Title: Essays in experimental economics
Description: This dissertation consists of three essays using experiments to better understand models of behavior in socially important contexts. The first essay investigates how punishment changes when a transgressor does not directly interact with the injured party. In a laboratory experiment, third party punishment for keeping money at the expense of a poorer player is shown to decrease when an intermediary actor is included in the transaction. Follow-up treatments provide evidence that intermediation reduces punishment predominately because the selfish player does not directly interact with the poorer player when an intermediary is used. Additionally, the experiments are designed such that when the selfish player chooses to include the intermediary the poorer player can only be made worse off. Thus many current theories of fairness would incorrectly predict intermediation increases punishment. The results support the hypothesis that judgments of fairness are consistent with current theories but that judgments narrowly focus on direct interactions. Narrow judgment can have grim equilibrium consequences. When an intermediary is made available, punishment is almost entirely ineffective in moderating self-interest, and the poorest players are far worse off than when no intermediary is allowed. Primarily as a test of generalizability, this paper also investigates moral decision-making and indirectness in a charity-reward domain. Consistent with the laboratory results, a framed field experiment shows rewards of a charitable behavior (donating mosquito nets) to decrease when the saliency of an intermediary (a charity) is increased. Together, the results show that moral decision-making is not always well predicted by the overall fairness of an act but rather by the fairness of the consequences that follow directly from an act.

The implications of these results are that allowing indirect actions may lead to increased anti-social behavior. The second essay analyzes the schooling decisions of poor households with adolescent children in urban Brazil using a framed field experiment. Parents in our study were being paid large monthly transfers by the local government conditional upon their 13 to 15 year-old child attending school. We elicit parents' choices between such conditional monthly payments and guaranteed, unconditional monthly payments of varying relative sizes. In the baseline treatment, an overwhelming majority of parents are willing to forego large, guaranteed sums to keep the current conditionality on the transfers they receive. However, parents reveal much weaker preferences for the conditionality if their child is not informed that the conditionality has been dropped or if they are offered to receive cell-phone text messages whenever their child misses school. We conclude that parent-child conflict plays a crucial role in these schooling decisions, with most parents being unable to control their child's school attendance behavior, in particular due to lack of observability of the child's actions. Further experimental treatments indicate that parental demand to control that behavior is not just to provide the child with skills but also to keep the child safe and off the streets.

The third essay reports a series of laboratory experiments investigating the hypothesis that expectations affect punishment. Despite support from Moral Psychology and recent reference-dependence experiments in Economics, I find third party punishment does not respond to exogenous changes in expectations of the targeted party's behavior. I use a random process for revealing the true action taken by the actor. This process varies the expectation the punisher holds just before the truth is revealed. Expectations are shown to vary significantly and substantially. However, in an instrumental variables regression. exogenous expectations are shown not to affect punishment at all. This is true both when expectations are exceeded or failed.