Working Papers by Jean-robert Tyran
CEPR Discussion Paper 11622, Nov 2016
The quality of democratic choice critically depends on voter motivation, i.e. on voters' willingn... more The quality of democratic choice critically depends on voter motivation, i.e. on voters' willingness to cast an informed vote. If voters are motivated, voting may result in smart choices because of information aggregation but if voters remain ignorant, delegating decision making to an expert may yield better outcomes. We experimentally study a common interest situation in which we vary voters' information cost and the competence of the expert. We find that voters are more motivated to collect information than predicted by standard theory and that voter motivation is higher when subjects demand to make choices by voting than when voting is imposed on subjects.
University of Copenhagen Economics Working Paper No. 16-12, Nov 2016
Standard economic reasoning assumes that people vote instrumentally, i.e., that the sole motivati... more Standard economic reasoning assumes that people vote instrumentally, i.e., that the sole motivation to vote is to influence the outcome of an election. In contrast, voting is expressive if voters derive utility from the very act of expressing support for one of the options by voting for it, and this utility is independent of whether the vote affects the outcome. This paper surveys experimental tests of expressive voting with a particular focus on the low-cost theory of expressive voting. The evidence for the low-cost theory of expressive voting is mixed.
University of Copenhagen Economics Working Paper No. 16-14, Nov 2016
We elicit money illusion and match it with financial and sociodemographic data from official regi... more We elicit money illusion and match it with financial and sociodemographic data from official registers on a quasi-representative sample of the Danish population.
University of Copenhagen Economics Working Paper No. 16-08, Jul 2016
What explains the gender gap in ideology, i.e. the observation that women tend to be more leftist... more What explains the gender gap in ideology, i.e. the observation that women tend to be more leftist than men? We provide new evidence showing that personality traits play a key role. Using a novel high-quality data set, we show that the mediating (i.e. indirect) effects of gender operating through personality traits by far dominate the direct effects of gender. They also dominate other potential differences between the sexes like income or education as explanatory factors. Our findings suggest that women tend to be more leftist than men mainly because they have different personalities, which, in turn, shape their expressed ideology. Taking such mediating effects of personality traits into account explains over three quarters of the observed gender gap in general ideological preferences.
Discussion Paper SP II 2013 –312r, Mar 2015
We experimentally examine the effects of price competition in markets for experience goods where ... more We experimentally examine the effects of price competition in markets for experience goods where sellers can build up reputations for quality. We compare price competition to monopolistic markets and markets where prices are exogenously fixed (somewhere between the endogenous oligopoly and monopoly prices). While oligopolies benefit consumers regardless of whether prices are fixed or endogenously chosen, we find that price competition lowers efficiency as consumers pay too little attention to reputation for quality. This provides empirical support to recent models in behavioral industrial organization that assume that consumers may with increasing complexity of the market place focus on selected dimensions of products. We also find that consumers' attention to quality and, hence, provided quality drops when regulated prices are set at levels that are too low.
University of Copenhagen Economics Working Paper No. 14-27, Nov 2014
Cooperation can be induced by an authority with the power to mete out sanctions for free riders, ... more Cooperation can be induced by an authority with the power to mete out sanctions for free riders, but law enforcement is prone to error. This paper experimentally analyzes preferences for and consequences of errors in formal sanctions against free riders in a public goods game. With type I errors, even full contributors to the public good may be punished. With type II errors, free riders may go unpunished. We find that judicial error undermines cooperation and that the effects of type I and II errors are symmetric. To investigate their relative (dis-)like for error, we let subjects choose what type of error to prevent. By use of an incentive-compatible mechanism, we find that subjects prefer type II over type I errors. We find that the strength of this preference is fully in line with a motive to maximize income and does not indicate any additional psychological or fairness bias against type I errors.
