This article surveys the use of nonparametric permutation tests for analyzing experimental data. The permutation approach, which involves randomizing or permuting features of the observed data, is a flexible way to draw statistical inferences in common experimental settings. It is particularly valuable when few independent observations are available, a frequent occurrence in controlled experiments in economics and other social sciences. The permutation method constitutes a comprehensive approach to statistical inference. In two-treatment testing, permutation concepts underlie popular rank-based tests, like the Wilcoxon and Mann-Whitney tests. But permutation reasoning is not limited to ordinal contexts. Analogous tests can be constructed from the permutation of measured observations-as opposed to rank-transformed observations-and we argue that these tests should often be preferred. Permutation tests can also be used with multiple treatments, with ordered hypothesized effects, and with complex data-structures, such as hypothesis testing in the presence of nuisance variables. Drawing examples from the experimental economics literature, we illustrate how permutation testing solves common challenges. Our aim is to help experimenters move beyond the handful of overused tests in play today and to instead see permutation testing as a flexible framework for statistical inference.

This paper is concerned with multi-object, multi-unit auctions with a budget constrained auctioneer who has noisy value estimates for each object. We propose a new allocation mechanism, the , with two key features. First, bids are normalized across objects using "reference prices." Second, reference prices are set endogenously using information extracted from the bids submitted. We report on an experiment showing that a simple endogenous process mitigates value inaccuracies and improves three performance measures: the seller's profit, allocative efficiency and total surplus. These results have important implications for large auctions used in practice.

We present experimental evidence for decision settings where public good providers compete for rewards which are donations (transfers) offered by outside donors. Donors receive benefits from public good provision but cannot provide the good themselves. The performance of three competition mechanisms is examined in relation to the level of public good provision and transfers offered by donors. In addition to a contest where transfers received by public good providers are proportional to effort, we study two contests with exclusion from transfers, namely a winner-takes-all and a loser-gets-nothing. We compare behavior in these three decision settings to the default setting of no-contest (no-transfers). Results for this novel decision environment with endogenous transfers show that donors offer transfers (contest prizes) at similar levels across contests and contributions to the public good are not significantly different in the three contests settings, but are consistently and significantly higher in all contests compared to the setting with no-transfers. Initially, the winner-takes-all setting leads to a significantly higher increase in public good contributions compared to the other two contests; but this difference diminishes across decision rounds.

With the rise of experimental research in the social sciences, numerous methods to elicit and classify people's risk attitudes in the laboratory have evolved. However, evidence suggests that attitudes towards risk may vary considerably when measured with different methods. Based on a within-subject experimental design using four widespread risk preference elicitation tasks, we find that the different methods indeed give rise to considerably varying estimates of individual and aggregate level risk preferences. Conducting simulation exercises to obtain benchmarks for subjects' behavior, we find that the observed heterogeneity in risk preference estimates across methods is qualitatively similar to the heterogeneity arising from independent random draws from the choice distributions observed in the experiment. Our study, however, provides evidence that subjects are surprisingly well aware of the variation in the riskiness of their choices. We argue that this calls into question the common interpretation of variation in revealed risk preferences as being inconsistent.

The COVID-19 pandemic presents a remarkable opportunity to put to work all of the research that has been undertaken in past decades on the elicitation and structural estimation of subjective belief distributions as well as preferences over atemporal risk, patience, and intertemporal risk. As contributors to elements of that research in laboratories and the field, we drew together those methods and applied them to an online, incentivized experiment in the United States. We have two major findings. First, the atemporal risk premium during the COVID-19 pandemic appeared to change significantly compared to before the pandemic, consistent with theoretical results of the effect of increased background risk on foreground risk attitudes. Second, subjective beliefs about the cumulative level of deaths evolved dramatically over the period between May and November 2020, a volatile one in terms of the background evolution of the pandemic.

We experimentally study competitive markets with socially responsible production. Our main focus is on the producers' decision whether or not to reveal the degree of social responsibility of their product. Compared to two benchmark cases where either full transparency is enforced or no disclosure is possible, we show that voluntary and costless disclosure comes close to the full transparency benchmark. However, when the informational content of disclosure is imperfect, social responsibility in the market is significantly lower than under full transparency. Our results highlight an important role for transparent and standardized information about social externalities.

