Date of Award

2019

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Graduate Group

Applied Economics

First Advisor

Judd B. Kessler

Abstract

This dissertation examines how social preferences and norms affect decision making in a variety of settings using experimental methods.

The first chapter investigates the role of transaction utility on consumer choice. I design two laboratory paradigms to mirror shopping experiences using discounts and mark-ups (Study 1) and coupons (Study 2). In my experiments, participants purchase virtual products, allowing me to isolate transaction utility from inferences of product quality. Results reveal that consumers experience transaction utility even over these virtual products and will sacrifice monetary payoffs for transaction utility. My estimates suggest consumers’ marginal rate of substitution between study earnings and transaction utility is: 37-57 cents to gain a dollar of perceived discount and 37-78 cents to avoid a dollar of perceived mark-up.

Chapter 2 investigates the role of gender in negotiations. While conventional wisdom holds that women are “worse” negotiators, we find that men have a disadvantage in a setting with explicit verbal communication relative to a control game without communication. This is driven by men’s failure to optimally tailor their negotiation strategy based on their partner’s gender. In particular, men are significantly less likely to use tough (but effective) negotiation strategies against female compared to male partners. Male-male pairs have the worst overall joint performance, indicating that women create efficiency gains without losing out on individual payoffs. We suggest these findings may be related to gender-specific social norms influencing communication strategies.

Finally, research from the last three decades suggests that fairness plays an important role in economic transactions. However, the vast majority of this evidence investigates behavior in a full-information environment. In chapter 3, we develop a new experimental paradigm---which nests the widely used Ultimatum Game---to show that the role of fairness in economic transactions depends fundamentally on the information structure. We find that when transacting agents are less informed inequality increases. In the absence of information, proposers give less-fair offers and report believing that responders will accept them. Responders do, in fact, accept less-fair offers when proposers are uninformed, suggesting that responders are concerned about their social image or proposers’ intentions.

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