• Negrini, M., Riedl, A., & Wibral, M. (2022). Sunk cost in investment decisions. Journal of Economic Behavior & Organization, 200, 1105-1135. (Link to paper)

We experimentally investigate the effect of sunk cost in a two-stage investment continuation task. After an initial investment, participants have to decide whether or not to continue the project with an additional investment. We do not find a standard sunk cost bias, but observe a robust reverse sunk cost effect: the larger the initial investment, the lower the likelihood to continue investing. This holds despite the fact that we replicate the standard sunk cost bias in hypothetical scenarios. We argue that both, risk aversion without asset integration and loss aversion can account for the reverse sunk cost effect.

  • Brain stimulation reveals distinct motives underlying reciprocal punishment and reward (Under review) (with Arno Riedl, Leticia Micheli & Teresa Schuhmann) Work in progress

Punishment and reward are crucial for sustaining cooperation in societies. However, their neural mechanisms are still poorly understood. It is yet unclear whether the same brain networks involved in punishment are engaged in reward, as very little attention has been paid to the latter. In this preregistered study, we use transcranial magnetic stimulation to test the involvement of the right dorsolateral prefrontal cortex (R dlPFC) and medial prefrontal cortex (mPFC) on punishment and reward of greedy and generous monetary transfers. In a within-subjects design, participants received deep active continuous theta burst stimulation (cTBS) to inhibit the R dlPFC and the mPFC in addition to sham stimulation. Participants took part in a novel dictator game as Receiver (second-party) or Observer (third-party) with the opportunity to punish and reward the Proposer. In half of the trials, punishment and reward were costly to participants. Results indicate that the stimulated prefrontal regions play distinct roles in punishment and reward. Stimulation of the R dlPFC and mPFC decreased punishment of greedy allocations in all conditions except when participants were Observers and had no costs to punish. These findings are consistent with a broad perspective of the implication of R dlPFC and mPFC in self-centeredness, which includes both a personal and a monetary component. Following generous offers, a decrease in costly reward is observed, presumably because stimulation of these regions allows selfish economic motivations to overtake norm enforcement or reciprocity motives. In the absence of cost, however, reciprocity drives the decision, resulting in increased reward of generous offers. Although reciprocal fairness is influenced by brain stimulation, individuals’ perceptions of fairness and social norms remain unaffected.

  • Intertemporal social preferences (with Arno Riedl, Giang Tran & Matthias Wibral)Working paper available upon request

People are often confronted with situations that involve a trade-off between immediate and delayed benefits and costs, and between one’s own and others’ welfare. Despite the importance of these decisions, intertemporal and social domains are traditionally analyzed separately. In this paper, we use modified Dictator Games and examine the relationship between time delay and generosity in a laboratory experiment. In a between-subjects design, we vary the time of payout for the dictator and the receiver. Within-subjects, we vary the endowment of the dictator as well as the price of giving and keeping and the resulting relative price of giving. Our results show that, at the aggregate level, time delay does not affect giving. This result holds also when taking into account the differences in discount rates for one’s own and the recipient's payoffs. However, we observe that time delay affects the sensitivity to different prices of giving. Only when both dictator and recipient receive their payoff immediately, is giving sensitive to price changes. Third, our data suggest that the finding of Andreoni & Vesterlund (2001), that men are more sensitive to the price of giving than women, extends to contexts with delayed payments. This also holds for the finding that women give more than men when giving is expensive, but not for the finding that men are more generous than women when giving is cheap. Finally, we observe that giving decisions largely respect GARP also in the presence of delayed payments, suggesting that choices can be rationalized by a well-behaved utility function.

  • Gender Differences in Attribution Processes and Strategic Behavior (with Lina Lozano) Work in progress

At various points in our educational and professional lives, we are explicitly asked to justify the causes of our failures and successes. These justifications may come in the form of attribution processes that can be either internal (i.e. own ability) or external (i.e. luck). Recent evidence suggests that women attribute success\failure less favorably than equally capable men do, that is, women attribute failure to internal and success to external factors upon receiving negative feedback (Shastry and Shurchkov, 2020). Such differences in attribution processes might be one of the causes of the observed gender gaps in the labor market. However, it is yet unknown whether these differences persist in a strategic setting, which is one of the most common social environments. In this study, we propose a novel incentivized laboratory measurement of attribution processes, and test: first, whether men and women attribute failure\success differently; second, whether these attribution processes change between a strategic versus a non-strategic setting; and third, the economic consequences of this divergence. In our design, individuals perform an IQ test and then report beliefs about their own performance. Their final payoffs depend on two factors: their own ability (internal) and luck (external). After being informed of their final payoffs, individuals are asked to do an incentivized self-assessment report of how much of their final payoffs are due to their own ability and how much is due to luck. Individuals answer this self-assessment report knowing whether it will have some hiring consequences with a future employer or not, and therefore, they can decide to distort their reported self-assessment relative to their true belief for strategic reasons.