Seminar Vol. 192
Title: Putting Preference for Randomization to Work
Speaker: Zhong Songfa, National University of Singapore
Time: October 25th, 2019 15:00-16:30
Venue: Conference Room 106B, IESR, Zhonghui Building (College of Economics)
About the speaker:
Zhong Songfa is an Associate Professor of Economics at the National University of Singapore. He uses a wide range of methodologies from behavioral economics and experimental economics to genetics and neuroscience to conduct research on decision making, encompassing theory, experiment, and application. Arising from the interdisciplinary nature of his research, Zhong’s works have appeared in economics-oriented journals such as American Economic Review, Econometrica, Management Science, International Economic Review, Review of Economic and Statistics, and Journal of European Economic Association, as well as more biology-oriented ones including Proceedings of the National Academy of Sciences, Neuron, Proceedings of the Royal Society B, and Neuroimage. He is also a Coordinating Editor of Theory and Decision. Zhong was a fellow of the Center for Advanced Study in the Behavioral Sciences at Stanford University from 2018 to 2019. Zhong received his BA in accounting from Peking University in 2003 and his Ph.D. in Economics from the Hong Kong University of Science and Technology in 2009.
Abstract:
Random device such as coin flipping has been commonly used for groups to allocate resources, assign tasks, and resolve disputes among different parties. It has been suggested that individuals may also prefer to leave the decision to randomness when they face difficult choice problems. Despite being practically popular and theoretically appealing, there is a lack of systematic empirical research on how preference for randomization would be put to work. This study presents the first experimental test of coin flipping as a nudge to help resolve choice difficulty in the setting of charity giving. We conduct a randomized field experiment in which coin flipping option is given to potential donors to determine which charities to donate to. We find that the introduction of coin flipping increases donation by 20 percent when choice is hard due to choosing between two similarly attractive charities, but not when choice is relatively easy with matching fund provided to one of the two charities. Additional laboratory experiments replicate the observed patterns and shed further light on the underlying psychological mechanism. More generally, our results point to the power of coin flipping as a nudge when people must make difficult choices.
