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Push, Don't Nudge: Behavioral Spillovers and Policy Instruments

18 Pages Posted: 18 Oct 2015 Last revised: 25 Feb 2017

Giovanna d'Adda

Polytechnic University of Milan - Department of Management, Economics and Industrial Engineering

Valerio Capraro

Middlesex University

Massimo Tavoni

Fondazione Eni Enrico Mattei (FEEM); Princeton University - Princeton Environmental Institute

Date Written: February 24, 2017

Abstract

Policy interventions are generally evaluated for their direct effectiveness. Little is known about their ability to persist over time and spill across contexts. These latter aspects can reinforce or offset the direct impacts depending on the policy instrument choice. Through an online experiment with 1,486 subjects, we compare four widely used policy instruments in terms of their ability to enforce a norm of fairness in the Dictator Game, and to persist over time (i.e., to a subsequent untreated Dictator Game) or spill over to a norm of cooperation (i.e., to a subsequent Prisoner's Dilemma): defaults, implemented by pre-setting dictators' donations at 50% of the endowment; social information, where dictators were informed that roughly half of the donations made by subjects in a pilot study were equal or above 50%; rebates, which returned half of the donation to dictators who gave at least 50% of their endowment; and a minimum donation rule, forcing dictators to donate at least 50% of the endowment. Our results show that (i) rebates, the minimum donation rule and social information have a significant positive direct effect on fairness, and that (ii) the effect of rebates and the minimum donation rule persists in the second game, but only within the same game type. Moreover, we measure observers' beliefs about dictators' donations and find that (iii) subjects overestimate the direct and the spillover effects of defaults and the spillover effect of social information.

Keywords: default, social norms, rebates, minimum donation rule, fairness, cooperation, spillover effects

JEL Classification: C90, C91, C92, D63, D64, D70, D78, H30, H40, H41, H53, I38

Suggested Citation

d'Adda, Giovanna and Capraro, Valerio and Tavoni, Massimo, Push, Don't Nudge: Behavioral Spillovers and Policy Instruments (February 24, 2017). Economics Letters, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2675498

Giovanna D'Adda (Contact Author)

Polytechnic University of Milan - Department of Management, Economics and Industrial Engineering ( email )

Via Lambruschini 4C - building 26/A
Milano, 20156
Italy

Valerio Capraro

Middlesex University ( email )

The Burroughs
London, NW4 4BT
United Kingdom

Massimo Tavoni

Fondazione Eni Enrico Mattei (FEEM) ( email )

Corso Magenta 63
20123 Milan
Italy

Princeton University - Princeton Environmental Institute

22 Chambers Street
Princeton, NJ 08544
United States

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