We present results from a laboratory experiment designed to identify preferences over the resolution of uncertainty and timing of non-instrumental information acquisition in a rich choice set. We test theoretical predictions along three dimensions: early vs. late resolution, one-shot vs. gradual, and positive vs. negative skew. Treatments vary whether the outcome previously has been determined, as in an information structure, or is determined later, as in a compound lottery. We find that individuals prefer to delay uncertainty resolution when the outcome has not been determined and prefer to expedite uncertainty resolution when the outcome has already occurred. We find no evidence for a preference for one-shot resolution in either context.
Revision Requested, The Economic Journal
We experimentally demonstrate that a communication regime where a worker communicates about his intended effort is less effective in i) soliciting truthful information, and ii) motivating effort, than a regime where he communicates about his past effort. Our experiment uses a real-effort task, which additionally allows us to demonstrate the effects of communication on effort over time. We show that the effects of ex-ante promises are short-lived as compared to ex-post communication. Our results reveal that the timing of communication is a critical feature that merits attention in the design of mechanisms for information transmission in strategic
Revision Requested, Games and Economic Behavior
The literature on pre-play communication suggests people fulfill promises because doing so avoids guilt. Our results indicate this conclusion does not apply to team decision makers. In our experiment, individuals and teams participate in a hidden-action trust game with and without pre-play communication. Both make non-binding promises to cooperate at the same rate, but individuals live up to their promises while teams do not. Teams first decide on their action and use non-binding communication to support their chosen action. Teams and individuals receiving non-binding communication generally trust promises and choose to cooperate, and do so at similar rates.
The “realization effect,” put forth by Imas (2016), predicts how individuals will change risk-taking behavior following a loss. The theory is defined for individuals choosing whether to accept a positively skewed lottery, and previous experiments have focused in this domain. We test the realization effect using a variation of the bomb risk elicitation task, which gives a much wider range of lottery options. We identify conditions under which the realization effect makes predictions in this environment, and test these predictions in the data. We find little support, but we also find that few individuals even select into those conditions where the realization effect applies.
Works in Progress:
+ Testing the Axiomatic Foundation of Risky Intertemporal Choice
+ Probability Matching, Strategic Uncertainty, and Preferences for Randomization
+ Testing The Behavioral Foundations of (Cautious) Expected Utility Theory
with Ritesh Jain