University of Copenhagen Economics Working Paper No. 14-19, Sep 2014
In a laboratory experiment designed to capture key aspects of the interaction between physicians ... more In a laboratory experiment designed to capture key aspects of the interaction between physicians and patients in a stylized way, we study the effects of medical insurance and competition in the guise of free choice of physician. Medical treatment is an example of a credence good: only the physician (but not the patient) knows the appropriate treatment, and even after consulting, the patient is not sure whether he got proper treatment or got an unnecessary treatment, i.e. was overtreated. We find that with insurance, moral hazard looms on both sides of the market: patients consult more often and physicians overtreat more often than in the baseline condition. Competition decreases overtreatment compared to the baseline and patients therefore consult more often. When the two institutions are combined, competition is found to partially offset the adverse effects of insurance: most patients seek treatment, but overtreatment is moderated.
University of Copenhagen Economics Working Paper No. 14-10, Apr 2014
In this paper we provide new evidence showing that fair behavior is intuitive to most people. We ... more In this paper we provide new evidence showing that fair behavior is intuitive to most people. We find a strong association between a short response time and fair behavior in the dictator game. This association is robust to controls that take account of the fact that response time might be affected by the decision-maker's cognitive ability and swiftness. The experiment was conducted with a large and heterogeneous sample recruited from the general population in Denmark. We find a striking similarity in the association between response time and fair behavior across groups in the society, which suggests that the predisposition to act fairly is a general human trait.
University of Copenhagen Economics Working Paper No. 14-09, Apr 2014
We present a new type of field experiment to investigate ethnic prejudice in the workplace. Our d... more We present a new type of field experiment to investigate ethnic prejudice in the workplace. Our design allows us to study how potential discriminators respond to changes in the cost of discrimination. We find that ethnic discrimination is common but remarkably responsive to the "price of prejudice", i.e. to the opportunity cost of choosing a less productive worker on ethnic grounds. In addition, we find that the standard theory of statistical discrimination fails to explain observed choices, and that taking ethnic prejudice into account helps to predict the incidence of discrimination.
University of Copenhagen Economics Working Paper No. 14-18, Sep 2014
We investigate experimentally the effects of corrupt experts on information aggregation in commit... more We investigate experimentally the effects of corrupt experts on information aggregation in committees. We find that non-experts are significantly less likely to delegate through abstention when there is a probability that experts are corrupt. Such decreased abstention, when the probability of corrupt experts is low, actually increases information efficiency in committee decision-making. However, if the probability of corrupt experts is large, the effect is not sufficient to offset the mechanical effect of decreased information efficiency due to corrupt experts. Our results demonstrate that the norm of "letting the expert decide" in committee voting is influenced by the probability of corrupt experts, and that influence can have, to a limited extent, a positive effect on information efficiency.
IFN Working Paper No. 964, 2013, Apr 2013
Recent experimental studies suggest that risk aversion is negatively related to cognitive ability... more Recent experimental studies suggest that risk aversion is negatively related to cognitive ability. In this paper we report evidence that this relation might be spurious. We recruit a large subject pool drawn from the general Danish population for our experiment. By presenting subjects with choice tasks that vary the bias induced by random choices, we are able to generate both negative and positive correlations between risk aversion and cognitive ability. Structural estimation allowing for heterogeneity of noise yields no significant relation between risk aversion and cognitive ability. Our results suggest that cognitive ability is related to random decision making rather than to risk preferences.
University of Copenhagen Economics Working Paper No. 13-14, Nov 2013
We explore the political acceptance of taxation in commodity markets. Participants in our experim... more We explore the political acceptance of taxation in commodity markets. Participants in our experiment earn incomes by trading and must collectively choose one of two tax regimes to raise a given tax revenue. A "uniform tax" (UT) imposes the same tax rate on all markets and is fair in that it yields the samebut lowincome to participants in all markets. The "discriminatory tax" (DT) imposes a higher burden on markets with inelastic demand and is therefore efficient but it is also unfair in that incomes are unequal across markets. We find that DT are unpopular, as predicted. Surprisingly, however, DT remain unpopular when they are both efficient and produce a fair (equal) distribution. We conclude that non-discrimination (equal treatment) is a salient fairness principle in taxation that shapes voting on commodity taxes above and beyond concerns for efficiency and equal distribution.
