Communication and Information Economics

Cheap-talk, Information Disclosure, Social Network, and Social Learning 

Applications of Behavioral Economics

Farmers' Behavior, Social Issues, and Nudge

Public Choice, Political Economics, Law and Economics: 

Voting, Punishment, Corruption, Justice, and Contract Design

Brief Summary of Publications

"Impact of Open-Mindedness on Information Avoidance: Tailored vs. Generic Communication" (with Delong Meng) Volume 108, February 2024, 102152 , Journal of Behavioral and Experimental Economics 

Summary: This study explores the impact of open-mindedness on tailored versus generic information communication. We develop a preference formation model and formulate the following hypotheses: (1) in the case of generic information, open-minded individuals tend to avoid information less, resulting in them being better-informed; (2) with tailored information, close-minded individuals display stronger resistance, necessitating the sender to provide additional information for effective persuasion. Our experiments validate the core theoretical predictions, with a few observed behavioral deviations: individuals tend to avoid more information than predicted, particularly when it is tailored. Our structural model attributes this reluctance to resistance in altering one’s worldview. This study tests preference formation theory while also raising questions about the practical effectiveness of commonly used tailored communication strategies.

"Is the 'Smoke-filled Room' Necessary? An Experimental Study of the Effect of Communication Networks on Collusion" (with Timothy Flannery) , Volume 89, Issue 4, April 2023, 1056-1077, Southern Economic Journal  [pdf]

Summary: We investigate how well firms can collude with partial communication in comparison to full communication. We find that firms vary their communication strategies with different network structures. In the network with either isolated firms or full communication, more players send "pure promises” suggesting everyone select the collusive actions unconditionally. In the network with leadership, more players send a "promise and threat” which includes the reward for collusion and the punishment for deviating. Because of the inability to communicate in the network with the isolated firm and the high frequency of deviation and punishment in the network with leadership, the full communication network achieves significantly higher payoff than partial communication.

"The Impact of Parental Migration on Social Identity - A Framed Field Experiment with Left-behind Children in China"  (with Hui Xu) Volume 187, July 2021, 246-257, Journal of Economic Behavior & Organization [pdf]

Summary: An estimated 61 million rural migrants in China were living outside their hometowns with their children left behind. We examine the impact of parental migration on the social identity among children by conducting a field experiment with 311 children from a major labor-exporting area in China. By exploiting a natural setting on varying parental migration status, we find that children, regardless of their own identity, show stronger generosity towards the left-behind children, propose sharing higher amounts with left-behind children, and are willing to accept lower proposed amounts from left-behind children.

"The Aspirational Income Hypothesis: Limits of the Relative Income Hypothesis" (with Elias Lafi Khalil, Jason Aimone, Daniel Houser, Deborah Martinez and Kun Qian) Volume 182, February 2021, 229-247, Journal of Economic Behavior & Organization [pdf]

Summary: According to the “relative income hypothesis,” decision makers derive positive utility from identifying with a group that performs more poorly than they do. We hypothesize that decision makers simultaneously derive negative utility from identifying with such a group. The reason is that decision makers aspire toward status, and thus prefer to identify with a group that is more successful than they are. We call such proposed reason the “aspirational income hypothesis.” If the aspirational income effect dominates the relative income effect, decision makers would prefer to join groups with higher rank than their own. We report data from an experiment that supports the aspirational income hypothesis. It shows that the hypothesis holds (at a weaker intensity) even when it is costly to join a higher ranking group.

"Intention or Request: The Impact of Message Structure" (with Timothy Flannery) Games 2020, 12(1), 12 Special Issue "Experiments on Communication in Games" [pdf]

Summary: We investigate how different message structures impact communication strategy as well as sender and receiver behavior. Specifically, we focus on comparing communication games with messages stating an intention versus a request. Our experimental results show that when a game includes self-signaling or self-committing messages, the two message structures yield negligibly different results. However, when the messages of the game are neither self-signaling nor self-committing, we find that more subjects send messages suggesting cooperation with request than intention. Interestingly, subjects also deviate from their suggested actions more frequently with request than intention. We surmise lying aversion plays a prominent role in contributing to the differences in games where messages lack the self-committing property.

