Using Behavioral Insights For a Better Understanding of Economic Decisions (Regarding Savings, Inequality and Dishonesty)

This dissertation consists of three essays on behavioral economics, with a general aim of enriching our understanding of economic decisions using behavioral insights and experimental methodology. Each essay takes on one particular topic with this general aim.

The first chapter studies savings behavior of the poor. In this project, partnering with a savings product provider in Kenya, we tested the extent to which behavioral interventions and financial incentives can increase the saving rate of individuals with low and irregular income. Our experiment lasted for six months and included a total of twelve conditions. The control condition received weekly reminders and balance reporting via text messages. The treatment conditions received in addition one of the following interventions: (1) reminder text messages framed as if they came from the participant’s kid (2) a golden colored coin with numbers for each week of the trial, on which participants were asked to keep track of their weekly deposits (3) a match of weekly savings: The match was either 10% or 20% up to a certain amount per week. The match was either deposited at the end of each week or the highest possible match was deposited at the start of each week and was adjusted at the end. Among these interventions, by far the most effective was the coin: Those in the coin condition saved on average the highest amount and more than twice as those in the control condition. We hypothesize that being a tangible track-keeping object; the coin made subjects remember to save more often. Our results support the line of literature suggesting that saving decisions involve psychological aspects and that policy makers and product designers should take these influences into account.

The second chapter is related to views towards inequality. In this project, we investigate how the perceived fairness of income distributions depends on the beliefs about the process that generated the inequality. Specifically, we examine how two crucial features of this process affect fairness views: (1) Procedural justice - equal treatment of all, (2) Agency - one's ability to determine his/her income. We do this in a lab experiment by varying the equality of opportunity (procedural justice), and one's ability to make choices, which consequently influence subjects’ ability to influence their income (agency). We then elicit ex-post redistribution decisions of the earnings as a function of these two elements. Our results suggest both agency and procedural justice matter for fairness. Our main findings can be summarized as follows: (1) Highlighting the importance of agency, we find that inequality resulting from risk is considered to be fair only when risk is chosen freely; (2) Highlighting the importance of procedural justice, we find that introducing inequality of opportunity significantly increases redistribution, however the share of subjects redistributing none remain close to the share of subjects redistributing fully revealing an underlying heterogeneity in the population about how fairness views should account for inequality of opportunity.

The third chapter is on morality. In this project, we study whether religious rituals act as an internal reminder for basic moral principles and thus affect moral judgments. To this end, we conducted two survey experiments in Turkey and Israel to specifically test the effect of Ramadan and Yom Kippur. The results from the Turkish sample how that Ramadan has a significant effect on moral judgments to some extent for those who report to believe in God. Those who believe in God judged the moral acceptability of ten out of sixty one actions significantly differently in Ramadan, whereas those who reported not to believe in God significantly changed their judgments only for one action in Ramadan. Our results extends the hypothesis established by lab experiments that religious reminders have a significant effect on morality, by testing it in the field in the natural environment of religious rituals.

This thesis is part of a broader collaborative research agenda with both colleagues and advisors. The programming, analyses, and writing, as well as any errors in this work, are my own.

Adapting Behavioral Parent Training as an Interactive Computer Game

Behavioral Parent Training (BPT) is a well-established therapy that reduces child externalized behaviors and parent stress. Although BPT was originally developed for parents of children with defiant behaviors, the program’s key concepts are relevant to parenting all children. Since parents might not fully utilize BPT due to cost and program location, we created an online game as a low-cost, easily accessible alternative or complement to BPT. We tested the game with nineteen undergraduate students at the University of Maryland. The experimental group completed pretest survey on core BPT knowledge, played the game, and completed a BPT posttest, while the control group completed a pretest and posttest survey over a three week period. Participants in the experimental group also completed a survey to indicate their satisfaction with the overall program. The experimental group demonstrated significantly higher levels of BPT knowledge than the control group and high levels of satisfaction. This suggests that an interactive, online BPT platform is an engaging and accessible way for parents to learn key concepts.

