Showing papers in "Natural Field Experiments in 2006"

The Goal-Gradient Hypothesis Resurrected: Purchase Acceleration, Illusionary Goal Progress, and Customer Retention

Abstract: The goal-gradient hypothesis denotes the classic finding from behaviorism that animals expend more effort as they approach a reward. Building on this hypothesis, the authors generate new propositions for the human psychology of rewards. They test these propositions using a field experiment, secondary customer data, paper-and-pencil problems, and Tobit and logit models. The key finding indicate that (1) participants in a real cafe reward program purchase coffee more frequently the closer they are to earning a free coffee; (2) Internet users who rate songs in return for reward certificates visit the rating Web site more often, rate more songs per visit, and persist longer in the rating effort as they approach the reward goal; (3) the illusion of progress toward the goal induces purchase acceleration (e.g., customers who receive a 12-stamp coffee card with 2 preexisting "bonus" stamps complete the 10 required purchases faster than customers who receive a "regular" 10-stamp card) and (4) a stronger tendency to accelerate toward the goal predicts greater retention and faster reengagement in the program. The conceptualization and empirical findings are captured by a parsimonious goal distance model, in which effort investment is a function of the proportion of original distance remaining to the goal. In addition, using statistical and experimental controls, the authors rule out alternative explanations for the observed goal gradients. They discuss the theoretical significance of their findings and the managerial implications for incentive systems, promotions, and customer retention.

Cues of being watched enhance cooperation in a real-world setting

Abstract: We examined the effect of an image of a pair of eyes on contributions to an honesty box used to collect money for drinks in a university coffee room People paid nearly three times as much for their drinks when eyes were displayed rather than a control image This finding provides the first evidence from a naturalistic setting of the importance of cues of being watched, and hence reputational concerns, on human cooperative behaviour

Relative Risks and the Market for Sex: Teenagers, Sugar Daddies and HIV in Kenya ∗

Abstract: An information campaign that provided Kenyan teenagers in randomly selected schools with the information that HIV prevalence was much higher among adult men and their partners than among teenage boys led to a 65% decrease in the incidence of pregnancies by adult partners among teenage girls in the treatment group relative to the comparison. This suggests a large reduction in the incidence of unprotected cross-generational sex. The information campaign did not increase pregnancies among teenage couples. These results suggest that the behavioral choices of teenagers are responsive to information on the relative risks of different varieties of a risky activity. Policies that focus only on the elimination of a risky activity and do not address risk reduction strategies may be ignoring a margin on which they can have substantial impact.

Who gets spammed

Abstract: Using a field experiment, we investigate whether, and if so, how spam is targeted. By comparing the spam rates among a set of synthetic email accounts, we find that spam is targeted to clients of particular email providers, users who declared interest in particular products or services, and consumer segments that are relatively more likely to make online purchases.

Do ethical consumers care about price? A revealed preference analysis of fair trade coffee purchases

Abstract: The existing literature on socially responsible purchasing relies heavily on stated preference measures elicited through surveys that utilize hypothetical market choices. This paper explores consumers' revealed purchasing behavior with regard to fair trade coffee and is apparently the first to do so in an actual market setting. In a series of experiments, we investigated differences in consumer responsiveness to relative price changes in fair trade and non-fair trade brewed coffees. In order to minimize the hypothetical bias that may be present in some experimental settings, we conducted our experiments in cooperation with a vendor who allowed us to vary prices in an actual coffee shop. Using a choice model, we found that purchasers of fair trade coffee were much less price responsive than those of other coffee products. The demonstration of low sensitivity to price suggests that the market premiums identified by stated preference studies do indeed exist and are not merely artifacts of hypothetical settings.

