The Endowment Effect: High stakes evidence from rural Zambia

Last registered on September 30, 2019
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Pre-Trial

Trial Information

General Information

Title
The Endowment Effect: High stakes evidence from rural Zambia
RCT ID
AEARCTR-0001111
Initial registration date
September 28, 2019
Last updated
September 30, 2019, 1:37 PM EDT

Locations

Country
Zambia
Region
Chipata District, Eastern Province

Primary Investigator

Name
Kelsey Jack
Affiliation
UC Santa Barbara
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Other Primary Investigator(s)

PI Name
Günther Fink
PI Affiliation
Swiss Tropical and Public Health Institute & University of Basel
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PI Name
Dietmar Fehr
PI Affiliation
University of Heidelberg
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PI Name
B. Kelsey Jack
PI Affiliation
UC Santa Barbara
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Additional Trial Information

Status
Completed
Start date
2014-10-07
End date
2015-09-15
Keywords
Other
Additional Keywords
poverty, decision bias, endowment effect, seasonality
JEL code(s)
Secondary IDs
Abstract
A growing literature associates poverty with biases in decision-making. We investigate this link in a sample of over 3,000 small-scale farmers in Zambia, who participated in a series of experiments involving the opportunity to exchange randomly assigned household items for alternative items of similar value. Exploring a total of 5,842 trading decisions over a range of household items we show that exchange asymmetries are sizable and remarkably robust across items and experimental procedures. Using cross sectional, seasonal and randomized variation in financial resource availability, we show that exchange asymmetries decrease in magnitude when subjects are more constrained. Consistent with the interpretation that financial constraints increase decision stakes, we also show that trading probabilities increase when the value of the items involved is exogenously increased.
External Link(s)

Registration Citation

Citation
Fehr, Dietmar et al. 2019. "The Endowment Effect: High stakes evidence from rural Zambia." AEA RCT Registry. September 30. https://doi.org/10.1257/rct.1111-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
We collect data in the context of an ongoing randomized controlled trial on seasonal resource constraints and labor supply that involved repeated surveys over multiple years (see Fink, Jack, and Masiye, 2018). As part of the ongoing surveys, households received a small item as a compensation for their time. We intervened in this standard procedure by randomly endowing participants with one of two equally-valued items midway through a survey. Items were common household necessities worth about 1/5th of the daily agricultural wage. At the end of the survey, surveyors offered participants the opportunity to trade the endowed item for the alternative item. This implements the standard exchange paradigm used to measure the "endowment effect" in laboratory settings in a more naturalistic, real-stakes decision in the field.
Intervention Start Date
2014-10-07
Intervention End Date
2015-09-15

Primary Outcomes

Primary Outcomes (end points)
trading decisions
Primary Outcomes (explanation)
we record whether a respondent exchanges the item they received initially for an alternative item

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Trading decisions were measured over three survey rounds, implemented after the 2014 harvest, before the 2015 harvest (during the hungry season) and after the 2015 harvest, with random variation in respondent experience in each round. Item pairs and experimental procedures were varied at the village and household level, respectively, into the following conditions:
A) Item pairs:
i) Boom (washing powder) versus Salt
ii) Boom versus cash
iii) Cup versus spoon
iv) Solar lamp versus cash

B) Experimental procedures:
i) Free Choice (no initial assignment)
ii) Assigned (by computer)
iii) Lottery (transparent randomization)
iv) Timing (~5 min interval between assignment and trading opportunity)
v) Voucher (initial assignment of voucher instead of item)
vi) Expectations (trading opportunity announced at time of initial endowment)
vii) Wording (surveyor requested respondent to trade)
Experimental Design Details
Randomization Method
i) assignment of initial item:
standard assignment: computer
lottery: draw button from a bag

ii) assignment of item pairs and experimental procedures:
block randomized across rounds and treatments by computer
Randomization Unit
Village level (item pairs) and household level (experimental procedures)
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
175 villages
Sample size: planned number of observations
5842 choice or trading decisions across 3059 households
Sample size (or number of clusters) by treatment arms
3059 households that make up to three decisions each
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Harvard School of Public Health Institutional Review Board
IRB Approval Date
2013-10-15
IRB Approval Number
13-1832
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials