Sera Linardi

Prediction Markets: Alternative Mechanisms for Complex Environments with Few Traders

Double auction prediction markets have proven successful in large-scale applications such as elections and sporting events. Consequently, several large corporations have adopted these markets for smaller-scale internal applications where information may be complex and the number of traders is small. Using laboratory experiments, we test the performance of the double auction in complex environments with few traders and compare it to three alternative mechanisms. When information is complex we find that an iterated poll (or Delphi method) outperforms the double auction mechanism. We present five behavioral observations that may explain why the poll performs better in these settings.

Competition as a savings incentive: A field experiment at a homeless shelter

This paper describes a randomized field experiment testing the impact of a savings competition on the behavior of working homeless individuals at a transitional shelter. When monetary prizes were offered for achieving the highest saving rates within a particular month, average savings increased by

Violence and Cell Phone Communication: Behavior and Prediction in Cote D’Ivoire

80 (a 30% increase) while income and attendance at case management meetings remained unchanged. However, repeating the competition in the following month had no effect because responsive savers selected out of the shelter after the first month. In summary, while competition can increase savings in the short run, its effect may be limited to the intensive margin and may diminish with repetition. Combined with our findings that the strongest determinant of savings is income, it appear that for transitional populations on the economic margin, policies that provide opportunities to increase income may be a more effective first step than saving incentives.

Awareness of Low Self-Control: Theory and Evidence

We investigate the relationship between low-level incidents of political violence and communication patterns seven months after the 2012 Ivorian Civil War using network traffic from all of Orange Telecom’s Cote d’Ivoire cell towers and 500,000 randomly sampled cell phone subscribers. We first show that in the days preceding small violent incidents, mobile phone call volumes increase by 10% and the number of cell phones that are active increases by 6%, while the length of average calls decreases by 4%. These unique communication patterns attenuate as the distance from violence increase and strengthen when incidents with no fatalities are excluded. We then use machine learning techniques to explore whether these changes can predict the day and location of violent events. The addition of cell phone data to base models appear to improve our ability to predict violent events at very fine spatial and temporal resolution.

Transforming Global Information and Communication Markets: The Political Economy of Innovation by Peter F. Cowhey and Jonathan D. Aronson

Self-reported survey measures of self-control continue to appeal to practitioners for ease of implementation, necessitating further investigation of how well they predict outcomes. We provide a simple theoretical model and empirical evidence that relates how awareness of self-control and availability of commitment devices affect the way survey responses predict outcomes. This paper focuses on the Ameriks et al. (2007) survey, which utilizes the deviation between self-reported ideal and predicted behavior, namely Expected Deviation (ED), to capture self-control problems. Our model predicts that ED will largely be negatively correlated with outcomes, except in settings where awareness can play a large role (e.g. when self-control is low and commitment devices are available). Previous empirical evidence, derived from highly successful populations, has shown that larger ED is correlated with worse outcomes. We complement this with evidence from the homeless population, showing that ED is positively correlated to amount saved in shelter lockboxes, a commitment savings device. As a whole, it appears that the ED measure correlates with outcomes in a theoretically-consistent manner after accounting for awareness.

No excuses for good behavior: Volunteering and the social environment

Transforming Global Information and Communication Markets: The Political Economy of Innovation Peter F. Cowhey (University of California, San Diego, Graduate School of International Relations and Pacific Studies, La Jolla, California 92093. Email: pcowhey@ucsd.edu) and Jonathan D. Aronson (University of Southern California, Annenberg School of Communication and School of International Relations, 734 West Adams Blvd., Los Angeles, CA 90007. Email: aronson@ usc.edu) Cambridge: MIT Press, 2009, 978-0-262-01285-0.

Wallflowers: Experimental Evidence of an Aversion to Standing Out

36.00. 341 pp.