Revenue Windfalls & Accountability

Last registered on September 12, 2024
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Pre-Trial

Trial Information

General Information

Title
Revenue Windfalls & Accountability
RCT ID
AEARCTR-0014212
Initial registration date
September 09, 2024

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
September 12, 2024, 5:59 PM EDT

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

Locations

Country
United States of America
Region
Wyoming

Primary Investigator

Name
Alexander James
Affiliation
University of Wyoming
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Other Primary Investigator(s)

PI Name
James Murphy
PI Affiliation
University of Alaska Anchorage
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PI Name
Maroš Servátka
PI Affiliation
Macquarie Business School
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Additional Trial Information

Status
In development
Start date
2024-09-30
End date
2024-10-05
Keywords
Behavior, Electoral, Environment & Energy, Governance
Additional Keywords
Public Revenue Windfalls, Public accountability, Natural Resources, Democratic Institutions
JEL code(s)
D72, H7, H27, H11
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Existing literature suggests that taxation is necessary for robust democratic representation. The argument is centered around the idea that money is not fungible. Rather, how money is spent depends on how money is obtained. In the context of public finance, this implies that people's preferences over government expenditures depend on how the public revenue was collected. Revenue generated from a broad-based tax is potentially viewed differently than revenue generated from, say, an intergovernmental grant or resource windfall. We explore this idea using an experiment in which people are assigned the role of either "Governor" or "Citizen". Depending on the treatment, Citizens receive either i) earned income or ii) a windfall. An exogenously determined tax is implemented and the resulting tax revenue is given to the Governor. The tax revenue can be embezzled by a Governor, or invested in a risky asset that pays the Citizen $1.20 with a 5/6 probability and $0 with a 1/6 probability. Modeled as a hidden-action game, should a Citizen receive $0, they do not know if the revenue was embezzled or if the investment paid $0 by chance. We also augment this basic framework with a treatment in which Citizens can punish Governors by reducing their earnings by $0.20. Outcomes of interest include i) the rate at which Governor's embezzle money in windfall and earned-income treatments (in both the "punishment" and "no punishment" treatments), ii) the rate at which Citizens punish Governor's in windfall and earned-income treatments.
External Link(s)

Registration Citation

Citation
James, Alexander, James Murphy and Maroš Servátka. 2024. "Revenue Windfalls & Accountability." AEA RCT Registry. September 12. https://doi.org/10.1257/rct.14212-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Subjects in this study will be randomly assigned the role of either "Citizen" or "Governor". Governors will tax either i) earned or ii) windfall income from the Citizen. The Governor can choose to keep the money for themselves or invest in a risky asset. In one branch of the experiment, the Citizen will have the opportunity to punish the Governor by reducing their pay once the Citizen realizes their return. The 2x2 design consists of interventions where i) the Citizen earning their money rather than simply being endowed with it and ii) the Citizen being able to punish the Governor rather than having no matter of recourse.
Intervention Start Date
2024-09-30
Intervention End Date
2024-10-05

Primary Outcomes

Primary Outcomes (end points)
We are interested in the rates at which i) Governors steal money across the two treatments (earned and windfall) and ii) the rate at which Citizens punish Governors across the two treatments (earned and windfall) and whether having the opportunity to punish affects the Governors' stealing.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Subjects will be recruited on Prolific. Subjects in this study will be randomly assigned the role of either "Citizen" or "Governor". Governors will tax either i) earned or ii) windfall income from the Citizen. The tax is automatic and is not a choice. The Governor can choose to keep the money for themselves or invest in a risky asset. In one branch of the experiment, the Citizen will have the opportunity to punish the Governor by reducing their pay once the Citizen realizes their return. The interventions include i) the Citizen earning their money rather than simply being endowed with it and ii) the Citizen being able to punish the Governor rather than having no matter of recourse. The experiment is conducted using the strategy method. Subjects make decisions for all possible scenarios without knowing which one will be chosen by their counterparts. For example, Citizens are asked to choose a punishment should they be matched with a Governor who returns nothing to them and also choose a punishment should they be matched with a Governor who returns a positive amount to them.
Experimental Design Details
Randomization Method
Subjects are randomly assigned by Qualtrics into the various treatments.
Randomization Unit
Individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
N/A
Sample size: planned number of observations
We will have roughly 250 Citizens and 250 Governors in each treatment. With four treatments, our sample size will therefore be roughly 2000.
Sample size (or number of clusters) by treatment arms
We will have roughly 250 Citizens and 250 Governors in each treatment (so our sample size will be roughly 500 per treatment).
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials

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IRB

Institutional Review Boards (IRBs)

IRB Name
University of Wyoming Institutional Review Board
IRB Approval Date
2024-02-02
IRB Approval Number
LEGACY-20240202AJ03726
Analysis Plan

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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