Communication, Guilt, and Agency Risk with Payoff Externalities

Last registered on August 10, 2023
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Pre-Trial

Trial Information

General Information

Title
Communication, Guilt, and Agency Risk with Payoff Externalities
RCT ID
AEARCTR-0011895
Initial registration date
August 10, 2023

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
August 10, 2023, 1:43 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Name
Timothy Cason
Affiliation
Purdue University
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Other Primary Investigator(s)

PI Name
Lana Friesen
PI Affiliation
University of Queensland
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PI Name
Lata Gangadharan
PI Affiliation
Monash University
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Additional Trial Information

Status
In development
Start date
2023-08-21
End date
2024-08-19
Keywords
Behavior, Lab
Additional Keywords
Guilt aversion, principal-agent, trust
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
This lab experiment investigates how different types of communication between principals and agents affect cooperation and efficiency in a setting where actions not only affect payoffs for the pair within the agency relationship, but also the earnings for an external principal-agent pair. Communication is hypothesized to impact beliefs, which in turn affects the psychological costs (e.g., guilt and lying aversion) that principals and agents feel when choosing their actions. A baseline treatment allows no communication opportunities. Two communication treatments introduce (a) a single, private message from the agent to the principal in each pair; and (b) preliminary free-form chat between both agents and principals whose payoffs are affected by actions, in addition to the single, private message in (a). Complete first- and second-order beliefs are elicited from all subjects following action choices. The experiment also elicits subjects’ risk tolerance and social value orientation.
External Link(s)

Registration Citation

Citation
Cason, Timothy, Lana Friesen and Lata Gangadharan. 2023. "Communication, Guilt, and Agency Risk with Payoff Externalities." AEA RCT Registry. August 10. https://doi.org/10.1257/rct.11895-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Communication opportunities will be varied across treatments. This includes a no-communication baseline, and treatments in which the agent in each pair can send a single, private message to their principal before choices are made, as well as rich and free form (chat) communication between both agents and both principals whose payoffs are affected by actions.
Intervention Start Date
2023-08-21
Intervention End Date
2024-05-03

Primary Outcomes

Primary Outcomes (end points)
Cooperation choices (frequency of IN for principals, and HIGH for agents)
Overall group cooperation rates (both principals choose IN and both agents choose HIGH in the four-person set of principal-agent pairs)
First-order beliefs
Second-order beliefs
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Communication content
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
This is a laboratory experiment, conducted in a standard university experimental economics lab, recruiting students broadly across the university. Subjects will be randomly assigned to treatments, and then randomly assigned to roles (agents or principals) and into pairs to make a choice.
Within each principal-agent pair, the principal chooses IN or OUT and the agent chooses HIGH or LOW (effort). The OUT choice corresponds to an outside option for which the agent’s choice is irrelevant; the IN choice leads the pair’s earnings to depend on the agent’s effort choice. These choices have payoff externalities for one other principal-agent pair, so final earnings depend on the binary choices of four subjects in each group. Efficient cooperation is achieved only if both principals choose IN and both agents choose HIGH.
Experimental Design Details
Not available
Randomization Method
Subjects will be recruited by email using ORSEE. They choose between a list of available sessions, and the session is randomized to a treatment before it is initialized.
Randomization Unit
Individual
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
80 groups of 4 subjects
Sample size: planned number of observations
320 individuals
Sample size (or number of clusters) by treatment arms
120 individuals in the no communication baseline
120 individuals in the single message treatment
80 individuals in the group chat treatment
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Based on pilot sessions conducted in April 2023, as well as findings from the related treatments of Charness and Dufwenberg (2006). Proportion of cooperative IN/HIGH decisions that differ by 0.25 compared to the baseline and 0.3 difference between communication treatments can be detected with 80 percent power (5-percent significance level two-tailed).
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Purdue University Institutional Review Board
IRB Approval Date
2019-02-05
IRB Approval Number
1902021679
Analysis Plan