Intuitive Generosity and Error Prone Inference from Response Time - PowerPoint PPT Presentation

Intuitive Generosity and Error Prone Inference from Response Time María P. Recalde 1 Arno Riedl 2 Lise Vesterlund 1 1 University of Pittsburgh 2 Maastricht University October 18, 2013

Motivation When called upon to help others, is our instinctive, fast, gut reaction to help or to be selfish? ◮ Are we as individuals tempted to do good? Existing work is consistent with temptation motives for giving ◮ DellaVigna, List, Malmendier (2012) ◮ Andreoni, Rao, Trachtman (2012) Unclear how we can identify the intuitive response ◮ Rand, Greene, Nowak (2012) use decision time

Rand, Greene, and Nowak (2012) 4-person linear VCM, $0.40 endowment, mpcr=0.5, AMT Replicated by Lotito et al (2012) and Nielsen et al (2012)

The linear VCM Can confound error with other-regarding preferences ◮ Location of the dominant strategy Nash equilibrium ◮ Location of efficiency maximizing strategy Problematic if error correlates with response time ◮ Kocher & Sutter (2006) ◮ Rubinstein (2007), Agranov, Caplin, Tergiman (2012)

Our study Research questions: 1. Is the correlation between generosity and decision time robust to changes in the strategic environment? 2. Could decision error be playing a role? Experiment: ◮ 4 person piece-wise linear VCM unique interior Nash equilibrium in dominant strategies unique interior efficiency maximizing outcome ◮ between-subject design with two treatments vary the location of the interior Nash equilibrium

Experimental design Treatment Equilibrium contribution Low $3.00 out of $10.00 High $7.00 out of $10.00 Constant in both treatments: ◮ Individual endowment ($10.00), group size (4) ◮ Efficiency maximizing contribution ($9.00) ◮ Equilibrium payoffs ◮ Payoffs of contributing $0.00 and $10.00 ◮ Unit cost of deviation between giving $3.00 and $7.00

Implementation ◮ Neutral instructions without payoff information ◮ Tutorial on how to read a payoff table ◮ Actual payoff table presented on decision screen ◮ Response time measured since decision screen is displayed ◮ Two parts in a session Part 1: one-time contribution decision Part 2: 10 repeated decisions with random rematching Same payoff table, one part randomly chosen for payment

Results - Part 1 Histogram of contribution decisions by treatment .4 .3 share per treatment .2 .1 0 0 1 2 3 4 5 6 7 8 9 10 contribution Low High

Do we replicate Rand, Greene, and Nowak’s findings? OLS regression of contribution on response time Dep. Var.: Contribution to group account Low response time -0.019** (0.016) Constant 6.024*** (0.000) N 80 Note: P-values in parentheses. * p<0.10, ** p<0.05, *** p<0.01.

Scatter plot of contribution and response time Low 300 300 250 250 response time (seconds) 200 200 150 150 100 100 50 50 0 0 0 2 4 6 8 10 contirbution

Does the correlation change with treatment? OLS regression of contribution on response time and treatment Treatments Dep. Var.: Contribution to group account Low High All response time -0.019** 0.016** -0.019*** (0.016) (0.013) (0.010) High -0.205 (0.732) High x response time 0.035*** (0.001) Constant 6.024*** 5.819*** 6.024*** (0.000) (0.000) (0.000) Total effect decision time: High 0.016** (0.018) N 80 80 160 Note: P-values in parentheses. * p<0.10, ** p<0.05, *** p<0.01. determinants of response time

Scatter plot of contribution and response time Low High 300 300 250 250 response time (seconds) 200 200 150 150 100 100 50 50 0 0 0 2 4 6 8 10 0 2 4 6 8 10 contirbution contribution

Contributions made by fast and slow decision makers

Contributions made by fast and slow decision makers

Contributions made by fast and slow decision makers Mistakes Nash equilibrium share of treatment share of treatment .3 .3 .2 .2 .1 .1 0 0 Low High Low High fast slow fast slow Midpoint of strategy space Efficiency maximizing contribution share of treatment share of treatment .3 .3 .2 .2 .1 .1 0 0 Low High Low High fast slow fast slow

Results - Part 2 Frequency of equilibrium play by period and treatment .8 .6 percent frequency .4 .2 0 1 2 3 4 5 6 7 8 9 10 period Low High

Contributions - Part 2 Mean and median contribution by period and treatment 8 7 6 contribution 5 4 3 2 0 1 2 3 4 5 6 7 8 9 10 period mean, Low mean, High C.I. mean, Low C.I. mean, High median, Low median, High

Response time - Part 2 Median response time by period and treatment 40 response time (seconds) 30 20 10 0 0 1 2 3 4 5 6 7 8 9 10 period Low High

Correlation between contribution and response time OLS regression of contribution on response time Treatment Low NE High NE All decision time 0.014 0.022 0.014 (0.340) (0.278) (0.261) period -0.068** 0.047* -0.068*** (0.047) (0.052) (0.010) High NE 2.143*** (0.003) High NE X decision time 0.009 (0.668) High NE X period 0.115*** (0.002) Constant 4.082*** 6.225*** 4.082*** (0.001) (0.001) (0.000) Total effect decision time: High NE 0.022 (0.196) Total effect period: High NE 0.047** (0.012) R-squared 0.041 0.025 0.506 N 800 800 1600 determinants of decision time

Contributions made by fast and slow decision makers Mean contribution by response time in part 1 7 6 contribution 5 4 3 0 1 2 3 4 5 6 7 8 9 10 period fast in part 1, Low fast in part 1, High slow in part 1, Low slow in part 1, High

Response time of fast and slow decision makers Median response time Low High 60 response time (seconds) 40 20 0 0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10 period fast in part 1 fast in part 1 slow in part 1 slow in part 1

Conclusion ◮ The correlation between choices and response time changes with features of the decision environment ◮ Error negatively correlates with response time ◮ Potential explanation for mixed evidence in the literature Piovesan and Wengstrom (2008), Fiedler et al (2013) Tinghog et al (2013), Rand et al (2013) Matthey and Regner (2010) ◮ Caution warranted when making inferences about preferences from response time

Thank you

Payoff table - Low treatment resume

Payoff table - High treatment resume

Screen shot - Tutorial resume

Determinants of response time, part 1 Low High All % tutorial correct 22.121 30.526 22.121 (0.328) (0.165) (0.331) experiments -0.824 -0.948 -0.824 (0.125) (0.148) (0.126) econ courses 1.175 5.763*** 1.175 (0.396) (0.004) (0.398) High -25.062 (0.779) High x % tutorial correct 8.404 (0.789) High x experiments -0.123 (0.883) High x econ courses 4.588* (0.055) Constant -2.218 -27.280 -2.218 (0.972) (0.667) (0.972) Age and gender controls Yes Yes Yes N 80 80 160 resume

Determinants of response time, part 2 Low High All period -1.564*** -1.249** -1.573*** (0.004) (0.021) (0.000) % past equilibrium play 1.422 3.377* 1.835** (0.213) (0.075) (0.020) mean contribution others -0.130 0.353 -0.135 (0.843) (0.215) (0.816) experiments -0.268** -0.136** -0.274*** (0.031) (0.045) (0.005) High -6.528 (0.599) High x period 0.322 (0.338) High x % past equilibrium play 1.142 (0.330) High x mean contribution others 0.484 (0.439) High x experiments 0.142 (0.114) Constant 15.762 9.532 15.639 (0.178) (0.394) (0.100) Age and gender controls Yes Yes Yes Econ training and tutorial controls Yes Yes Yes N 800 800 1600 resume