Has the COVID-19 pandemic affected pro-sociality among individuals? After the onset of the pandemic, many charitable appeals were updated to include a reference to COVID-19. Did donors increase their giving in response to such changes? In order to answer these questions, we conducted a real-donation online experiment with more than 4200 participants from 149 local areas in England and over 21 weeks. First, we varied the fundraising appeal to either include or exclude a reference to COVID-19. We found that including the reference to COVID-19 in the appeal increased donations. Second, in a natural experiment-like approach, we studied how the relative local severity of the pandemic and media coverage about local COVID-19 severity affected giving in our experiment. We found that both higher local severity and more related articles increased giving of participants in the respective areas. This holds for different specifications, including specifications with location fixed effects, time fixed effects, a broad set of individual characteristics to account for a potentially changing composition of the sample over time and to account for health- and work-related experiences with and expectations regarding the pandemic. While negative experiences with COVID-19 correlate negatively with giving, both approaches led us to conclude that the pure effect of increased salience of the pandemic on pro-sociality is positive. Despite the shift in public attention toward the domestic fight against the pandemic and away from developing countries' challenges, we found that preferences did not shift toward giving more to a national project and less to developing countries.

Widespread evidence from psychology and neuroscience documents that previous choices unconditionally increase the later desirability of chosen objects, even if those choices were uninformative. This is problematic for economists who use choice data to estimate latent preferences, demand functions, and social welfare. The evidence on this , however, exhibits serious shortcomings which prevent evaluating its possible relevance for economics. In this paper, we present a novel, parsimonious experimental design to test for the economic validity of the mere choice effect addressing these shortcomings. Our design uses well-defined, monetary lotteries, all decisions are incentivized, and we effectively randomize participants' initial choices without relying on deception. Results from a large, pre-registered online experiment find no support for the mere choice effect. Our results challenge conventional wisdom outside economics. The mere choice effect does not seem to be a concern for economics, at least in the domain of decision making under risk.

The Stochastic Becker-DeGroot-Marschak (SBDM) mechanism is a theoretically elegant way of eliciting incentive-compatible beliefs under a variety of risk preferences. However, the mechanism is complex and there is concern that some participants may misunderstand its incentive properties. We use a two-part design to evaluate the relationship between participants' probabilistic reasoning skills, task complexity, and belief elicitation. We first identify participants whose decision-making is consistent and inconsistent with probabilistic reasoning using a task in which non-Bayesian modes of decision-making lead to violations of stochastic dominance. We then elicit participants' beliefs in both easy and hard decision problems. Relative to Introspection, there is less variation in belief errors between easy and hard problems in the SBDM mechanism. However, there is a greater difference in belief errors between consistent and inconsistent participants. These results suggest that while the SBDM mechanism encourages individuals to think more carefully about beliefs, it is more sensitive to heterogeneity in probabilistic reasoning. In a follow-up experiment, we also identify participants with high and low fluid intelligence with a Raven task, and high and low proclivities for cognitive effort using an extended Cognitive Reflection Test. Although performance on these tasks strongly predict errors in both the SBDM mechanism and Introspection, there is no significant interaction effect between the elicitation mechanism and either ability or effort. Our results suggest that mechanism complexity is an important consideration when using elicitation mechanisms, and that participants' probabilistic reasoning is an important consideration when interpreting elicited beliefs.

Decision makers in positions of power often make unobserved choices under risk and uncertainty. In many cases, they face a trade-off between maximizing their own payoff and those of other individuals. What inferences are made in such instances about their choices when only outcomes are observable? We conduct two experiments that investigate whether outcomes are attributed to luck or choices. Decision makers choose between two investment options, where the more costly option has a higher chance of delivering a good outcome (that is, a higher payoff) for the group. We show that attribution biases exist in the evaluation of good outcomes. On average, good outcomes of decision makers are attributed more to luck as compared to bad outcomes. This asymmetry implies that decision makers get too little credit for their successes. The biases are exhibited by those individuals who make or would make the less prosocial choice for the group as decision makers, suggesting that a consensus effect may be shaping both the belief formation and updating processes.

