External and Internal Consistency of Choices made in Convex Time Budgets [go to paper] Experimental Economics 2017 (with Evan Calford, Yoram Halevy and Guidon Fenig)
We evaluate data on choices made from Convex Time Budgets (CTB) in Andreoni and Sprenger (2012a) and Augenblick et al. (2015), two influential studies that proposed and applied this experimental technique. We use the Weak Axiom of Revealed Preference (WARP) to test for external consistency relative to pairwise choice, and demand, wealth and impatience monotonicity to test for internal consistency. We find that choices made by subjects in the original Andreoni and Sprenger (2012a) paper violate WARP frequently; violations of all three internal measures of monotonicity are concentrated in subjects who take advantage of the novel feature of CTB by making interior choices. Wealth monotonicity violations are more prevalent and pronounced than either demand or impatience monotonicity violations. We substantiate the importance of our desiderata of choice consistency in examining effort allocation choices made in Augenblick et al. (2015), where we find considerably more demand monotonicity violations, as well as many classical monotonicity violations which are associated with time-inconsistent behavior. We believe that the frequency and magnitude of WARP and monotonicity violations found in the two studies pose important confounds for interpreting and structurally estimating choice patterns elicited through CTB. We encourage researchers employing CTB in present and future experiments to include consistency tests in their design and pre-estimation analysis.
The Relation between Behavior under Risk and over Time. [go to paper] AER-Insights 2020 (with Yoram Halevy and Kota Saito)
The paper establishes a tight relation between non-standard behaviors in the domains of risk and time, by considering a decision maker with non-expected utility preferences who believes that only present consumption is certain while any future consumption is uncertain. We provide the first complete characterizations of the two-way relations between the certainty effect and present biased temporal behavior, and between the common ratio effect and temporal reversals related to the common difference effect.
Present bias is the inclination to prefer a smaller present reward to a larger later reward, but reversing this preference when both rewards are equally delayed. This paper investigates and characterizes the most general class of present-biased temporal preferences. We show that any present-biased preference has a max-min representation, which can be cognitively interpreted as if, the decision maker considers the most conservative present equivalents in the face of uncertainty about future tastes. We also discuss empirical anomalies which temporal models like beta-delta or hyperbolic discounting cannot account for, but the proposed general representation can accommodate.
Working Papers (Submitted)
Motives Behind Cooperation in Finitely Repeated Prisoner's Dilemma [go to paper] Revise and Resubmit at Games and Economic Behavior
Selfish preferences cannot explain the significant instances of cooperation observed in Finitely Repeated Prisoner's Dilemma experiments. This paper deploys a novel experiment to compare four theories that explain cooperation. The four theories capture the following four non-pecuniary motives: caring about others (Altruism), being conscientious about cooperation (Duty), enjoying the pleasure of collaborative cooperation (Reciprocal Cooperation), and concerns for reciprocal kindness (Sequential Reciprocity). Our experimental design varies the decline-rate of future rewards, under which these theories make contrasting predictions. We find that our data is best explained by Reciprocal Cooperation-type subjects.
We study peer-grading with competitive graders who enjoy a higher utility when their peers get lower scores. We propose a new mechanism, PEQA, that incentivizes such graders through a score-assignment rule which aggregates the final score from multiple peer-evaluations, and a grading performance score which rewards performance in the peer-grading exercise. PEQA makes grader-bias irrelevant. Additionally, under PEQA, a peer-grader's utility increases monotonically with the reliability of her grading, irrespective of her competitiveness and how her co-graders act. In a reasonably general class of score assignment rules, PEQA uniquely satisfies this utility-reliability monotonicity. When grading is costly and costs are private information, a modified version of PEQA implements the socially optimal effort-choices in an equilibrium of the peer-evaluation game. Data from our classroom experiments confirm our theoretical assumptions and show that PEQA outperforms the popular median mechanism.
Do experimental subjects have consistent first and higher-order beliefs about other's preferences? How does any inconsistency affect strategic decisions? We introduce a simple four-player sequential social dilemma where actions reveal first and higher-order beliefs. The unique sub-game perfect Nash equilibrium (SPNE) is observed less than 5% of the time, even though our diagnostic treatments show that a majority of our subjects are self-interested, higher-order rational and have accurate first-order beliefs. In our data, strategic play vastly deviates from Nash predictions because first-order and higher-order beliefs are inconsistent for most subjects.
We introduce and study, both theoretically and empirically, the notion of `future self-proof' mechanisms, those in which boundedly rational individuals do not need to rationally forecast their own future actions (or those of others). We construct an obviously strategy-proof (OSP) elicitation mechanism, showing that it greatly outperforms the standard Becker-Degroot-Marschak (BDM) mechanism, but also sometimes fails due to the fact that it is not future self-proof. Motivated by recent experimental findings, we then define a new notion of future self-proof mechanisms, which we call game-structure obvious (GSO). We find empirically that a GSO mechanism outperforms the OSP mechanism.
Origins of Low Public Good Provision in Diverse Localities: Evidence from India (with Ritwik Banerjee, Arka Roy Choudhury and Ashokankur Dutta), project has received a research grant of 41,542 GBP by the IGC.
Sophistication in Bayesians vs Non-Bayesians (with Evan Calford)
Competitive Present Bias (with Guidon Fenig)
The Power of Revealed Preference Tests under Reasonable Alternatives (with Yoram Halevy, Guy Mayraz and Lanny Zrill)
The effect of COVID-19 salience on demand for lockdown - an experimental investigation from India with Ritwik Banerjee and Jeevant Rampal.