Contract Enforcement in a Stateless Economy

Last registered on August 18, 2022
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Pre-Trial

Trial Information

General Information

Title
Contract Enforcement in a Stateless Economy
RCT ID
AEARCTR-0009926
Initial registration date
August 13, 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
August 18, 2022, 3:17 PM EDT

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

Locations

Country
Pakistan
Region
South Asia

Primary Investigator

Name
Sultan Mehmood
Affiliation
New Economic School Moscow
Contact Primary Investigator

Other Primary Investigator(s)

PI Name
Daniel Chen
PI Affiliation

Additional Trial Information

Status
Completed
Start date
2022-07-25
End date
2022-08-15
Keywords
Behavior, Crime, Violence, & Conflict, Welfare
Additional Keywords
JEL code(s)
D03, D49, G13, G14, L83
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 into four different contracts: (i) the most common, status quo contract that stipulates spot betting with the pay back the week after (ii) Blacklisting contract that imposes a local or global reputational cost in case of nonpayment (iii) Payment deadline extension treatment that provides a week’s extension to pay back the lost money i.e. pay back deadline in 14 days instead of 7 days; Finally, a (iv) decision aid group where we do not offer any contract but accept the status-quo 7 day pay back contract if the bettor explicitly requests this contract, within this treatment arm, the gambler also receives a decision aid notebook containing odds and historical data relevant to the bet. We pre-register three field outcomes and four strategic dilemmas. The field measures include (a) amount bet, (b) won and lost amount (c) payback amount. The behavioral data are collected for the following for games: (a) risk, (b) confidence, (c) cooperation and (d) coordination.
External Link(s)

Registration Citation

Citation
Chen, Daniel and Sultan Mehmood. 2022. "Contract Enforcement in a Stateless Economy." AEA RCT Registry. August 18. https://doi.org/10.1257/rct.9926-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
Intervention(s)
Treatment 1: 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 in the standard book bet contract)

Treatment 2: Blacklisting Clause embedded within the status quo book bet contract of payment in case of non-payment. The gamblers within this greatment are further cross-randomized into:
T2a: Global Black Listing: the global blacklisting contract stipulates listing names of the gamblers on the notice board of the betting station upon nonpayment and notifying all betting stations about the gambler’s “default”, effectively banning the gambler from all eight betting stations at the race club
T2b: Local Blacklisting: the local blacklisting contract that also lists names of the gamblers on the notice board in case of non payment, as before, but we do not notify other stations at the race club.
Conceptionally, the difference in global and local blacklisting is that the local blacklisting imposes a reputional cost but the potential sanction is limited to one betting stand at the race club, allowing the gambler to bet freely at other stations.

Treatment 3: The third group of gamblers is assigned the standard or most common bookbet contract (payment deadline in 14 versus 7 days).

Placebo or Decision Aid Group: The last group is not explicitly assigned any contract but instead offered a decision aid i.e., a notebook with odds on each horse race and historical data relevant to the bet. This group is also allowed to engage in a status quo 7 day payback deadline booklet but we will not explicitly offer any contract to them
Intervention (Hidden)
Intervention Start Date
2022-07-25
Intervention End Date
2022-08-15

Primary Outcomes

Primary Outcomes (end points)
Field measures: amount bet (denominated in PKR and standardized to mean zero and standard deviation one), win or lost amount (denominated in PKR and standardized to mean zero and standard deviation one), payback amount (denominated in PKR and standardized to mean zero and standard deviation one). Strategic dilemmas: Risk, Confidence, Cooperation, Coordination Games
Primary Outcomes (explanation)
The field measures allow to assess treatment effects in high-stakes setting, while strategic dilemmas allow to explore mechanisms using behavior data. We pre-register exploring only four potential mechanism via these games.

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We will randomly allocate 12000 gamblers at the Lahore Race Derby into four groups of 3000 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: Global Blacklisting Imposed via making the "defaulters" public
T2b: Local Blacklisting by informing the Race Club Guild.

Treatment 3: Provide for free a decision aid containing odds and historical data relevant to bet embedded within the "handicap" decision aid and opportunity to sign standard book bet contract with payback 7 days later.

Placebo or Control: This status quo group is not explicitly assigned any contract but instead offered a decision aid i.e., a notebook with odds on each horse race and historical data relevant to the bet. This group is also allowed to engage in a status quo 7 day payback deadline booklet but we will not explicitly offer any contract to them
Experimental Design Details
Randomization Method
Randomization by shuffling color coded cards at the betting station.
Randomization Unit
Individual gambler
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
12000 individual gamblers (robust standard errors or "clustered" at the individual level since that is the level of randomization.
Sample size: planned number of observations
12000 gamblers for betting amount and wins/losses.
Sample size (or number of clusters) by treatment arms
3000 bettors per treatment arm.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
IRB by the New Economic School Ethics Committee
IRB Approval Date
2022-04-15
IRB Approval Number
IRB 0059/22
Analysis Plan

Analysis Plan Documents

Pre Analysis Plan for Contract Enforcement in a Stateless Economy

MD5: 50a5335f2f62571295890e2ec5b29a1b

SHA1: adacec3e5f3051980ee24789f0f70cfafe9fb757

Uploaded At: August 13, 2022

Post-Trial

Post Trial Information

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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