Date of Award

2016

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Graduate Group

Applied Economics

First Advisor

Jeremy Tobacman

Abstract

This dissertation presents three essays in labor economics and risk. Chapter 1 examines how past effort can impact current effort, such as when effort is reduced following an interruption. I present a series of real-effort incentivized experiments in which both piece rates and leisure options were manipulated and find effort displays significant stickiness, even in the absence of switching costs. I demonstrate that this intertemporal evidence is indicative of effort “momentum”, rather than on-the-job learning, reciprocity, or income targeting. When employing an instrumental variables (IV) approach, approximately 50\% of the effort increase persists for 5 minutes after incentives return to baseline. Thus if a worker suffers a complete interruption in productivity, it would take an average of 15 minutes to return to 90\% of prior work effort. I further demonstrate that advanced knowledge does not significantly reduce this productivity loss.

Chapter 2 examines how risk preferences differ over goods and in-kind monetary rewards. I study an incentivized experiment in which subjects allocate bundles of either Amazon.com goods or Amazon.com gift credit (which must be spent immediately) across uncertain states. Under a standard model of perfect information of prices and goods available, I demonstrate risk preferences across these treatments would be identical. In practice, I uncover substantial differences in risk preferences across goods and in-kind monetary rewards. With additional treatments, I find no evidence that these differences are driven by price or product uncertainty.

Chapter 3 is joint work with David Dillenberger, Daniel Gottlieb, and Pietro Ortoleva. We study preferences over lotteries that pay a specific prize at uncertain dates. Expected Utility with convex discounting implies that individuals prefer receiving x in a random date with mean t over receiving x in t days for sure. Our experiment rejects this prediction. It suggests a link between preferences for payments at certain dates and standard risk aversion. Epstein-Zin (1989) preferences accommodate such behavior, and fit the data better than a model with probability weighting.

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