Working Paper: NBER ID: w31930
Authors: Yvonne Jie Chen; Deniz Dutz; Li Li; Sarah Moon; Edward J. Vytlacil; Songfa Zhong
Abstract: This paper develops a partial-identification methodology for analyzing self-selection into alternative compensation schemes in a laboratory environment. We formulate a model of self-selection in which individuals select the compensation scheme with the largest expected valuation, which depends on individual- and scheme-specific beliefs and non-monetary preferences. We characterize the resulting sharp identified sets for individual-specific willingness-to-pay, subjective beliefs, and preferences, and develop conditions on the experimental design under which these identified sets are informative. We apply our methods to examine gender differences in preference for winner-take-all compensation schemes. We find that what has commonly been attributed to a gender difference in preference for performing in a competition is instead explained by men being more confident than women in their probability of winning a future (though not necessarily a past) competition.
Keywords: self-selection; competition; gender differences; willingness to pay; beliefs and preferences
JEL Codes: C25; C91; J16; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| gender differences in confidence about winning future competitions (Z22) | willingness to enter competition (L13) |
| men's overconfidence regarding chances of winning (D80) | gender gap in competition entry (J16) |
| beliefs about future performance (D84) | selection into competitive compensation schemes (M52) |
| gender differences in confidence (J16) | willingness to pay for competitive schemes (D44) |
| men valuing competitive compensation schemes higher than women (J33) | gender gap in competition entry (J16) |