IFN Working Paper No.989, 2013, Nov 2013
We study risk taking on behalf of others in an experiment on a large random sample. The decision ... more We study risk taking on behalf of others in an experiment on a large random sample. The decision makers in our experiment are facing high-powered incentives to increase the risk on behalf of others through hedged compensation contracts or with tournament incentives. Compared to a baseline condition without such incentives, we find that the decision makers respond strongly to these incentives that result in an increased risk exposure of others. However, we find that the increase in risk taking is mitigated by altruistic preferences and pro-social personality traits.
The data in Fehr and Tyran (FT, 2001) and Luba Petersen and Abel Winn (PW, 2013) show that money ... more The data in Fehr and Tyran (FT, 2001) and Luba Petersen and Abel Winn (PW, 2013) show that money illusion plays an important role in nominal price adjustment after a fully anticipated negative monetary shock. Money Illusion affects subjects' expectations, and causes pronounced nominal inertia after a negative shock but much less inertia after a positive shock. Thus PW provide a misleading interpretation both of our and their own data.
IFN Working Paper No. 976 , 20 13 , Sep 2013
We study risk taking on behalf of others, both with and without potential losses. A large-scale i... more We study risk taking on behalf of others, both with and without potential losses. A large-scale incentivized experiment is conducted with subjects randomly drawn from the Danish population. On average, decision makers take the same risks for other people as for themselves when losses are excluded. In contrast, when losses are possible, decisions on behalf of others are more risky. Using structural estimation, we show that this increase in risk stems from a decrease in loss aversion when others are affected by their choices.
Lund University School of Economics and Management Working Paper No. 2013-29, Sep 2013
We use the strategy method to classify subjects into cooperator types in a largescale online Publ... more We use the strategy method to classify subjects into cooperator types in a largescale online Public Goods Game and find that free riders spend more time on making their decisions than conditional cooperators and other cooperator types.
University of Copenhagen Economics Working Paper No. 12-14, Oct 2012
Loss aversion is one of the most robust findings to have emerged from behavioral economics. Surpr... more Loss aversion is one of the most robust findings to have emerged from behavioral economics. Surprisingly little attention, however, has been devoted to nominal loss aversion, the interaction of loss aversion and money illusion.
Harvard Business School Working Paper No. 13-017 , Aug 2012
We experimentally investigate information aggregation through majority voting when some voters ar... more We experimentally investigate information aggregation through majority voting when some voters are biased. In such situations, majority voting can have a "dark side", i.e. result in groups making choices inferior to those made by individuals acting alone. We develop a model to predict how two types of social information shape e¢ ciency in the presence of biased voters and we test these predictions using a novel experimental design. In line with predictions, we …nd that information on the popularity of policy choices is bene…cial when a minority of voters is biased, but harmful when a majority is biased. In theory, information on the success of policy choices elsewhere de-biases voters and alleviates the ine¢ ciency. In the experiment, providing social information on success is ine¤ective. While voters with higher cognitive abilities are more likely to be de-biased by such information, most voters do not seem to interpret such information rationally.
SAM 14 2012 ISSN: 0804-6824, Jul 2012
It has been shown that participants in the dictator game are less willing to give money to the ot... more It has been shown that participants in the dictator game are less willing to give money to the other participant when their choice set also includes the option to take money. We examine whether this effect is due to the choice set providing a signal about entitlements in a setting where entitlements initially may be considered unclear. We find that the share of positive transfers depends on the choice set even when there is no uncertainty about entitlements, and that this choice-set effect is robust across a heterogenous group of participants recruited from the general adult population in Denmark. The findings are consistent with dictator giving partly being motivated by a desire to signal that one is not entirely selfish or by a desire to follow a social norm that is choice-set dependent.
IZA Discussion Paper No. 6620, Jun 2012
The ability of groups to implement efficiency-enhancing institutions is emerging as a central the... more The ability of groups to implement efficiency-enhancing institutions is emerging as a central theme of research in economics. This paper explores voting on a scheme of intergroup competition, which facilitates cooperation in a social dilemma situation. Experimental results show that the competitive scheme fosters cooperation. Competition is popular, but the electoral outcome depends strongly on specific voting rules of institutional choice. If the majority decides, competition is almost always adopted. If likely losers from competition have veto power, it is often not, and substantial gains in efficiency are foregone.
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Working Papers by Jean-robert Tyran