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This article evaluates short-time work (STW) schemes, known as temporary labour adjustment plans in Spain, from a comparative perspective. The use of STW schemes in the European Union during the COVID pandemic contained the redundancy processes that traditionally occur during adjustments to economic crises. These programmes not only made it possible to maintain employment but also allowed for a much faster economic recovery. The main contribution of this article is that it studies the functioning and results of this type of action in Spain and also considers the effects in other countries. This policy watch exercise also points to some recommendations for improving the functioning of STW schemes.
Real-effort experiments are frequently used when examining a response to incentives. For a real-effort task to be well suited for such an exercise its measurable output must be sufficiently elastic over the incentives considered. The popular slider task in Gill and Prowse (Am Econ Rev 102(1):469–503, 2012) has been characterized as satisfying this requirement, and the task is increasingly used to investigate the response to incentives. However, a between-subject examination of the slider task’s response to incentives has not been conducted. We provide such an examination with three different piece-rate incentives: half a cent, two cents, and eight cents per slider completed. We find only a small increase in performance: despite a 1500 % increase in the incentives, output only increases by 5 %. With such an inelastic response we caution that for typical experimental sample sizes and incentives the slider task is unlikely to demonstrate a meaningful and statistically significant performance response.
In this project, we manipulate the public observability of forecasts and outcomes of a physical task. We explore how these manipulations affect overconfidence (OC). Participants in the experiment are asked to hold a weight after predicting how long they think they could do it for. Comparing the prediction and outcome times (in seconds) yields a measure of OC. We independently vary two dimensions of public observability (of the outcome and of the prediction). Additionally, we manipulate incentives to come up with an accurate prediction. This design allows us to shed light on the mechanism behind male and female OC. Following the existing literature, we formulate several hypotheses regarding the differences in predictions and outcomes for males and females in the presence of the public observability of predictions and outcomes. Our experimental data do not provide support to most of the hypotheses: in particular, there is no evidence of a gender gap in overconfidence. The most robust finding that emerges from our results is that incentives on making correct predictions increase participants’ forecasts on their own performance (by about 24%) and their actual performance as well, but to a lower extent (by about 8%); in addition, incentives to predict correctly in fact increase error for females (by about 33%).
We study the robustness of Krupka and Weber's method (2013) for eliciting social norms. In two online experiments with more than 1200 participants on Amazon Mechanical Turk, we find that participants’ response patterns are invariant to differences in the salience of the monetarily incentivized coordination aspect. We further demonstrate that asking participants for their personal first- and second-order beliefs without monetary incentives results in qualitatively identical responses in the case that beliefs and social norms are well aligned. Overall, Krupka and Weber's method produces remarkably robust response patterns.
This article replicates an experiment by Coffman et al. (Manag Sci 67(6):3551–3569, 2021) who separated taste-based and statistical discrimination by comparing employer choices in one of two hiring environments (treatments). Both treatments were characterized by the same ability distributions of workers in tasks on which men are found to outperform women on average, but only one allowed for gender-specific considerations. We found statistical discrimination against women when they are presented to employers not as women, but as people belonging to a low-performance group, but discrimination in their favor when their gender is revealed to potential employers. This discrimination in favor of women was observed in both male and female employers. It was greater when employers were women and disappeared when monetary incentives to employ more productive workers were higher for employers.
Chapter 6 examines an alternative strategy for increasing the chances of winning in contests, namely sabotage. The chapter provides examples of sabotage in various contexts such as the Luddite movement, the workplace, and political campaigns. It delves into the rational motives for sabotage and studies the determinants of such actions and the individuals or groups that are more likely to be targeted. Contests highly responsive to efforts may create a significant incentive for sabotage, leading to a trade-off between meritocracy and sabotage.
Under closed-list proportional representation, a party's electoral list determines the order in which legislative seats are allocated to candidates. When candidates differ in their ability, parties face a trade-off between competence and incentives. Ranking candidates in decreasing order of competence ensures that elected politicians are most competent. Yet, party lists create incentives for candidates that may lead parties not to place their best candidates at the top of the list. We examine this trade-off in a game-theoretical model in which parties rank their candidates on a list, candidates choose their campaign effort, and the election is a team contest for multiple prizes. We analyze how the candidates’ objectives, voters’ attention and media coverage, incumbency, the number of parties competing in the election, and the electoral environment influence how parties rank candidates.
