Behnud Mir Djawadi

'' ... and they are really lying'': Clean evidence on the pervasiveness of cheating in professional contexts from a field experiment

We investigate the pervasiveness of lying in professional contexts such as insurance fraud, tax evasion and untrue job applications. We argue that lying in professional contexts share three characterizing features: (1) the gain from the dishonest behavior is uncertain, (2) the harm that lying may cause to the other party is only indirect and (3) lies are more indirect lies by action or written statements. Conducted as a field experiment with a heterogenous group of participants during a University “Open House Day”, our “gumball-machine-experiment” provides field evidence on how preferences for lying are shaped in situations typically found in professional contexts which we consider to be particularly prone to lying behavior compared to other contexts. As a key innovation, our experimental design allows measuring exact levels of cheating behavior under anonymous conditions. We find clean evidence that cheating is prevalent across all sub groups and that more than 32% of the population cheats for their own gain. However, an analysis of the cheating rates with respect to highest educational degree and professional status reveals that students cheat more than non-students. This finding warrants a careful interpretation of generalizing laboratory findings with student subjects about the prevalence of cheating in the population.

Asymmetric dominance effect with multiple decoys for low- and high-variance lotteries

The asymmetric dominance effect refers to the phenomenon according to which the choice probability of an alternative increases when an inferior alternative - the decoy - is included into the choice set. The objective of this experimental study is twofold. First, we investigate the asymmetric dominance effect on two-outcome lotteries with almost equal expected values. We find that the impact of a decoy on low-variance lotteries (LVLs) is much higher than on high-variance lotteries (HVLs). Second, we examine the asymmetric dominance effect in the presence of two decoys. While the asymmetric dominance effect persists when the choice set includes two decoys, the effect is not always further enhanced compared to the setting with one decoy and again much stronger for LVLs than for HVLs. Controlling for subjects’ degrees of risk aversion, we find support for consistency between individual risk preferences and choice behavior among the lotteries. However, we observe decoy effects of equal strength irrespective of the subjects’ degree of risk aversion. Thus, our analysis indicates that to a substantial extent the presence of decoys subtly makes decision-makers choose against their risk preferences by favoring lotteries that entail risks contrary to their elicited individual risk-taking profile.

Tailored Financial Incentives to Fight Medical Non-Persistence in Therapeutic Treatment: A Behavioral Economic Engineering Approach

The development and design of financial incentive schemes as a sustainable and cost-effective intervention strategy to foster effectiveness of medical interventions remains a significant challenge in health care delivery.Based on the findings of the conceptual model of medical non-persistence we test three different financial incentive schemes. These incentives are derived upon concepts of behavioral economics, in particular mental accounting, prospect theory and choice bracketing, and incorporated into deposit, copayment and bonus schemes. We conduct randomized laboratory experiments to evaluate the performance and effectiveness of each incentive scheme on persistence behavior under controlled conditions. Participants in the experiment are students remunerated according to their performance in the experiment.We find that financial incentive schemes based on the principles of prospect theory significantly improve treatment persistence compared to the situation where there are no incentives at all. This finding implies that the simple but smart re-allocation of co-payments and co-payment support between the treatment initiation phase and treatment maintenance phase represents an effective way of promoting persistence behavior.This study delivers first applications of behavioral interventions based on theoretical foundation. Using the method of experimental economics the study serves as a first proof of concept of a scalable way to design, calibrate and test the effectiveness of financial incentives on behavioral change. This approach is inevitable for broad application in real world as it minimizes the need for patient research while clarifying the impact of interventions under controlled conditions before these interventions get implemented in the field.