Working Papers


Avoiding the Cost of Your Conscience: Belief-Dependent Preferences and Information Acquisition. R&R Experimental Economics (with Claire Rimbaud). [pdf]

Pro-social individuals face a trade-off between their monetary and moral motives. Hence, they may be tempted to exploit the uncertainty in their decision environment in order to reconcile this trade-off. In this paper, we investigate whether individuals with belief-dependent preferences avoid the monetary cost of behaving according to their moral standards by strategically acquiring information about others’ expectations. We test the predictions of an information acquisition model in an online experiment. We use a modified trust-game in which we introduce uncertainty about the second movers’ beliefs about first-movers’ expectations. Our design enables to (i) identify participants with belief-based preferences and (ii) investigate their information acquisition strategy.Consistent with our predictions of subjective preferences, we find that most individuals classified as belief-dependent strategically select their source of information to avoid the cost of their conscience.


Competitive vs. Random Audit Mechanisms: Regulatory Performance and the Role of Peer Information. Conditionally accepted at Journal of the Association of Environmental and Resource Economists (with Timo Goeschl and Marcel Oestreich). [pdf]

In a simplifying analytical framework with endogenous levels of actual and self-reported activity, we consolidate the existing literature into three main hypotheses about the relative merits, for a resource-constrained regulator, of random (RAM) and competitive (CAM) audit mechanisms in the presence or absence of peer information about activity levels. Testing the three hypotheses in a quasi-laboratory experiment (N = 131), we find supportive evidence that CAM always induce more truthful reporting than RAM. Moreover, we provide the empirical validation of the theoretical prediction that CAM can succeed in aligning activity levels more closely with the social optimum in the presence of peer information when RAM cannot. Behavioral mechanisms prevent reaching the first-best outcome.


Publications


Soldà, Alice, Changxia Ke, William von Hippel, and Lionel Page (2021). "Absolute Versus Relative Success: Why Overconfidence Creates an Inefficient Equilibrium." Psychological Science. [pdf][Appendix]

Overconfidence is one of the most ubiquitous biases in the social sciences, but the evidence regarding its overall costs and benefits is mixed. To test the possibility that overconfidence might yield important relative benefits that offset its absolute costs, we conducted an experiment (N=298 university students) in which pairs of participants bargain over the unequal allocation of a prize that was earned via a joint effort. We manipulated confidence using a binary noisy signal to investigate the causal effect of negotiators’ beliefs about their relative contribution on the outcome of the negotiation. Our results provide evidence that high levels of confidence lead to relative benefits (how much one earns compared to one’s partner) but absolute costs (how much money one receives overall). These results suggest that overconfidence creates an inefficient equilibrium whereby overconfident negotiators benefit over their partners even as they bring about joint losses.


Soldà, Alice, and Marie Claire Villeval (2020). "Exclusion and Reintegration in a Social Dilemma." Economic Inquiry, 58(1), 120-149. [pdf]

Using a social dilemma game, we study the cooperative behavior of individuals who reintegrate their group after being excluded by their peers. We manipulate the length of exclusion and whether this length is imposed exogenously or results from a vote. We show that people are willing to exclude the least cooperators and they punish more, and more severely, chronic defections. In return, a longer exclusion has a higher disciplining effect on cooperation after reintegration, but only when the length of exclusion is not chosen by group members. Its relative disciplining effect on cooperation after reintegration is smaller when the length of exclusion results from a vote. In this environment, a quicker reintegration also limits retaliation. The difference in the impact of long versus short exclusion on retaliation is larger when the length of exclusion is chosen by group members than when it is exogenous. Post‐reintegration cooperation and forgiveness depend not only on the length of exclusion but also on the perceived intentions of others when they punish.


Soldà, Alice, Changxia Ke, Lionel Page, and William von Hippel (2019). "Strategically Delusional." Experimental Economics. 1-28. [pdf] [online Appendix]

We aim to test the hypothesis that overconfidence arises as a strategy to influence others in social interactions. To address this question, we design an experiment in which participants are incentivized either to form accurate beliefs about their performance at a test, or to convince a group of other participants that they performed well. We also vary participants’ ability to gather information about their performance. Our results show that participants are more likely to (1) overestimate their performance when they anticipate that they will try to persuade others and (2) bias their information search in a manner conducive to receiving more positive feedback, when given the chance to do so. In addition, we also find suggestive evidence that this increase in confidence has a positive effect on participants’ persuasiveness.



Work in Progress

Confidence, Demand for Information and Responsiveness to Feedback. (single authored).

Overconfidence and Deterrence in Contests. (with Si Chen).

Keeping Promises: The effect of Credibility on Cooperation in Social Dilemmas. (with Timo Goeschl).

Overconfidence, Inequality and Leadership Striving. (with Changxia Ke, Lionel Page, and William von Hippel).

Air Pollution, Motivated Reasoning and Perceived Control: Evidence from an Experiment in India. (with Anca Balietti, Angelika Budjan and Tillmann Eymess).

Playing Dumb: The Effect of Information Complexity on Attitudes Towards Information. (with Claire Rimbaud).

Centralized versus decentralized enforcement mechanisms under imperfect monitoring: Impacts on compliance in a public good game. (with Timo Goeschl and Beatriz Haberl).



Miscellaneous

Keeping Up Appearances and Willful Ignorance, Psychology Today

Why Overconfidence Is So Common and So Costly, Psychology Today

Deceiving Yourself to Better Deceive Others, behavioraleconomics.com