Shrouded Attributes and Information Suppression: Evidence from Field Experiments

Abstract: The recent theoretical literature suggests that consumer myopia may lead …rms to pro…tably suppress or shroud some attributes of the price. Empirical and experimental data also suggest that sellers gain by transferring a larger fraction of the price to the shrouded attributes. However, alternative theories,

Growing export-oriented crops in kenya: An evaluation of drumnet services

Abstract: This paper evaluates a program in Kenya that encourages the production of export oriented crops by providing smallholder farmers with credit linked to agricultural extension and marketing services. We use an experimental design in which farmer selfhelp groups are randomly assigned to either a control group, a group receiving all DrumNet services, or a group receiving all services except credit. Among the services offered by DrumNet, credit is the most important. Since the production of export crops requires a significant investment in capital and inputs, without credit farmers are less likely to plant the mentioned crops. Overall, the results show that DrumNet is an effective model for encouraging the production of export oriented crops.

Joker: Choice in a simple game with large stakes

Abstract: This paper examines data from the Norwegian television game show Joker, where contestants make well-speci…ed choices under risk. The game involves very large stakes, randomly drawn contestants, and ample opportunities for learning. Expected utility (EU) theory gives a simple prediction of choice under weak conditions, as one choice is always …rst-order stochastically dominating. We document frequent, systematic and costly violations of dominance. Most alternative theories fail to add explanatory power beyond the EU benchmark, but many contestants appear to have a systematic expectation bias that can be related to Tversky and Kahneman’s (1973) “availability heuristic”. In addition, there seems to be a stochastic element in choice that is well captured by the so-called Fechner model.

The role of leadership in democratic deliberations: Results from a field experiment in sao tome and principe

Abstract: Despite a widespread trend towards the adoption of increasingly participatory approaches to political decision-making in developing countries there is little or no evidence that these practices in fact return the benefits attributed to them. We present an empirical investigation into one specific worry-that participatory decision processes may be vulnerable to manipulation by elites. We report on a field experiment on the effects of leaders, drawing on a unique nationwide experiment in democratic deliberation in Sao Tome and Principe. In these deliberations, meetings were moderated by discussion leaders who were randomly assigned to run meetings around the country. The randomization procedure provides a rare opportunity to identify the impact of leaders on the outcomes of group deliberations. We find that leadership effects were extremely large, in many cases accounting for over one third of all variation in the outcomes of the national discussions. These results have important implications for the design of such deliberative practices. While the total effect of leadership cannot be assessed, it is possible to observe leadership effects and to correct for variation in outcomes of meetings.

Group versus individual liability: A field experiment in the philippines

Abstract: Group liability is often portrayed as the key innovation that led to the explosion of the microcredit movement, which started with the Grameen Bank in the 1970s and continues on today with hundreds of institutions around the world. Group lending claims to improve repayment rates and lower transaction costs when lending to the poor by providing incentives for peers to screen, monitor and enforce each other's loans. However, some argue that group liability creates excessive pressure and discourages good clients from borrowing, jeopardizing both growth and sustainability. Therefore, it remains unclear whether group liability improves the lender's overall profitability and the poor's access to financial markets. We worked with a bank in the Philippines to conduct a field experiment to examine these issues. We randomly assigned half of the 169 pre-existing group liability centers of approximately twenty women to individual-liability centers (treatment) and kept the other half as-is with group liability (control). We find that the conversion to individual liability does not affect the repayment rate, and leads to higher growth in center size by attracting new clients.

Which incentives work? An experimental analysis of incentives for trainers

Abstract: One conjecture in the theory of incentives is that incentives based on broader outcomes may be better at motivating agents than incentives based on narrow measures We designed an experiment to test these hypotheses using a "prospective randomized evaluation procedure" (PREP) We then apply PREP to training programs as typically funded by donors of economic development assistance We randomly assigned 274 participating entrepreneurs in the Philippines to one of 26, simultaneous, one-day, training classes in marketing Trainers were given cash incentives based on the average score of their "students" on a standardized test containing an alternative number of questions, which were randomly assigned to each class We then examined outcomes based on student satisfaction ratings of the trainer Our results suggest that incentives based on broad outcomes are more effective than incentives based on narrow outcomes We conclude with ways to improve our approach as well as with a discussion of the implications for using prospective randomized evaluation for improving the evaluation of donor projects