We conduct lab experiments in Ghana and Tanzania to foster strategic sophistication in two-person level-k games. Participants perform a series of tasks in which they guess a number as close as possible to an anonymous opponent's guess, times a multiplier. In a sample of small Ghanaian entrepreneurs, we investigate whether working in a team encourages strategic thinking. We find that team leaders display more strategic sophistication than individual players or team members. In Tanzania, we test whether participants' expectation of their opponent's level of strategic sophistication and their own revealed level of strategic sophistication are affected by (a) receiving written factual information about their opponent and (b) watching a video of their opponent introducing themselves. Receiving factual information increases participants' level of strategic sophistication as well as the level of strategic sophistication that they expect from their opponent. The video per se does not change strategic reasoning, but it enhances the impact of factual information when combined with it. These results suggest that human contact may either enhance perspective taking, e.g., via emotive and affective empathy, or facilitate the processing of information that is relevant for strategic reasoning, e.g., due to increased attention.

We propose an improved theoretically-grounded method to test for efficient risk pooling that allows for intertemporal smoothing, non-homothetic consumption, and heterogeneous risk and time preferences. Applying this method to recent panel data from Indian villages generates important new insights while confirming some earlier findings. Year-to-year smoothing of consumption takes place much more at the village level than at the individual level and occurs primarily through financial assets. While there is proportionally more smoothing of food than non-food consumption, accounting for differences in income elasticities between the two statistically eliminates this difference, indicating that risk pooling does not distort consumption choices in our study area. Finally, we find that consumption smoothing is affected jointly by income and liquid assets, and that there is no excess sensitivity to earned income.

We examine how social observability affects the willingness of low-income individuals to apply for financial support. After completing tasks to earn income in the lab, participants are given the opportunity to apply for a transfer from a social fund earmarked for the lowest earners. We experimentally vary whether the application is public or private and whether the funds come from the experimenters or other participants. We find that making the application public reduces take-up by 31 percentage points. Adding peer funding leads to a further 10 percentage point drop. These effects are strongest when income is earned through effort instead of a lottery, and when both public visibility and peer funding are present. The findings are not driven by altruistic or redistributive preferences, but perspective taking makes participants more sensitive to the public application treatment. Our findings suggest that ensuring privacy in the application process helps increase access to income support programs.

Human behaviors and innovations often spread through social networks, yet the mechanisms driving this diffusion — information sharing or persuasion — remain debated. Using a large-scale randomized controlled trial in Uttar Pradesh, India, we examine these dynamics while promoting a newly introduced savings commitment product. Our findings reveal persuasion as the dominant channel: villages where persuasion was incentivized experienced significantly higher product sign-up and take-up rates, even without corresponding increases in financial literacy or product knowledge. Conversely, providing information alone had minimal impact. The combined intervention of persuasion and information delivered the highest outcomes, highlighting their complementary roles. These results highlight the critical importance of persuasion in driving behavioral change and suggest that information dissemination alone may often be insufficient for effective adoption and diffusion.

We conduct a laboratory experiment to study a decentralized market where players engage in multiple (bilateral and multilateral) transactions. We propose a novel class of bargaining protocols that allow players to keep bid amounts shrouded from each other (covert bargaining). We show that these bargaining protocols double ex-post efficiency relative to a mechanism without bargaining, mainly to the benefit of players (particularly buyers) rather than the silent auctioneer. Aggregate efficiency nonetheless suffers from the fact that buyers bargain harder than sellers and that some players over-bargain to appropriate a larger share of the unknown surplus.

We evaluate the impacts of a randomised job fair intervention in which jobseekers and employers can meet at low cost. The intervention generates few hires, but it lowers participants' expectations and causes both firms and workers to invest more in search as predicted by a theoretical model; this improves employment outcomes for less educated jobseekers. Through a unique two-sided belief-elicitation survey, we confirm that firms and jobseekers have overoptimistic expectations about the market. This suggests that, beyond slowing down matching, search frictions have a second understudied cost: they entrench inaccurate beliefs, further distorting search strategies and labour-market outcomes.