"Collective Experimentation: A Laboratory Study" (with Cesar Martinelli and Mikhail Freer)  Volume 175, July 2020, 365-379,  Journal of Economic Behavior & Organization  [pdf]

Summary:  We develop a simple model of collective experimentation and take it to the lab. In equilibrium, as in the recent work of Strulovici (2010), majority rule has a bias toward under-experimentation. We compare the behavior under majority rule and under the (theoretically) optimal voting rule, which precludes voting in intermediate stages of the policy experiment. Surprisingly, simple majority performs better than the optimal voting rule. Majority rule seems to lead to better outcomes than other forms of voting when players make mistakes.

"Demanding or Deferring? An Experimental Analysis of the Economic Value of Communication with Attitude" (with Daniel Houser) Volume 115, May, 2019, 381-395,  Games and Economic Behavior  [pdf]

Summary: Research has shown that natural language communication is more effective than intention-signaling in promoting coordination. Our paper studies the reasons behind this finding. We hypothesize that, when communicating with natural language, people use and respond to both intentions and attitudes, with attitude indicating the strength of a message sender's desire to have her message followed. We test our hypothesis using controlled laboratory experiments. We find that: (i) free-form messages include both signaled intentions and attitudes; (ii) people respond to both intentions and attitudes when making decisions; and (iii) the use of attitude in natural language messages significantly improves coordination.

"Embezzlement, Whistleblowing and Organizational Structure" (with Michael Makowsky) 2018, 147, 58-75, Journal of Economic Behavior & Organization [pdf]

Summary: We investigate the optimal shape of organizations to reduce embezzlement. In a stylized synthesis of a common pool resource and ultimatum game, agents are activated sequentially within an organizational architecture wherein they can take a share of the available resources or choose to “blow the whistle”, an action that sets all payoffs to zero. The resources not taken will grow and benefit all agents. Six basic organizational architectures are tested, including horizontal, vertical, pyramid shaped, and inverted pyramid-shaped structures. Our results suggest that horizontal and pyramid structures are more effective at reducing embezzlement. Rates of embezzlement and whistleblowing increase with the number of levels in the structure. Holding the number of levels constant, embezzlement rates are lower in pyramid shaped structures than inverted-pyramid shaped structures, while whistleblowing rates are unchanged. 

"The Effect of Digitalization on Penalty Payments: An Experimental Investigation" (with Xiangdong Qin) 2015, 4(8), Journal of Neuroscience, Psychology and Economics [pdf]

Summary: The method of payment for penalties such as traffic tickets or library fines has become increasingly digitalized, with possible implications on the future effectiveness of deterring opportunistic behavior. This article is the first to compare the efficacy of punishment between cash and electronic cash-exchangeable penalties in a laboratory setting. Our results indicate that although both forms of punishment increase cooperation, cash penalties are significantly more effective. Interestingly, this difference gradually disappears over time. 

"Using an Exogenous Mechanism to Examine Efficient Probabilistic Punishment" (with Xiangdong Qin) 2013, 39, 1-10, Journal of Economic Psychology [pdf]

Summary:  Free riding can be made more costly by increasing either the probability of being caught or the severity of the punishment. However, neither option is without cost. What is the tradeoff between these strategies? In this study, we introduce an exogenous punishment mechanism that varies the probability and magnitude of punishment to examine this tradeoff. In our punishment system, sanctions are imposed on the lowest contributor according to a predetermined probability rather than assigned by the participants. Our results indicate that exogenous punishment enhances cooperation. Moreover, we show that a punishment of an intermediate magnitude imposed with a 50% probability is significantly more effective than a more severe punishment with a 10% probability or a lesser but certain punishment, even though the expected value of the punishment is equal across the punishment treatments.