Psychological bonds and their impact on behavioral loyalty in auditor-client relationships

Purpose – The purpose of this paper is to examine the effect of the psychological bond on behavioral loyalty (word-of-mouth, continuance and non-audit services) to audit firms providing services to companies listed on the Polish Stock Exchange. Design/methodology/approach – A model is proposed and tested using structural equation modeling with LISREL. Data were collected from top executives of companies listed on the Warsaw Stock Exchange. Findings – The psychological bond has a positive effect on word-of-mouth, continuance and non-audit services. Research limitations/implications – The current research is limited to the investigation of the psychological bond as an antecedent of behavioral loyalty in Poland. Future research should identify and assess other antecedents and replicate these across different countries. A longitudinal survey across different points in time might reveal more useful information about auditor-client relationships. Practical implications – Auditors need to consider ways in which they can develop the psychological bond with their clients. This bond is the basis for the client believing the audit firm is superior to others, which has been found to lead to behavioral loyalty in this study. In particular, management of the auditor brand and reputation, personal experience of the audit firm and alumni relations are discussed as ways of enhancing the psychological bond among client executives. Originality/value – This study is the first to examine the impact of the psychological bond on behavioral loyalty in auditor-client relationships.

Reactivity of Inorganic Mn and Mn Desferrioxamine B with O2, O2–, and H2O2 in Seawater

Manganese (Mn) is a required element for oceanic phytoplankton as it plays a critical role in photosynthesis, through its unique redox chemistry, as the active site in photosystem II, and in enzymes that act as defenses against reactive oxygen species (ROS), most notably for protection against superoxide (O2?), through the action of superoxide dismutase (SOD), and against hydrogen peroxide (H2O2) via peroxidases and catalases. The distribution and redox speciation of Mn in the ocean is also apparently controlled by reactions with ROS. Here we examine the connections between ROS and dissolved Mn species in the upper ocean using field and laboratory experimental data. Our results suggest it is unlikely that significant concentrations of Mn(III) are produced in the euphotic zone, as in the absence of evidence for the existence of strong Mn(III) ligands, Mn(II) reacts with O2? to form the short-lived transient manganous superoxide, MnO2+, which may react rapidly with other redox species in a manner similar to O2?. Experiments with the strong Mn(III) chelator, desferrioxamine B (DFB), in seawater indicated that the Mn(III) species are unlikely to form, as formation of the precursor Mn(II) complex is hindered due to the stability of the Ca complex with DFB.

Shark personalities? Repeatability of social network traits in a widely distributed predatory fish. Behavioral Ecology and Sociobiology, 68, 1995-2003.

Interest in animal personalities has generated a burgeoning literature on repeatability in individual traits such as boldness or exploration through time or across different contexts. Yet, repeatability can be influenced by the interactive social strategies of individuals, for example, consistent inter-individual variation in aggression is well documented. Previous work has largely focused on the social aspects of repeatability in animal behaviour by testing individuals in dyadic pairings. Under natural conditions, individuals interact in a heterogeneous polyadic network. However, the extent to which there is repeatability of social traits at this higher order network level remains unknown. Here, we provide the first empirical evidence of consistent and repeatable animal social networks. Using a model species of shark, a taxonomic group in which repeatability in behaviour has yet to be described, we repeatedly quantified the social networks of ten independent shark groups across different habitats, testing repeatability in individual network position under changing environments. To understand better the mechanisms behind repeatable social behaviour, we also explored the coupling between individual preferences for specific group sizes and social network position. We quantify repeatability in sharks by demonstrating that despite changes in aggregation measured at the group level, the social network position of individuals is consistent across treatments. Group size preferences were found to influence the social network position of individuals in small groups but less so for larger groups suggesting network structure, and thus, repeatability was driven by social preference over aggregation tendency.