We conduct an interactive online experiment framed as an employment contract between employer and worker. Subjects from the US, India, and Africa are matched in pairs within and, in some cases, across countries. Employers make a one-period offer to a worker who can either decline or choose a high or low effort. The offer is restricted to be from a variable set of possible contracts: high and low fixed wage; bonus and malus contracts; and bonus and malus with reneging. High effort is always efficient. Self-interest predicts a fraction of observed choices, but many choices are better explained either by conditional reciprocity or by intrinsic motivation. Subjects from India and Africa are more likely to follow intrinsic motivation and they provide high effort more often. US subjects are more likely to follow self-interest and reach a less efficient outcome on average, but workers earn slightly more. We find no evidence that workers favor employers from some countries or that employers treat workers from different countries differently. Individual characteristics and stated attitudes toward worker incentives are unable to predict the behavioral differences observed between countries, thus allowing the possible existence of cultural differences in the response to labor incentives.

We conduct an original lab-in-the-field experiment on the decision-making process of married couples over the allocation of rival and non-rival household goods. The experiment measures individual preferences over allocations and traces the process of deferral, consultation, communication and accommodation by which couples implement these preferences. We find few differences in individual preferences over allocations of goods. However, wives and husbands have strong preferences over process: women prefer to defer decisions to their husbands even when deferral is costly and is not observed by the husband; men rarely defer under any condition. Our study follows a randomised controlled trial that ended a year earlier and gave large cash transfers over eighteen months to half of the women in the study. We estimate the effect of treatment on the demand for agency among women and find that the receipt of cash transfers does not change women's bargaining process except in a secret condition when the decision to defer is shrouded from her husband. This suggests that the cash transfer to women increases their demand for agency, but does not change the intrahousehold balance of power enough to allow them to express it publicly.

We conduct a field experiment to test the demand for flexibility and for soft and hard commitment among clients of a microfinance institution. We offer a commitment contract inspired by the rotating structure of a ROSCA. Additional treatments test ex ante demand for soft commitment (in the form of reminders), hard commitment (in the form of a penalty for missing an installment), and flexibility (an option to postpone an installment). Our design is unique in the literature for allowing us to test — using the same respondent population — how demand for explicit commitment features differs between loan and savings contracts. We find substantial demand for both credit and savings contracts but no demand for additional commitment features — either in isolation or in combination — in spite of their effectiveness in improving repayment. In particular, demand for savings is insensitive to explicit commitment features. Individuals offered loans actively dislike commitment and flexibility, unless the latter is combined with reminders. These findings complement a literature showing that commitment devices induce financial discipline. They show that demand for commitment depends on whether commitment features are implicit or explicit.

We investigate the welfare cost of relative rank considerations, using a series of vignettes and lab-in-the-field experiments with over 2,000 individuals in Abidjan, Côte d’Ivoire. We show that: (1) people perceived to be of very low rank are considered more likely to be sidelined from beneficial opportunities in many aspects of life; and (2) in response, people invest in their appearance and distort consumption choices in order to appear of higher rank. These effects are economically significant. As predicted by a simple signaling model, the distortion concerns people with low (but not too low) socio-economic status and the SES range concerned varies across types of beneficial opportunities.

We conduct a field experiment in which we offer credit and saving contracts to the same pool of Pakistani microfinance clients. Additional treatments test ex ante demand for soft commitment (in the form of reminders, either to respondents or to their families), hard commitment (in the form of a penalty for missing an instalment) and flexibility (an option to postpone an instalment) to save or pay loan instalments on time. We find substantial demand for fixed repayment contracts in both the credit and savings domains, in ways that imply that respondents value the commitment required. While we find little or no average demand for additional contractual features, we nonetheless observe that different combinations of contractual add-ons are preferred depending on the respondent's level of financial discipline. Respondents with high financial discipline prefer flexibility in credit contracts when combined with reminders to self while those with low discipline value penalties in savings contracts only when paired with reminders. Our results imply that, for the average microfinance client, demand for commitment is met through the regular payment schedule built into standard microcredit or commitment savings contracts. However, combining penalties or flexibility with reminders may appeal to certain subsets of clients.

