Putting Preference for Randomization to Work
Speaker: Songfa Zhong (National University of Singapore)
Date: Oct. 23, Wednesday, 2019
Time: 12 -1 pm
Venue: Room 1050, Pudong Campus
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.
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