Recent meta-analyses suggest that certain drugs act as cognitive enhancers and can increase attentional investment and performance even for healthy adults. The current review examines the potential of behavioral economics enhancers (BEEs) for similarly improving cognitive performance and judgments. Traditionally, behavioral economics theory has adopted a skeptical approach regarding the notion of whether individuals can overcome judgment biases through variables that increase cognitive effort. We focus mostly on the effects of two BEEs: incentivization and losses. Summarizing results from different meta-analyses, we find a small but robust positive effect size for BEEs, with comparable effect sizes to those found in studies of pharmacological cognitive enhancers.
Scholars of International Organizations (IOs) increasingly use elite surveys to study the preferences and decisions of policymakers. When designing these surveys, one central concern is low statistical power, because respondents are typically recruited from a small and inaccessible population. However, much of what we know about how to incentivize elites to participate in surveys is based on anecdotal reflections, rather than systematic evidence on which incentives work best. In this article, we study the efficacy of three incentives in a preregistered experiment with World Bank staff. These incentives were the chance to win an Amazon voucher, a donation made to a relevant charity, and a promise to provide a detailed report on the findings. We find that no incentive outperformed the control group, and the monetary incentive decreased the number of respondents on average by one-third compared to the control group (from around 8% to around 5%).
The constructs of motivation (or needs, motives, etc.) to explain higher-order behavior have burgeoned in psychology. In this article, we critically evaluate such high-level motivation constructs that many researchers define as causal determinants of behavior. We identify a fundamental issue with this predominant view of motivation, which we called the black-box problem. Specifically, high-level motivation constructs have been considered as causally instigating a wide range of higher-order behavior, but this does not explain what they actually are or how behavioral tendencies are generated. The black box problem inevitably makes the construct ill-defined and jeopardizes its theoretical status. To address the problem, we discuss the importance of mental computational processes underlying motivated behavior. Critically, from this perspective, motivation is not a unitary construct that causes a wide range of higher-order behavior --- it is an emergent property that people construe through the regularities of subjective experiences and behavior. The proposed perspective opens new avenues for future theoretical development, i.e., the examination of how motivated behavior is realized through mental computational processes.
The Global Financial Crisis of 2007–2008 has elicited various debates, ranging from ethics over the stability of the banking system to subtle technical issues regarding the Gaussian and other copulas. We want to look at the crisis from a particular perspective. Credit derivatives have much in common with treaty reinsurance, including risk transfer via pooling and layering, scarce data, skewed distributions, and a limited number of specialised players in the market. This leads to a special mixture of mathematical/statistical and behavioural challenges. Reinsurers have been struggling to cope with these, not always successfully, but they have learned some lessons over the course of more than one century in business. This has led to certain rules being adopted by the reinsurance market and to a certain mindset being adopted by the individuals working in the industry. Some cultures established in the reinsurance world could possibly inspire markets like the credit derivatives market, but the subtle differences between the two worlds matter. We will see that traditional reinsurance has built-in incentives for (some) fairness, while securitisation can foster opportunism.
This Element examines economic perspectives on improving quality and safety in healthcare. Though competition is generally recognised by economists as an important driver of improvement, it may not work so straightforwardly in healthcare – in part because some services are provided by very few organisations, but also because people are not always easily able to judge healthcare quality and rarely have to pay the full price for services. Different approaches for stimulating improvement are therefore needed, and the authors look at examples from the care home, primary care, and hospital sectors. They emphasise the need for economic evaluation of improvement efforts, based on the principle that improvement activities should only be undertaken if the benefits are worth at least the costs of implementing and running them. Using examples, they explain the economic approach to evaluating how benefits and costs of improvement efforts can be compared by applying cost-effectiveness analysis. This title is also available as Open Access on Cambridge Core.
This commentary highlights the scientific history of the NIH-Moderna COVID-19 vaccine and corroborates Sarpatwari’s theme of private capture of value created by the public. The commentary also identifies missteps by the Trump and Biden Administrations and offers policy recommendations: better contracts with and incentives for pharmaceutical manufacturers and a not-for-profit “public option” for pharmaceutical development.
As scholars and activists seek to define and promote greater corporate political responsibility (CPR), they will benefit from understanding practitioner perspectives and how executives are responding to rising scrutiny of their political influences, reputational risk and pressure from employees, customers and investors to get involved in civic, political, and societal issues. This chapter draws on firsthand conversations with practitioners, including executives in government affairs; sustainability; senior leadership; and diversity, equity and inclusion, during the launch of a university-based CPR initiative. I summarize practitioner motivations, interests, barriers and challenges related to engaging in conversations about CPR, as well as committing or acting to improve CPR. Following the summary, I present implications for further research and several possible paths forward, including leveraging practitioners’ value on accountability, sustaining external calls for transparency, strengthening awareness of systems, and reframing CPR as part of a larger dialogue around society’s “social contract.”
