"The Structure and Behavioral Effects of Revealed Social Identity Preferences"
Hett, Florian, Markus Kröll, and Mario Mechtel
A large body of evidence shows that social identity affects behavior. However, our understanding of the substantial variation of these behavioral effects is still limited. We use a novel laboratory experiment to measure differences in preferences for social identities as a potential source of behavioral heterogeneity. Facing a trade-off between monetary payments and belonging to different groups, individuals are willing to forego significant earnings to avoid belonging to certain groups. We then show that individual differences in these foregone earnings correspond to the differences in discriminatory behavior towards these groups. Our results illustrate the importance of considering individual heterogeneity to fully understand the behavioral effects of social identity.
Economic Journal, revised and resubmitted (3rd round),
"Do Children Cooperate Conditionally? Adapting the Strategy Method for First-Graders"
Hermes, Henning, Florian Hett, Mario Mechtel, Felix Schmidt, Daniel Schunk, and Valentin Wagner
We develop a public goods game (PGG) to measure cooperation and conditional cooperation in young children. Our design addresses several obstacles in adapting simultaneous and sequential PGGs to children who are not yet able to read or write, do not possess advanced abilities to calculate payoffs, and only have a very limited attention span at their disposal. It features the combination of haptic offline explanation, fully standardized audiovisual instructions, computerized choices based on touch-screens, and a suitable incentive scheme. Applying our experimental protocol to a sample of German first-graders, we find that already 6-year-olds cooperate conditionally and that the relative frequency of different cooperation types matches the findings for adult subjects. We also find that neither survey items from teachers nor from parents predict unconditional or conditional cooperation behavior; this underlines the value of incentivized experimental protocols for measuring cooperation in children.
Journal of Economic Behavior & Organization, forthcoming
"Bank Rescues and Bailout Expectations: The Erosion of Market Discipline During the Financial Crisis"
Hett, Florian and Alexander Schmidt
We design a novel test for changes in market discipline based on the relation between firm-specific risk, credit spreads, and equity returns. We use our method to analyze the evolution of bailout expectations during the recent financial crisis. We find that bailout expectations peaked in reaction to government interventions following the failure of Lehman Brothers, and returned to pre-crisis levels following the initiation of the Dodd-Frank Act. We do not find such changes in market discipline for non-financial firms. Finally, market discipline is weaker for government-sponsored enterprises (GSEs) and systemically important banks (SIBs) than for investment banks.
Journal of Financial Economics, 126 (2017), 635-651.
Winner of the Sturm & Drang Prize for the best publication by a young researcher of the Faculty of Economics and Business Administration
"Social Identity and Social Free Riding"
Bernard, Mark, Florian Hett, and Mario Mechtel
We model individual identification choice as a strategic group formation problem. When choosing a social group to identify with, individuals appreciate high social status and a group stereotype to which they have a small social distance. A group's social status and stereotype are shaped by the (exogenous) individual attributes of its members and hence endogenous to individuals' choices. Unless disutility from social distance is strong enough, this creates a strategic tension as individuals with attributes that contribute little to group status would like to join high-status groups, thereby diluting the latters' status and changing stereotypes. Such social free-riding motivates the use of soft exclusion technologies in high-status groups, which provides a unifying rationale for phenomena such as hazing rituals, charitable activities or status symbols that is not taste-based or follows a standard signaling mechanism.
European Economic Review, 90 (2016), 4-17 (lead article).
"Can monetary incentives increase organ donations?"
Eyting, Markus, Arne Hosemann, and Magnus Johannesson
We test in an experiment if a monetary incentive or a charity incentive can motivate people to fill in the German organ donor card and thereby increase the number of organ donors. We find that a monetary incentive significantly increases the number of organ donors whereas the charity incentive does not.
Economics Letters. 142 (2016) 56–58
"How Individual Characteristics Shape the Structure of Social Networks"
Girard, Yann, Florian Hett, and Daniel Schunk
We study how students’ social networks emerge by documenting systematic patterns in the process of friendship formation of incoming students; these students all start out in a new environment and thus jointly create a new social network. As a specific novelty, we consider cooperativeness, time and risk preferences – elicited experimentally – together with factors like socioeconomic and personality characteristics. We find a number of robust predictors of link formation and of the position within the social network (local and global network centrality). In particular, cooperativeness has a complex association with link formation. We also find evidence for homophily along several dimensions. Finally, our results show that despite these systematic patterns, social network structures can be exogenously manipulated, as we find that random assignments of students to groups on the first two days of university impacts the students’ friendship formation process.
Journal of Economic Behavior & Organization. 115 (2015), 197-216.
"Belief Elicitation with Multiple Point Predictions"
Eyting, Markus and Patrick Schmidt
We propose a simple, incentive compatible elicitation mechanism to elicit beliefs about real-valued outcomes - multiple point predictions. Simultaneously eliciting multiple point predictions with linear incentives reveals the subjective probability distribution without pre-defined intervals or probabilistic statements. We show that the approach is theoretically as robust as existing methods, while adapting flexibly to heterogeneous beliefs. In a laboratory experiment, we compare our method to the standard approach of eliciting discrete probabilities on pre-defined intervals. We find that elicitation with multiple point predictions is faster, more convenient and more predictive of subsequent behavior. We further find that multiple point predictions are more accurate if participants have heterogeneous beliefs. Finally, we provide experimental evidence that pre-defined intervals anchor reports.
Working Paper, draft upon request