Essays in Behavioral Economics
This dissertation is comprised of three essays in behavioral economics. These essays share common empirical methodologies and intellectual themes. First, each essay uses randomized controlled trials, in the form of natural field experiments or online lab experiment. Second, each paper attempts to measure economically important but difficult-to-observe determinants of behavior – moral considerations in Chapter 1, social status concerns in Chapter 2, and social norms in Chapter 3.In Chapter 1, coauthors Leonardo Bursztyn, Daniel Gottlieb, Martin Kanz and I study the role of morality in debt repayment using an experiment with credit card customers of a large Islamic bank in Indonesia. In our main treatment, clients receive a text message stating that "non-repayment of debts by someone who is able to repay is an injustice." This increases the share of customers meeting their minimum payment by 15%, which is more than the effect of substantial financial incentives. Additional treatments help understand the underlying mechanisms and rule out competing explanations, such as reminder effects, priming religion, signaling the lender's commitment to debt collection, and provision of new information.In Chapter 2, coauthors Leonardo Bursztyn, Bruno Ferman, Martink Kanz, Gautam Rao and I provide novel field-experimental evidence on status goods. We work with an Indonesian bank that markets platinum credit cards to high-income customers. In a first experiment, we show that demand for the platinum card greatly exceeds demand for a nondescript control product with identical benefits, suggesting demand for the pure status aspect of the card. Transaction data reveal that platinum cards are more likely to be used in social contexts, implying social image motivations. Combining price variation with information on the use of the card sheds light on the magnitude of the demand for social status. In a second experiment, we provide evidence of positional externalities from the consumption of these status goods. The final experiment shows that increasing self-esteem causally reduces demand for status goods. We infer that part of the demand for status is psychological in nature, and that social image is a substitute for self-image.Social norms are typically thought to be persistent and long-lasting, sometimes surviving through growth, recessions, and regime changes. In some cases, however, they can quickly change. In Chapter 3, coauthors Leonardo Bursztyn, Georgy Egorov and I examine the unraveling of social norms in communication when new information becomes available, e.g., aggregated through elections. We build a model of strategic communication between citizens who can hold one of two mutually exclusive opinions. In our model, agents communicate their opinions to each other, and senders care about receivers' approval. As a result, senders are more likely to express the more popular opinion, while receivers make less inference about senders who stated the popular view. We test these predictions using two experiments. In the main experiment, we identify the causal effect of Donald Trump's rise in political popularity on individuals' willingness to publicly express xenophobic views. Participants in the experiment are offered a bonus reward if they authorize researchers to make a donation to an anti-immigration organization on their behalf. Participants who expect their decision to be observed by the surveyor are significantly less likely to accept the offer than those expecting an anonymous choice. Increases in participants' perceptions of Trump's popularity (either through experimental variation or through the "natural experiment" of his victory) eliminate the wedge between private and public behavior. A second experiment uses dictator games to show that participants judge a person less negatively for publicly expressing (but not for privately holding) a political view they disagree with if that person's social environment is one where the majority of people holds that view.
