Daniel Navarro-Martinez

There is growing concern about the extent to which economic games played in the laboratory generalize to social behaviors outside the lab. Here, we show that it is possible to make a game much more predictive of field behavior by bringing contextual elements from the field to the lab. We report three experiments where we present the same participants with different versions of the dictator game and with two different field situations. The games are designed to include elements that make them progressively more similar to the field. We find a dramatic increase in lab–field correlations as contextual elements are incorporated, which has wide-ranging implications for experiments on economic decision making.

Previous literature and conventional wisdom have led researchers to believe that boredom increases economic risk taking, but the evidence in support of this conclusion is limited and has important shortcomings. In four experiments (including more than 1,300 subjects), we systematically studied the effects of boredom on economic risk preferences. Across different risk elicitation tasks, boredom inductions, incentive schemes, subject pools, and using both reduced form and structural analyses, we consistently failed to find an effect of boredom on risky decisions. Our results disprove that boredom leads to even small increments in risk taking in one-shot elicitation tasks, and small to medium increases in multiple-choice elicitations. These findings question an important established belief, contribute to better understand the consequences of boredom, and have substantive implications for experiments on economic decision making.

Previous research has focused on studying the endowment effect for transactions that take place in the present. Many real-world transactions, however, are delayed into the future (i.e., people agree to buy or sell, but the actual transaction does not materialize until a later time). Here we investigate how transaction timing affects the endowment effect. In five studies, we show that the endowment effect systematically increases as transactions are delayed into the future. Specifically, buying prices significantly decrease as the transaction is delayed, while selling prices remain constant, resulting in an amplified endowment effect (Experiment 1). This pattern is not produced by a discounting of the money involved in the transaction (Experiment 2), and it holds across different types of items (Experiment 3). We also show that the phenomenon cannot be explained by sellers anticipating becoming increasingly attached to the items over time (Experiment 4). Finally, we demonstrate that this increased endowment effect in the future holds in the field, in the context of a real market and with real transactions (Experiment 5).

Pay what you want (PWYW) is a relatively new and promising pricing mechanism, where consumers have full control over the price they pay. It can potentially increase profits, but its practical applications have produced mixed results. The time of payment, and its implications for consumer uncertainty, might constitute an important determinant of the profitability of such pricing schemes for service providers. A large field experiment conducted in conventional and fast-food restaurants provides initial support that paying after consumption increases PWYW amounts. A laboratory study then details the underlying psychological process; payments after consumption help resolve uncertainty about the service process and service outcome. Another study affirms these insights and further shows that PWYW after consumption, compared with fixed pricing, can increase profitability due to enhanced service capacity utilization. By detailing how timing and uncertainty reduction affect consumers’ chosen payments, this article contributes to PWYW research in particular, as well as more general literature pertaining to the dynamics that affect consumers’ service experiences and service pricing studies.

We present a lab-field experiment designed to systematically assess the external validity of social preferences elicited in a variety of experimental games. We do this by comparing behavior in the different games with several behaviors elicited in the field and with self-reported behaviors exhibited in the past, using the same sample of participants. Our results show that the experimental social preference games do a poor job explaining both social behaviors in the field and social behaviors from the past. We also include a systematic review and meta-analysis of previous literature on the external validity of social preference games.Data are available at https://doi.org/10.1287/mnsc.2017.2908 .This paper was accepted by John List, behavioral economics.

We build a satisficing model of choice under risk which embeds Expected Utility Theory (EUT) into a boundedly rational deliberation process. The decision maker accumulates evidence for and against alternative options by repeatedly sampling from her underlying set of EU preferences until the evidence favouring one option satisfies her desired level of confidence. Despite its EUT core, the model produces patterns of behaviour that violate standard EUT axioms, while at the same time capturing systematic relationships between choice probabilities, response times and confidence judgments, which are beyond the scope of theories that do not take deliberation into account.