Contract Enforcement in a Stateless Economy

Last registered on May 03, 2022

Pre-Trial

Trial Information

General Information

Title
Contract Enforcement in a Stateless Economy
RCT ID
AEARCTR-0009050
Initial registration date
March 04, 2022

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
March 07, 2022, 1:54 PM EST

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

Last updated
May 03, 2022, 4:12 AM EDT

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Region

Primary Investigator

Affiliation
New Economic School Moscow

Other Primary Investigator(s)

PI Affiliation
World Bank
PI Affiliation
Toulouse School of Economics

Additional Trial Information

Status
On going
Start date
2022-04-17
End date
2022-05-08
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
In this paper, we study contract enforcement in the illegal gambling market of Pakistan as gamblers make high-stakes betting decisions without the state enforcing contracts. Our experimental intervention randomly assigns gamblers with additional week to honor their book bets –a contract that allows them to pay back the week after and to a treatment arm that makes blacklisting from betting market salient in the contract. We observe the pattern of repayment by gamblers in absence of any state authority enforcing these contracts. We also investigate two potential mechanisms behind the blacklisting 1) imposition of reputational costs in case of nonpayment 2) collusion utilization in case of non-payment. The mechanism underpinning the blacklisting is evaluated via a factorial design: we rerandomize gamblers into a treatment arm that imposes reputation costs in event of non-payment or informs the collusion by informing the race “guild” about the non-repayment. Finally, we examine the impact of a much-used decision aid, odds and historical data relevant to the bet, to investigate whether reducing uncertainty about the outcome affect the decision to bet. We observe winnings and losses of gamblers, payback rates and collect rich set of behavioral data in the form of strategic dilemmas on risk, confidence, cooperation and coordination.

External Link(s)

Registration Citation

Citation
Mehmood, Sultan, Bakhtawar Ali and Daniel Chen. 2022. "Contract Enforcement in a Stateless Economy." AEA RCT Registry. May 03. https://doi.org/10.1257/rct.9050
Experimental Details

Interventions

Intervention(s)
T1: Give an opportunity to sign a book bet contract with the gambler with additional time to payback (2 weeks to payback relative to status quo of one week repayment standard book bet contract)

T2: Blacklisting Clause embedded within the status quo book bet contract of payment the week after. The mechanism underpinning the blacklisting is evaluated via a factorial design:

T2a: Reputation Cost Imposed via making the "defaulters" public
T2b: Collusion Utilization by informing the Race Club Guild.
T2c: No Reputational Cost Imposed, Race Club Guild Not Informed.

T3: Provide for free a decision aid containing odds and historical data relevant to bet embedded within the "handicap" decision aid
C: Status quo - Opportunity to place a book bet with the status quo contract allowing to payback a week after and no decision-aid provided
Intervention Start Date
2022-04-17
Intervention End Date
2022-05-08

Primary Outcomes

Primary Outcomes (end points)
winnings and losses of gamblers, self reported outcomes such as risk appetite, total losses returned to the casino, total payments returned one week and two weeks after.
Primary Outcomes (explanation)
Winnings and Losses of gamblers, and total losses returned to the gambling den will be our primary outcome variables.

Secondary Outcomes

Secondary Outcomes (end points)
Outcomes on Risk, Confidence, Cooperation, Coordination Games
Secondary Outcomes (explanation)
Outcomes in strategic dilemas of Risk, Confidence, Cooperation and Coordination Games.

Experimental Design

Experimental Design
We will randomly allocate 16000 gamblers at the Annual Lahore Race Derby into four groups of 4000 gamblers each:
T1: Give an opportunity to sign a book bet contract with the gambler with additional time to payback (2 weeks to payback relative to status quo of one week repayment standard book bet contract)

T2: Blacklisting Clause embedded within the status quo book bet contract of payment the week after. The mechanism underpinning the blacklisting is evaluated via a factorial design:

T2a: Reputation Cost Imposed via making the "defaulters" public
T2b: Collusion Utilization by informing the Race Club Guild.
T2c: No Reputational Cost Imposed, Race Club Guild Not Informed.

T3: Provide for free a decision aid containing odds and historical data relevant to bet embedded within the "handicap" decision aid
C: Status quo - Opportunity to place a book bet with the status quo contract allowing to payback a week after and no decision-aid provided
Experimental Design Details
Randomization Method
Randomization done in office by a computer in Stata.
Randomization Unit
Individual Gambler
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
16000 individual gamblers are given the opportunity to participate.
Sample size: planned number of observations
16000
Sample size (or number of clusters) by treatment arms
4000 per treatment arm.
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
New Economic School's Instituional Review Board
IRB Approval Date
2022-03-04
IRB Approval Number
n/a

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