Alessandro Innocenti University of Siena

in collaboration with Patrizia Lattarulo (IRPET) and Maria Grazia Pazienza (University of Firenze)

VII LABSI WORKSHOP ON BEHAVIORAL AND EXPERIMENTAL ECONOMICS,

SIENA 13-14 APRIL 2010

Many experimental economists seem to view their enterprise as akin to silicon chip production. Subjects are removed from all familiar contextual cues. Like the characters 'thing one' and 'thing two' in Dr. Suess' Cat in the Hat, buyers and sellers become 'persons A and B', and all other information that might make the situation familiar and provide a clue about how to behave is removed.

George Loewenstein (1999)

The context-free experiment is an elusive goal and not necessarily a good thing

Games in the laboratory are usually played without labels but subjects inevitably apply their own labels

A major discovery of cognitive psychology is how all forms of thinking and problem solving are context-dependent (language comprehension)

The laboratory is not a socially neutral context, but is itself an institution with its own formal or informal, explicit or tacit, rules

Jones-Sudgen (2001)

Wason’s selection task to test positive bias confirmation: tendency, when testing an existing belief, to search for evidence which could confirm that belief, rather than for evidence which could disconfirm it

  Correct response is facilitated by adding thematic

content to the task, i.e. by providing a cover story which accounts for the statement and gives some point to the selection task

Aim: to extend previous experimental evidence on travel mode choice by providing subject not only with information acquired through personal experience, but also with actual travel times of the alternative non chosen travel modes

Key Findings: subjects show a marked preference for cars are inclined to confirm their first choices exhibit a low propensity to change travel mode

Experimental literature on travel mode choice relies widely on studies on route choice

Common object: coordination games, i.e. the payoff each traveler can achieve is conditional on her/his ability to diverge from or to converge with other travelers’ choices

Selten et al. (2007), Ziegelmeyer et al. (2008), Razzolini-Dutta (2009) provide laboratory evidence that choices between route A and route B generate Nash equilibria

Evidence from the field shows that these learning processes are affected by cognitive biases (Kareev et al. 1997, Verplanken–Aarts 1999)

To provide travelers with more accurate information on actual travel times does not necessarily increase their propensity to minimize travel costs (Avineri-Prashker 2006)

Information is better processed when travelers lack long-term experience on travel time distribution (Ben Elia–Erev-Shiftan 2008)

Cars are generally perceived as travel means giving people the sensation of freedom and independence

The costs associated to car use are undervalued because they not paid contextually with car use

Pollution or social costs due to car accidents are often neglected and not easily computable

These factors explain the presence of a general propensity to use private cars and of a psychological resistance to reduce it

Van Vugt et al. 1995, Tertoolen et al. 1998, Bamberg et al. 2003

62 undergraduate students (31 women and 31 men) from the University of Firenze

Computerized experiment

Between subject

Each session lasted approximately an hour

Average earnings 18.4 euro

1) Choice between car or metroMetro travel costs are fixed, while car costs are uncertain and determined by the joint effect of casual events and traffic congestion

2) Choice between car or busCar and bus are both uncertain and determined by the combination of casual events and traffic congestion.

Travelers’ utility only depends on travel times, which are converted in monetary costs. After each choice, subjects are informed of actual times of both available modes, but not of the probability distributions determining casual events

Table 2 Experimental parameters made known to subjects

Treatment Car Expected Time Travel (in minutes)

Car Fixed Cost

Metro / Bus Expected Time

Travel

Metro / Bus Fixed Cost

Metro vs. Car 25 1.5 30 1.0

Bus 1.0 vs. Car 27 1.5 32 1.0

Bus 0.8 vs. Car 27 1.5 32 0.8

Metro Car treatment- the expected total costs of car and metro were equivalent if the share of car users was not greater than 55%;

Bus 1.0 Car treatment - the expected total costs of car and bus were equivalent if the share of car users was not greater than 55%;

Bus 0.8 Car treatment- the expected total cost of the bus was 20% lower than car expected total costs if the share of car users was not greater than 55%.

Table 8 Proportion of car choices by treatment (each five periods)

Period Metro Bus 1.0 Bus 0.8 1 0.70 0.60 0.59 5 0.67 0.67 0.35

10 0.60 0.47 0.35 15 0.57 0.67 0.47 20 0.57 0.53 0.53 25 0.77 0.53 0.41 30 0.67 0.73 0.71 35 0.70 0.60 0.71 40 0.60 0.53 0.53 45 0.67 0.60 0.53 50 0.73 0.53 0.53

Total 0.68 0.58 0.50

The first choice effect decreases the propensity to change travel mode

Only 28.6% of the subjects in the metro treatment and 39% of the subjects in the bus treatments change more than 20 times over 50 periods.

On average, subjects change mode 17.7 times in the metro treatment and 18.0 times in the bus treatments

Travel mode choice is significantly affected by heuristics and biases that lead to robust deviations from rational behaviour

Travelers choose modes using behavioural rules that do not necessarily involve the minimization of total travel costs.

Subjects show a marked preference for cars, are inclined to confirm their first choice and exhibit a low propensity to change travel mode.

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In repeated travel mode choice, available information is not properly processed, cognitive efforts are generally low and rational calculation play a limited role

The habit of using cars should be assumed to be relatively resistant, to the effect of economic incentives

Little progress can be expected by asking travelers to voluntarily reduce the use of a car or even by subsidizing public transport costs

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One of the basic tenets of laboratory methodology is that the use of non-professional subjects and monetary incentives allows making subjects’ innate characteristics largely irrelevant

In our experiment, it is as if subjects take into the lab the preferences applied to real choices and stick to them with high probability

This inclination to prefer cars tends to override the incentives effect

Labels give subjects clues to become less and not more rational

Internal validity - ability to draw confident causal conclusions from one's research

External validity - ability to generalise from the research context to the settings that the research is intended to approximate

Experiments have the reputation of being high in internal validity but low in external validity

Field studies of being low in internal validity but high in external validity

In our experiment, subjects’ behavior depends more on prior learning outside the laboratory than on expected gains in the laboratory

Labels have the power to increase external validity with a minimal sacrifice of the internal validity

To test learning and cognitive models, it is necessary to remind and to evoke contexts which may activate emotions, association, similarities in the laboratory