Essays in Experimental Economics

Citation

Detkova, Polina (2025) Essays in Experimental Economics. Dissertation (Ph.D.), California Institute of Technology. doi:10.7907/p5yr-yn70. https://resolver.caltech.edu/CaltechTHESIS:05232025-181508218

Abstract

This dissertation consists of three essays that use lab and online experiments to investigate how individuals make decisions under uncertainty, in social contexts, and when forming beliefs about others. Each essay introduces a distinct setting, but all share a common goal, which is to improve our understanding of human decision-making.

Chapter 1 examines commitment contracts. Their high rates of failure raise concerns since individuals may end up worse off than if they had never committed. We investigate whether some of these failures are actually anticipated, with individuals recognizing that future uncertainty might make failing the contract the best option upon some realizations of uncertainty. We refer to this behavior as planning for the possibility of failure. This approach is different from the usual interpretation of failures, which we call failing to plan, as it attributes failures to take-up mistakes. To study whether individuals plan for the possibility of failure, we conducted a controlled lab experiment designed to detect patterns of such planning. Our findings indicate that about one-third of all commitment choices can be attributed to this kind of foresight. This suggests that planning for failure is common, and that high failure rates are not necessarily driven by mistaken commitments. Thus, they do not by themselves call into question the value of commitment contracts.

The second essay studies the decision to ask for help—a behavior that can be critical in addressing information asymmetries but is often avoided. In an online experiment, we find that making potential helpers even minimally identifiable (e.g., through an uninformative ID number) significantly increases the likelihood of asking. Belief data suggest that this effect stems from shifts in how individuals weigh expected payoffs and other factors (particularly social ones) when deciding whether to ask.

The third essay explores how people expect others to update their beliefs upon receiving new information. We find that when two individuals have different priors, people expect others’ beliefs to move toward their own prior upon receiving new information. Although this result is consistent with the theoretical predictions for Bayesian agents, we find no support for the precision of information affecting the magnitude of the shift in the way the theory predicts. We find that this effect occurs not only due to under-updating of one's own beliefs but also due to recognition of under-updating by others.