Essays in macroeconomics and experiments

Abstract

This dissertation consists of four chapters on empirical and experimental macroeconomics and other experimental topics. Chapter 1 uses a laboratory experiment to test the predictions of a dynamic global game designed to capture the role of information and coordination in speculative attacks. The game has a large number of heterogeneously informed agents deciding whether to attack a status quo; the status quo in turn collapses if enough agents choose to attack. The theory predicts that the equilibrium size of the attack is decreasing in both the underlying strength of the status quo and the agents' cost of attacking. Furthermore, the knowledge that the status quo has survived a past attack decreases the incentive to attack, implying that a new attack is possible only if agents receive new information. Our experimental evidence supports these theoretical predictions. We identify the agents' beliefs about the actions of others to be the main channel through which the relative strength of the status quo, the cost of attacking, and learning impact observed behavior. However, we also find that the subject's actions are overly aggressive relative to the theory's predictions. Once again, we find that the excess aggressiveness in actions stems from the aggressiveness of their beliefs about others' actions. Chapter 2 studies gender inequality in performance. One explanation for this inequality is that the genders perform differently under competitive conditions, as previous experimental studies have found a significant gender gap in competitive tasks that are perceived to favor men. We use a verbal task that is perceived to favor women and find no gender difference under competition per se.

(cont.) We also reject the hypothesis that a "stereotype threat" explains the inability of women to improve performance under competition: even in verbal tasks, competition does not increase women's performance. We offer an alternative explanation for this finding: namely, that women and men respond differently to time pressure. With reduced time pressure, competition in verbal tasks greatly increases the performance of women, such that women significantly outperform men. This effect appears largely due to the fact that extra time in a competition improves the quality of women's work, leading them to make fewer mistakes. On the other hand, men use this extra time to increase the quantity of work, which results in a greater number of mistakes. Chapter 3 studies the effects of institutions on development in post-Communist Russia. Even though Russia transitioned to a democratic institutional system in 1991, old Communist institutions persist in some of its regions. These "shadow institutions" have a significant effect on economic outcomes and, in particular, on small business development. We show that regions run by old Communist elites have had lower levels of economic development than regions led by newcomers to the political arena. Chapter 4 uses a laboratory experiment to investigate whether an uninformative announcement by an outsider can help us detect multiplicity in a dynamic global game setting. When theory predicts a unique equilibrium, the announcement should have no effect on behavior. In the presence of multiplicity, the announcement may serve as a coordination device. The experimental results suggest that the effect of the uninformative announcement is significant only in circumstances where information dynamics result in multiple equilibria. Moreover, the announcement seems to impact observed behavior through its effect on the subjects' beliefs about others' actions.