Experimental evidence on human choices in organizations and markets
Creators: name: Gehrlein, Jonas
Publisher: name: Universität Bern
Year: 2019
Subjects: 330 Economics
380 Commerce, communications &amp; transportation
650 Management &amp; public relations

description: Managerial and Behavioral Economics have received increasing attention in academia and in the private sector. For example, companies are incorporating behavioral findings into actively designing the environment for their employees, to account for social preferences, such as positive and negative reciprocity, or to enhance individual or team performance. Many of those approaches are successful, despite lacking a monetary incentive, and thus, conflict with standard economic theory. Therefore, fundamental behavioral research, as presented by three essays in this thesis, is important for uncovering basic human decision-making mechanisms. These essays utilize the experimental method, which offers control of various confounding factors, enabling the identification of causal relationships. The first three essays challenge rational economic models, and show results that can be explained only by incorporating behavioral theories. The last essay is a methodological approach to further develop experimental software. The common factor of all studies is an interdisciplinary perspective: Essay 1 investigates a longstanding question of Economics, pairing it with a mechanism prominent in Psychology, and measuring an outcome inspired by Philosophy. Essays 2 and 3 go beyond the model of the Homo oeconomicus to analyze teamwork and the role of intentions. Essay 4 concludes this dissertation, by including aspects of Computer Science to illustrate how current software can be extended to allow for interactive online experiments, which will be increasingly relevant in the future. In essay 1, we investigate how the market mechanism influences moral decision making. This question is a longstanding one, which is receiving increasing attention due to our rapidly progressing society. We are driving towards a global economy, where markets are penetrating more and more aspects of daily life. For example, our social lives are dragged toward online platforms, which are launching efforts to monetize social interactions in the forms of likes and followers, and selling products in the process. Thus, it is important to understand the implications of an increasingly market-centric society for our moral standards. In a large online experiment, we expose a non-standard subject pool to either a market or a non-market condition, and elicit decisions about a subsequent moral dilemma. We hypothesize that markets foster a cost-benefit analysis mindset, which materializes in changing behavior in the dilemma. In comparison to the baseline, and in line with our hypothesis, we find a substantial effect after the participants are exposed to the market game. However, the non-market control setting shows a similar increase, and thus, excludes a treatment effect. In essay 2, we analyze how social preferences translate into output in a modified teamwork setting. In most firms, the product of a teamwork situation is essential for successful operation. However, in a large number of cases, teamwork itself is a prerequisite for future individual performance. Examples involve helping on the job, internal knowledge sharing, or peer coaching. Those scenarios are still neglected in the literature. Therefore, we investigate how social preferences translate in such modified teamwork settings into future individual performance. In a lab-in-the-field setting, we observe students of Mathematics who work jointly on problem sets, to prepare them for future individual exams. Contrary to our hypothesis, we find that conditional cooperators are not more successful jointly or individually. Instead, people categorized as free riders excel in individual performance without causing negative externalities on their peers in the teamwork phase. In essay 3, we investigate how intentions influence punishment behavior. Almost all decisions in daily life and within companies are made facing alternatives. In that sense, decisions can be evaluated regarding the underlying intentions. By actively framing the choice set, decision makers might be able to cast their actions in a better light than appropriate. In a laboratory experiment, we investigate the role of intentions in situations where it is possible to disguise the underlying motives. We find that assessing intentions plays a major role in punishing behavior. This seems to be common knowledge among humans, as the participants extensively make use of the possibility to disguise. Interestingly, the sanctions for such malign behavior are limited, even in cases of discovery, which makes this strategy quite efficient. The results shed some light on recent political developments, in which some politicians do not lose touch with voters, even when the politicians are obviously dishonest about their intentions. In essay 4, we demonstrate a novel way to extend oTree to allow for real-time interactions in online settings, such as Amazon’s Mechanical Turk. As a proof-of-concept, we run a series of double auction markets to show that the software works as intended, and that the results are comparable to the literature. We further share important insights into how to conduct interactive games online with large groups. The trend of online experiments paired with accessible software solutions provides various advantages for academic research: Experiments can be conducted with non-standard subject pools, and reduced costs make sufficiently powered studies affordable. It also provides researchers in various parts of the world the opportunity to participate in social science research. To facilitate this trend, we make the code accessible under an open-source license.