Can informing people of high rates of community support for social distancing encourage them to do more of it? Our Mozambican study population underestimated the rate of community support for social distancing, believing support to be only 69%, while the true share was 98%. In theory, informing people of high rates of community support has ambiguous effects on social distancing, depending on whether a perceived-infectiousness effect dominates a free-riding effect. We randomly assigned a "social norm correction" treatment, informing people of true high rates of community support for social distancing. We examine an improved measure of social distancing combining detailed self-reports with reports on the respondent by others in the community. The treatment increases social distancing where COVID-19 case loads are high (where the perceived-infectiousness effect dominates), but decreases it where case loads are low (where free-riding dominates). Separately, randomized local-leader endorsements of social distancing are ineffective. As COVID-19 case loads continue to rise, interventions such as the social norm correction treatment should show increased effectiveness at promoting social distancing.
We combine survey responses, network data, and medical records in order to examine how friends affect the decision to get vaccinated against influenza. The random assignment of undergraduates to residential halls at a large private university generates exogenous variation in exposure to the vaccine, enabling us to credibly identify social effects. We find evidence of positive peer influences on health beliefs and vaccination choices. In addition, we develop a novel procedure to distinguish between different forms of social effects. Most of the impact of friends on immunization behavior is attributable to social learning about the medical benefits of the vaccine.
This paper uses a microfinance field experiment in two Lima shantytowns to measure the relative importance of social networks and prices for borrowing. Our design randomizes the interest rate on loans provided by a microfinance agency, as a function of the social distance between the borrower and the cosigner. This design effectively varies the relative price (interest rate differential) of having a direct friend versus an indirect friend as a cosigner. After loans are processed, a second randomization relieves some cosigners from their responsibility. These experiments yield three main results. (1) As emphasized by sociologists, connections are highly valuable: having a friend cosigner is equivalent to 18 per cent of the face value of a 6 month loan. (2) While networks are important, agents do respond to price incentives and switch to a non-friend cosigner when the interest differential is large. (3) Relieving responsibility of the cosigner reduces repayment for direct friends but has no effect otherwise, suggesting that different social mechanisms operate between friends and strangers: Non-friends cosign known high types, while friends also accept low types because of social collateral or altruism.
Stylized evidence suggests that people process information about their own ability in a biased manner. We provide a precise characterization of the nature and extent of these biases. We directly elicit experimental subjects’ beliefs about their relative performance on an IQ quiz and track the evolution of these beliefs in response to noisy feedback. Our main result is that subjects update as if they misinterpret the information content of signals, but then process these misinterpreted signals like Bayesians. Specifically, they are asymmetric, over-weighting positive feedback relative to negative, and conservative, updating too little in response to both positive and negative feedback. These biases are substantially less pronounced in a placebo experiment where ego is not at stake, suggesting they are motivated rather than cognitive. Consistent with Bayes’ rule, on the other hand, updating is invariant to priors (and over time) and priors are sufficient statistics for past information. Based on these findings, we build a model that theoretically derives the optimal bias of a decision-maker with ego utility and show that it naturally gives rise to both asymmetry and conservatism as complementary strategies in self-confidence management.
I study finite two player normal form games where player 2 (the ‘follower’) can observe the move of player 1 (the ‘leader’) by paying a small cost. I characterize the limit set of perfect equilibria of this game as the cost of information converges to zero and provide a simple algorithm for constructing it. Limit equilibria have the following properties: (a) both players choose pure strategies; (b) the follower plays a best response; (c) even though the set of limit equilibria always contains the Stackelberg equilibrium it can contain strategy profiles which are not even Nash equilibria of the normal form game. In fact, the follower will only purchase information in the Stackelberg equilibrium if the Stackelberg equilibrium is not a Nash equilibrium. Similar to Yariv and Solan (2004), the subgame perfect solution concept is therefore not robust to the introduction of small information costs. The Stackelberg equilibrium only reemerges as the unique limit equilibrium if we allow for the possibility that the leader is irrational. I test the theory experimentally using the classic Battle of the Sexes game with information acquisition. I find that subjects coordinate on the Stackelberg equilibrium and purchase information which can only be reconciled with theoretical predictions if it is common knowledge amongst subjects that the leader can be irrational.
We study the formation of social capital in an environment where specialized agents have frequent diverse needs. This limits the potential of purely bilateral cooperation because the interaction frequency between any two particular agents is low. Such interactions usually invite defection by both sides unless agents are altruistic, or there exist information aggregation institutions that facilitate the use of group punishments. In a companion paper Gentzkow and Mobius (2002) develop a theory of how agents can cooperate even in a limited information environment as long as they can relay requests for help. This mechanism creates networks with long-term relationships which are continuously recombined to satisfy short-term needs. We test the theoretical predictions by conducting an experiment with two treatments: in the first treatment, agents can only utilize direct ‘favors’ while the second treatment adds the ability to provide indirect ‘favors’ as well. Our results help us understand how agents form and sustain weak links.
Historically, commodity money preceded fiat money. Standard search-theoretical models of money such as Kiyotaki and Wright (1989) cannot explain this transition because of multiple equilibria: a small infusion of fiat money with superior intrinsic characteristics into a commodity money equilibrium is always valued if agents believe in its acceptability. We propose a natural extension of the standard model in order to break this indeterminacy. We assume (1) that agents derive positive utility from consuming even non-favorite commodities and (2) that agents have to consume regularly. We find that agents accept only commodity money if search frictions are large. Fiat money can become valuable in sufficiently advanced economies with small search frictions.