Does social learning and subsequent private information processing differ depending on whether the observer shares the same group identity as the predecessor whose action is observed? In this paper, we conduct a lab experiment to answer this question, in which subjects first observe a social signal and then receive a private signal. We find that subjects put greater weights on the social signal if they share with the predecessor the same group identity that is induced in the experimental environment. We also provide suggestive evidence that such an ingroup-outgroup difference cannot be explained by individuals' beliefs of the predecessor's rationality. Moreover, heterogeneous effects of group identity exist in weights given to the subsequent private signal: Compared to when the predecessor is an outgroup, those who have learned from an ingroup predecessor put a greater (smaller) weight on the private signal if it contradicts (confirms) the social signal. We conjecture that such group effects are consistent with the perspective that group identity works as a framing device and brings about certain decision heuristics in the social signal phase, which no longer exist in the private signal phase.

Previous work has shown that unobservable random shocks on output have a detrimental effect on efficiency in short-term ('static') employment relationships. Given the prevalence of long-term ('dynamic') relationships in firms, we investigate whether the impact of shocks is similarly pronounced in gift-exchange relationships where the same principal-agent pair interacts repeatedly. In dynamic relationships, shocks have a significantly less pronounced negative effect on efficiency than in static relationships. In an attempt to identify the drivers for our results we find that the combination of a repeated-game effect (current misbehavior can be punished in future periods) and a noise-canceling effect (part of the noise cancels out in the long run) is required to avoid the detrimental effects of unobservable random shocks on efficiency.

Central banks are increasingly communicating their economic outlook in an effort to manage the public and financial market participants' expectations. We provide original causal evidence that the information communicated and the assumptions underlying a central bank's projection can matter for expectation formation and aggregate stability. Using a between-subject design, we systematically vary the central bank's projected forecasts in an experimental macroeconomy where subjects are incentivized to forecast the output gap and inflation. Without projections, subjects exhibit a wide range of heuristics, with the modal heuristic involving a significant backward-looking component. Ex-Ante Rational dual projections of the output gap and inflation significantly reduce the number of subjects' using backward-looking heuristics and nudge expectations in the direction of the rational expectations equilibrium. Ex-Ante Rational interest rate projections are cognitively challenging to employ and have limited effects on the distribution of heuristics. Adaptive dual projections generate unintended inflation volatility by inducing boundedly-rational forecasters to employ the projection and model-consistent forecasters to utilize the projection as a proxy for aggregate expectations. All projections reduce output gap disagreement but increase inflation disagreement. Central bank credibility is significantly diminished when the central bank makes larger forecast errors when communicating a relatively more complex projection. Our findings suggest that inflation-targeting central banks should strategically ignore agents' irrationalities when constructing their projections and communicate easy-to-process information.

In an artefactual field experiment, we implemented a crowdfunding campaign for an institute's summer party and compared donation and contribution framings. We found that the use of the word 'donation' generated higher revenue than the use of 'contribution.' While the individuals receiving the donation framing gave substantially larger amounts, those receiving the contribution framing responded more strongly to reward thresholds and suggestions. An additional survey experiment on MTurk indicated that the term 'donation' triggers more positive emotional responses and that emotions are highly correlated with giving. It appears that making a donation is perceived as a more voluntary act and is thus more successful at generating warm glow than making a contribution. We surmise that this extends to other funding mechanisms.

An experiment is designed to shed light on how deception works. The experiment involves a twenty period sender/receiver game in which period 5 has more weight than other periods. In each period, the informed sender communicates about the realized state, the receiver then reports a belief about the state before being informed whether the sender lied. Throughout the interaction, a receiver is matched with the same sender who is either malevolent with an objective opposed to the receiver or benevolent always telling the truth. The main findings are: (1) in several variants (differing in the weight of the key period and the share of benevolent senders), the deceptive tactic in which malevolent senders tell the truth up to the key period and then lie at the key period is used roughly 25% of the time, (2) the deceptive tactic brings higher expected payoff than other observed strategies, and (3) a majority of receivers do not show cautiousness at the key period when no lie was made before. These observations do not match the predictions of the Sequential Equilibrium and can be organized using the analogy-based sequential equilibrium (ABSE) in which three quarters of subjects reason coarsely.

