Experimental Design Details
Below we describe the experimental design for our control group. Our treatment groups share the same experimental design with only some slight alterations, which we also describe below. Our experiment consists of six stages:
Stage 1: Subjects perform an effort task. In our case the effort task is the slider task of Gill and Prowse (2012). In this task subjects have to adjust sliders that range from a minimum to a maximum number, such that each slider shows a specific number. In our case, we have sliders that range from 0 until 100 which subjects need to adjust to exactly 50. Subjects have one minute to adjust as many sliders as possible at the number 50. Subjects' performance is measured as the number of correctly adjusted sliders. Before the effort task, we inform subjects that their performance in the effort task may positively affect their chances to earn money in the experiment but we do not give further details about the experiment.
Stage 2: We measure subjects' belief about their effort performance by asking them to rank themselves among 7 others, who have previously done the slider task. Since subjects on Prolific do not perform the experiment at the same time (this would be feasible on Prolific in principle, but it is too costly for our experimental budget and also rather complicated to conduct in practice), we conducted a pre-study on Prolific, where participating subjects only did the slider task. We use the data on performance of those participating subjects in the pre-study as comparison for the subjects in our main experiment i.e. the "7 others" are taken from this pre-study. We tell our subjects that they are ranked against subjects from the pre-study. We incentivize this belief elicitation by paying a bonus after the experiment only if a subject ranks herself exactly correctly among the 7 others.
Stage 3: We determine a payoff for every subject. This payoff is either determined by the performance in the effort task or by sheer luck. We have eight different payoffs, ranging from 1 EC (experimental currency, which we later convert to real money) to 8 EC in steps of 1EC. If a subject's payoff is determined according to effort, we simply take her rank in the effort task among the 7 others and assign the payoff according to this rank: If she ranks first, she gets 8 EC, rank 2 gets 7 EC etc. until rank 8, who gets 1 EC. If a subject's payoff is determined by luck, we simply assign each payoff with a 12.5% probability. Whether a subject's payoff is determined by effort or luck is random: With a specific probability p, effort is deterministic for the payoff. We vary this probability p across all our treatments: We use three different values for p (0.8; 0.5 and 0.2). We explain the above mentioned mechanism which determines payoffs to our subjects. Subjects see their assigned payoff, but not whether their payoff was determined according to effort or luck.
Stage 4: We ask subjects about how likely they think it is that their payoff was determined by effort rather than luck. Note that this is a non-trivial question, because subjects can combine the information they have from knowing their assigned payoff with their belief about their effort task performance to form a "posterior" belief about the probability that effort rather than luck was deterministic for their payoff. For instance, a subject who thinks of herself as ranking well in the effort task and who received a high payoff can plausibly infer that it is more likely that her payoff was being determined by effort rather than luck. We do not incentivize this belief elicitation because we want to give room for the formation of motivated beliefs.
Stage 5: Subjects decide upon a redistributive tax between 0% and 100%. The tax is redistributive, as it brings high and low payoffs closer together. The tax comes at a per subject efficiency cost, which increases with the tax rate. We randomly pick one subject's tax choice as being pivotal i.e. as the tax which applies to a group of 8 subjects, the pivotal subject included, of course. We use this simple voting mechanism to deter strategic voting. Subjects are aware of this voting mechanism.
Stage 6: Subjects choose from a menu of risky and riskless hypothetical payoffs. We include this stage in order to measure subjects' risk preferences. All choices in stage 6 are unincentivized.
Our treatments follow mainly the same experimental design with slight alterations:
In our justifying beliefs treatment everything is the same as in our control group, except that we tell subjects about stage 5 before stage 4 i.e. we inform subjects that they will make a choice about a redistributive tax before they state their beliefs regarding whether effort or luck determined their pre-tax payoffs. Thus, they can potentially report higher (lower) beliefs about the importance of effort in determining payoffs in order to justify a low (high) redistribution preference.
In our overconfidence treatment, everything is the same as in our control group, except that we do not inform subjects about their payoffs in stage 3, which is why we also omit stage 4 in this treatment: Asking about the probability that effort determined a subject's payoff is relatively nonsensical, if the subject has no information other than the baseline probability.
Across all our treatments we additionally vary the degree to which a subject’s payoff is determined by effort rather than luck. In the luck condition, subjects’ payoff is determined to 80% by luck and only to 20% by effort. In the effort condition, it is vice versa. In the neutral condition, payoffs are determined according to a 50/50 effort/luck mix. We expect overconfidence to have less of an effect on redistribution preferences in more luck-based treatment conditions. We also study the impact of the effort/luck mix on the effect of justifying beliefs on redistribution preferences.