Job market paper
Brütt, Katharina, Arthur Schram & Joep Sonnemans (2020). Endogenous group formation and responsibility diffusion: An experimental study. Games and Economic Behavior, 121, 1-31. DOI: https://doi.org/10.1016/j.geb.2020.02.003
Abstract: We study the effects of varying individual pivotality and endogenous group entry on the selfishness of group decisions. Selfish choices by groups are often linked to the possibility of diffusing responsibility; the moral costs of these decisions appear smaller when individual pivotality is reduced. Our experimental design explores unanimity voting under distinct defaults to identify this effect. In exogenously formed groups we find evidence of responsibility diffusion, but this diminishes with repetition. Our results also demonstrate the role of self-selection in generating differences in group behaviour depending on individual pivotality. Driven by a heterogeneous selection pattern, endogenous group formation amplifies the effects of a change in pivotality. Some people actively seek an environment to diffuse responsibility, while others join groups to promote pro-social behaviour.
Abstract: We study how contingent thinking - that is, reasoning through all possible contingencies without knowing which is realized - affects belief updating. According to the Bayesian benchmark, beliefs updated after exposure to new information should be equivalent to beliefs assessed for the contingency of receiving such information. Using an experiment, we decompose the effect of contingent thinking on belief updating into two components: (1) hypothetical thinking (updating on a piece of not-yet-observed information) and (2) contrast reasoning (comparing multiple contingencies during the updating process). Our results show that contingent thinking increases deviations from Bayesian updating and that this effect can be attributed to hypothetical thinking.
How teams can overcome free riding in strategic experimentation (draft available upon request)
Abstract: Experimentation is at the core of innovation. This project studies collaborative experimentation in teams, focusing on the inherent two-dimensional free-riding problem; agents create a payoff and an informational externality, which both induce free riding. This theoretically results in inefficiently low experimentation. In particular, agents' experimentation being observable decreases experimentation because of a discouragement effect. Agents become pessimistic after observing high experimentation but no success. In a laboratory experiment, I study how distinct elements of the experimentation environment affect strategic experimentation. I vary (i) the observability of experimentation, and (ii) whether agents work on joint or separate projects. Teams largely overcome the free-riding problem. Both the observability of experimentation and experimenting jointly increase experimentation levels. There is no lack of sophistication in updating beliefs that drives this, neither do subjects disregard their experimentation's effect on others. Instead, the data can be best explained by joint, observable experimentation creating incentives to 'lead by example' and setting norms of high experimentation.