There is substantial evidence that women tend to support different policies and political candidates than men. Many studies also document gender differences in a variety of important preference dimensions, such as risk-taking, competition and pro-sociality. However, the degree to which differential voting by men and women is related to these gaps in more basic preferences requires an improved understanding. We conduct an experiment in which individuals in small laboratory "societies" repeatedly vote for redistribution policies and engage in production. We find that women vote for more egalitarian redistribution and that this difference persists with experience and in environments with varying degrees of risk. This gender voting gap is accounted for partly by both gender gaps in preferences and by expectations regarding economic circumstances. However, including both these controls in a regression analysis indicates that the latter is the primary driving force. We also observe policy differences between male- and female-controlled groups, though these are substantially smaller than the mean individual differences-a natural consequence of the aggregation of individual preferences into collective outcomes.

We elicited incentivized measures of risk and time preferences from a sample of undergraduate students in Athens, Greece, in waves that preceded and overlapped with the COVID-19 pandemic. We exploited the timing of several events that occurred in the course of the pandemic (e.g., first occurrence of cases and deaths, curfew, relaxation of curfew etc.) and estimated structural parameters for various theories of risk and time preferences comparing these with pre-pandemic estimates. We find no effect between the different waves or other key events of the pandemic, despite the fact that we have about 1000 responses across all waves. Overall, our subjects exhibit intertemporal stability of risk and time preferences despite the significant effect of the COVID-19 pandemic on public health and the global economy.

Previous literature demonstrates that beliefs about the determinants of income inequality play a major role in individual support for income redistribution. This study investigates how people form beliefs regarding the extent to which work versus luck determines income inequality. Specifically, I examine whether people form self-serving beliefs to justify supporting personally advantageous redistributive policies. I use a laboratory experiment where I directly measure beliefs and manipulate the incentives to engage in self-deception. I first replicate earlier results demonstrating that (1) people attribute income inequality to work when they receive a high income and to luck when they receive a low income and (2) their beliefs about the source of income inequality influence their preferences over redistributive policies. However, I do not find that people's beliefs about the causes of income inequality are further influenced by self-serving motivations based on a desire to justify favorable redistributive policies. I conclude that, in my experiment, self-serving beliefs about the causes of income inequality are driven primarily by overconfidence and self-image concerns and not to justify favorable redistributive policies.

Public reputation mechanisms are an effective means to limit opportunistic behavior in markets suffering from moral hazard problems. While previous research was mostly concerned with the influence of exogenous feedback mechanisms, this study considers the endogenous emergence of reputation through deliberate information sharing among actors and the role of barriers in hindering information exchange. Using a repeated investment game, we analyze the effects of competition and transfer costs on players' willingness to share information with each other. While transfer costs are a direct cost of the information exchange, competition costs represent an indirect cost that arises when the transfer of valuable information to competitors comes at the loss of a competitive advantage. We show that barriers to information exchange not only affect the behavior of the senders of information, but also affect the ones about whom the information is shared. While the possibility of sharing information about others significantly improves trust and market efficiency, both competition and direct transfer costs diminish the positive effect by substantially reducing the level of information exchange. Players about whom the information is shared anticipate and react to the changes in the costs by behaving more or less cooperatively. For reputation building, an environment is needed that fosters the sharing of information. Reciprocity is key to understanding information exchange. Even when it is costly, information sharing is used as a way to sanction others.

Norm-based accounts of social behavior in economics typically reflect tradeoffs between maximization of own consumption utility and conformity to social norms. Theories of norm-following tend to assume that there exists a single, stable, commonly known injunctive social norm for a given choice setting and that each person has a stable propensity to follow social norms. We collect panel data on 1468 participants aged 11-15 years in Belfast, Northern Ireland and Bogotá, Colombia in which we measure norms for the dictator game and norm-following propensity twice at 10 weeks apart. We test these basic assumptions and find that norm-following propensity is stable, on average, but reported norms show evidence of change. We find that individual-level variation in reported norms between people and within people across time has interpretable structure using a series of latent transition analyses (LTA) which extend latent class models to a panel setting. The best fitting model includes five latent classes corresponding to five sets of normative beliefs that can be interpreted in terms of what respondents view as "appropriate" (e.g. equality vs. generosity) and how they view deviations (e.g. deontological vs. consequentialist). We also show that a major predictor of changing latent classes over time comes from dissimilarity to others in one's network. Our application of LTA demonstrates how researchers can engage with heterogeneity in normative perceptions by identifying latent classes of beliefs and deepening understanding of the extent to which norms are shared, stable, and can be predicted to change. Finally, we contribute to the nascent experimental literature on the economic behavior of children and adolescents.