The Economic Preferences of Cooperative Managers
Guillermo Alves (CAF)
Pablo Blanchard (Universidad de la Republica)
Gabriel Burdin (University of Leeds & IZA)
Andres Dean (Universidad de la Republica)
Mariana Chavez (Universidad de la Republica)

Abstract : A growing body of research has been investigating the role of management practices and managerial behaviour in conventional private firms and public sector organizations. However, little is known about managers’ behavioural profile in noninvestor-owned firms. This paper aims to fill this gap by providing a comprehensive behavioural characterization of managers employed in cooperatives. We gathered incentive-compatible measures of risk preferences, time preferences, reciprocity, altruism, and trust from 196 Uruguayan managers (half of them employed in worker cooperatives) and 92 first-year undergraduate students. To do this, we conducted a high-stakes lab-in-the-field experiment in which participants played a series of online experimental games and made incentivised decisions. The average payoff in the experiment was approximately 2.5 times higher than the average local managerial wage in the private sector. Our key findings are that (1) the fraction of risk loving subjects is lower among co-op managers compared to conventional managers, and (2) co-op managers appear to be more altruistic than their conventional counterparts. Interestingly, we do not observe significant differences between the two groups across other preference domains, such as impatience, trust, and reciprocity.

Fostering Savings by Commitment: Evidence from a Quasi-natural Experiment at the Small Enterprise Foundation in South Africa
Lucia Dalla Pellegrina (Università degli Studi di Milano-Bicocca)
Angela De Michele (The Small Enterprise Foundation (SEF))
Giorgio Di Maio (Università degli Studi di Milano-Bicocca)
Paolo Landoni (Politecnico di Torino)

Abstract : We study the effects of a pilot project that changed the saving incentive mechanisms set up by the Small Enterprise Foundation (SEF), a leading microfinance institution based in South Africa. The program aimed at introducing a stimulus to save in the form of the possession of “Goal Card” whereby clients owning this tool were asked to identify a saving goal and to commit to a regular saving amount. The experiment had quasi-natural approach, as it has been implemented by SEF in selected locations starting from May 2015. Diff-in-diff estimates show an improvement in the savings performance of the SEF customers treated with the program, compared to the counterfactual. Besides the evaluation of the program’s main effects, we investigate the clients’ understanding of the pilot and their attitude towards saving, as well as the quality of the pilot’s administration and its operational challenges, through the administration and analysis of surveys conducted on both the treated and control groups of clients.

Corporate Social Responsibility Under Imperfect Regulatory Oversight
Jean-Etienne de Bettignies (Queen's University)
Hua Fang Liu (Queen's University)
David T. Robinson (Duke University and NBER)

Abstract : We study a model in which corporate social responsibility (CSR) arises endogenously in response to imperfect regulatory oversight. In our model, a firm, a regulator, and workers interact. The firm generates profits but creates negative spillovers that can be attenuated through regulation. A regulator who cannot perfectly monitor firm compliance may have to set inefficiently loose regulation in order to ensure firm compliance. The firm may then hire a socially responsible worker who enjoys over-complying with regulation and taking actions to ameliorate the negative spillovers; the firm then benefits by extracting rents created by allowing this worker to engage in CSR. The key prediction of our model is that a reduction in regulatory oversight leads to an increase in CSR. We test the model in two ways. Using UK data we find that firms on average had lower CSR ratings after the introduction of mandatory greenhouse gas emissions disclosures compared to firms from the other 15 European countries which did not have a mandatory disclosure policy in place. Using US data, we find that industries most hit by outsourcing and globalization are those that increase their CSR scores the most. Both sets of results support the predictions of the model.

Persistent Overconfidence and Biased Memory: Evidence from Managers
David Huffman (University of Pittsburgh)
Collin Raymond (Purdue University)
Julia Shvets (University of Cambridge)

Abstract : A long-standing puzzle is how overconfidence can persist in settings characterized by repeated feedback. This paper studies managers who participate repeatedly in a high-powered tournament incentive system, learning relative performance each time. Using reduced form and structural methods we find that: (i) managers make overconfident predictions about future performance; (ii) managers have overly-positive memories of past performance; (iii) the two phenomena are linked at an individual level. Our results are consistent with models of moti- vated beliefs in which individuals preserve unrealistic expectations by distorting memories.