Research has documented labor conflict within foreign-owned, and especially Chinese-owned, manufac-turing firms in sub-Saharan economies. Yet, systematic comparisons of foreign versus domestic firms are rare, and it remains unclear whether labor conflict is a phenomenon that affects emerging industries or is specific to foreign firms. Drawing on a large firm survey in Ethiopia, we show that foreign firms hire sim-ilarly educated and experienced workers. They also offer comparable salaries, benefits, and hours than domestic firms, after controlling for firm size and age. Nevertheless, they experience more complaints, strikes, and protests, with Chinese-owned firms reporting particularly high rates of labor conflict. To scru-tinize these findings, we conduct case studies of labor management in six domestic and eight foreign -owned firms around Addis Ababa, Ethiopia. We observe antagonistic labor relations in five foreign -owned firms, four of which are Chinese-owned. In these firms, managers perceive employees as using labor laws to take advantage of them, whereas employees see labor laws as a basis for harmonious labor relations. In the remaining firms, managers frame their firm policies as consistent with employee percep-tions of labor laws. We conjecture that the visibility of formal labor institutions leads employees to inter-pret disagreements as intentional disrespect, rather than ignorance. Our findings suggest that misaligned perceptions about the role of local labor institutions may be an important driver of conflict in foreign -owned firms. (c) 2022 Elsevier Ltd. All rights reserved.

We conduct the first field experiment of a performance-contingent microfinance contract. A large food multinational wishes to help micro-distributors in its supply chain with the financing of a productive asset. Working with the firm in Kenya, we compare asset financing under a traditional debt contract to three alternatives: (i) a novel equity-like financing contract, (ii) a hybrid debt-equity contract, and (iii) an index-insurance financing contract. Experimental results reveal large positive impacts from the contractual innovations. These findings demonstrate the economic appeal of microfinance contracts that leverage improved observability of performance to achieve a greater sharing of risk and reward.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Using a large administrate dataset covering the universe of phone calls and airtime transfers in a country over a four year period, we examine the pattern of adoption of airtime transfers over time. We start by documenting strong network effects: increased usage of the new airtime transfer service by social neighbors predicts a higher adoption probability. We then seek to narrow down the possible sources of these network effects by distinguishing between network externalities and social learning. Within social learning, we also seek to differentiate between learning about existence of the new product from learning about its quality or usefulness. We find robust evidence suggestive of social learning both for the existence and the quality of the product. In contrast, we find that network effects turn negative after first adoption, suggesting that airtime transfers are strategic substitutes among network neighbors.

SMS information campaigns are increasingly used for policy. A field experiment is conducted to study information sharing through mobile phone messages. Subjects are rural households in Mozambique who have access to mobile money. In the baseline intervention, subjects receive an SMS containing simple instructions on how to redeem a voucher for mobile money. They can share this non-rival information with other exogenously assigned subjects unknown to them. Few participants redeem the voucher. They nonetheless share it with others and many share information about the voucher they do not use themselves. The voucher is shared more when no information is provided on the receiver. When partial information is provided, no evidence is found of more sharing with subjects who have similar characteristics. Treatments are introduced to increase the cost of sending a message, shame those who do not send the voucher to others, or allow subjects to appropriate the value of the voucher. All these treatments decrease information sharing. To encourage information diffusion among strangers, the best is to "keep it simple."

Many decisions require ordering alternatives: for example, the selection of top candidates for a competitive academic program or the selection of the poorest individuals for a cash transfer program. One common approach consists in aggregating orderings reported by different observers (e.g., committee or community members), but those orderings are typically partial: not all observers rank all applicants. We introduce a novel type of approach, based on pairwise rankings, to (i) aggregate partial orderings reported by multiple observers and (ii) construct confidence intervals for the resulting aggregate ordering. We identify, both theoretically and using simulations, the conditions under which a pairwise approach dominates rank averaging: when reporting error is low, reported orderings are partial, and observers rank alternatives that are close to each other in their true latent ordering. We introduce improvements to rank averaging and pairwise methods and illustrate them using several datasets. We find that, with partial reported orderings, Borda counts (i.e., simple rank averages) are dominated by the averaging of normalized ranks and should never be used in practice.