Stefan Schmidt

Abstract:  I experimentally study determinants of status-seeking behavior in inter-group status contests. In contrast to the previous literature that has focused on social status attached to individuals, I test whether the widely observed inclination to seek social status is affected by identity concerns or the decision-making process within groups when status is assigned to an identity. Results from a laboratory study reveal that participants make significant investments in inter-group status contests, through both effort and costly sabotage. Treatment analyses further show that enhanced identity concerns represent a strong driver for the intensity of status-seeking behavior. This effect originates from a pronounced belief-based mechanism where perceptions of a status threat imposed by competing out-groups are amplified and motivated beliefs justify retaliatory sabotage if the in-group loses status across rounds. Lastly, the increased intensity of status-seeking behavior cannot be explained by changes in the perceived pivotality within group decision-making processes.

Abstract:   Incentives are supposed to increase effort, yet individuals react differently to incentives. We examine this heterogeneity by investigating how personal characteristics, preferences, and socioeconomic background relate to incentives and performance in a real effort task. We analyze the performance of 1,933 high-school students under a Fixed, Variable, or Tournament payment. Productivity and beliefs about relative performance, but hardly any personal characteristics, play a decisive role for performance when payment schemes are exogenously imposed. Only when given the choice to select the payment scheme, personality traits, economic preferences and socioeconomic background matter. Algorithmic assignment of payment schemes could improve performance, earnings, and utility, as we show.

Selection bias (i.e., selection neglect) is often embedded in environments where social identity is salient. For example, a person who only consumes media exhibiting a certain political leaning might suffer from selection bias. Yet, the information on this media will also be transmitted by news presenters and guests that are showing likemindedness with the individual; thus, they can be perceived as in-group members. In this study, we investigate how social identity and selection bias together affect belief formation. We design a novel paradigm where subjects guess a computer-generated number. For each estimation task, subjects observe the guesses of multiple senders who have privately received signals about the correct number. We manipulate whether i) the senders are neutral or belong to an in-group/out-group, and whether ii) the information structure contains no bias, or is designed to induce selection bias. We show that subjects suffer from selection bias, yet importantly, the bias is exacerbated when the observed signals predominantly come from in-group members. In contrast, if the observed signals come from out-group members, subjects become much better in correcting for the bias. Moreover, we show social identity alone does not suffice to cause a bias, but it indeed is the combination of selection bias and social identity that drives our results. Our findings offer insight into the nature of selection bias, and suggest that in many real-world cases, the error in belief formation is much worse than if it were only induced by selection bias.

Abstract:  This project studies the role of beliefs regarding immigrants’ speed of integration as a determinant of immigration preferences. We conduct a representative survey in Germany and relate immigration preferences to individuals’ beliefs regarding immigrants’ speed of integration pertaining to Germany’s culture and economy. Also, we test the effects of correcting misperceptions about immigrants’ integration process on immigration preferences via two information treatments. Our results show that subjects that believe immigrants integrate quickly are more favorable towards immigration, while beliefs of slower integration speed are associated with stronger aversion towards immigration. In further analyses, we show that (i) the relationship between beliefs about the speed of integration and immigration preferences is especially driven by dimensions of cultural integration (ii); the provision of hard information and anecdotal evidence on the speed of integration causally affects immigration preferences; (iii) correcting misperceptions has highly heterogeneous effects conditional on initial beliefs and concerns on cultural diversity.