This chapter deals with two other sets of generic institutional issues: state capacity and property rights. Both have received a growing attention by economists. They are probed here in the light of our six case studies and, occasionally, other countries’ experiences. The discussion of state capacity is articulated around three major issues: bureaucratic failures, inadequate incentives and professional norms (e.g., in the education sector), and ineffectiveness of the judiciary. Beyond technical and organisational aspects, politics also plays a major role in the three areas. The money needed to maintain support to clientelist or crony regimes is often obtained in exchange of favours to big business, through embezzled state budgets and kickbacks implicitly allowed at all levels of the bureaucracy. They strongly diminish state capacity. The discussion of property rights distinguishes between rights over business assets and rights over land, the latter being especially important in countries where a large proportion of the population depends on agriculture. Special attention is brought to what we call the ‘maze’ of land laws, as observed in many developing countries.
This chapter describes the theories of Clark Hull, who had an enormous influence on American psychology from the time he first wrote about - and reinterpreted - Pavlovs work in the early 1930s to well into the 1960s. Hulls ambition was to develop a general theory of learning and motivation based on the development of habits - as studied mainly in rats - that would provide psychology with the equivalent of Newtons contribution to physics. His vision inspired some of the brightest and most productive researchers into animal learning in the 1950s and 1960s. Important topics that the neo-Hullians studied included the partial reinforcement extinction effect and conditioning of visceral responses.
The Rhino Bond is the first financial instrument dedicated to protecting a species. The Bond allows investors to invest in the conservation of the black rhinoceros Diceros bicornis, with the amount of money returned by the investment depending on whether rhinoceros numbers increase (and by how much). In this paper we focus on how the Bond was brought into being. We draw on an analysis of organizational reports along with data collected from interviews with key informants to investigate the roles of the various stakeholders in the Bond, how species and sites were selected, the motivations and experiences of the stakeholders and the involvement of stakeholders in decision-making. We found that although conservation actors are attracted by the potential for new funding, they have experienced challenges navigating complex financial instruments. The needs of financial actors often dictated decision-making, with implications for the species and sites chosen for the Bond. As profits are tied to an increase in population size of a specific species (which needs to be monitored), the instrument has favoured large and easily counted species and populations. Only some sites were able to meet the stringent conditions of financial instruments, including metrics on financial sustainability. We argue that the dominance of financial principles and motives means that not all species or sites will be viable candidates for investment and that conservation finance should not be seen as a panacea.
Multiple strategies can be used to influence individual decisions. A common assumption is that a lack of information, an information deficit, leads to poor decisions. While that is sometimes true, since decisions are shaped by both facts and values, providing information is often insufficient to change decision-making. The rational actor model suggests that changing incentives, and in particular changing prices, will shift decisions. Incentives matter, but they are only one factor in decisions and shifting incentives can be inequitable. Values are difficult to change but have broad and long-lasting influence on decisions. Norms are relatively easy to change and can have substantial influence. Design principles, generalizations from research on decision-making, can help shape effective efforts to influence decisions. Policies and programs should be designed with the consent of and in collaboration with those who may be impacted by the decision.
A free world is one in which human beings can live free, self-directed lives. A great obstacle to such a world is severe poverty, still blighting the lives of half of humankind. We have the resources, technologies, and administrative capacities to eradicate severe poverty, but doing so requires some restructuring of existing social arrangements. We might begin with the current regime governing innovation, which has monopoly markups as its key funding source. Such monopoly rents encourage the quest for innovations, but also greatly impede their diffusion. This headwind harms the poor, who cannot afford monopoly prices and whose specific needs innovators thus tend to ignore. It also works against potential innovations whose benefits would mostly go to third parties whom buyers care little about. Both problems can be much alleviated through a supplementary alternative reward mechanism that would enable innovators to exchange their monopoly privileges on any patentable technology for impact rewards based on the social benefits achieved with it. By promoting innovations and their diffusion together, international impact funds would bring substantial gains in justice and cost-effectiveness, especially in the pharmaceutical and green-technology sectors.
Joan Costa-Font, London School of Economics and Political Science,Tony Hockley, London School of Economics and Political Science,Caroline Rudisill, University of South Carolina
This chapter focuses on how patients use health-care services. It addresses screening and medication adherence, vaccination (including COVID-19), and self-management of chronic diseases. The realities of health-care decision-making include both direct and opportunity costs (e.g. time it takes for screening, preparing for screening, side effects).This chapter begins with the biases that influence patients’ decisions about healthcare use including preventative care and self-management. Then, with an understanding of how these biases emerge in many contexts, the chapter discusses tools from behavioural economics that could help. Finally, the chapter goes through several examples where we know something about how behavioural economics can help (or not!).