Friday, October 24, 2008

Halloween Economics

With Halloween approaching, I thought it might be fun to bring to your attention a new paper by Dean Karlan et al. This is a great paper on an important and interesting field experiment.

In the paper, the authors discuss and experiment conducted on Halloween 2007 in which they had trick-or-treaters (you know the kids who show up at your door asking for candy) to choose from an ambiguous urn of types of candy or an urn in which the distribution of candy types was known. Here's the abstract:

We examine whether ambiguity aversion correlates with costume choice amongst children at Halloween. We conducted an ambiguity aversion experiment with children on Halloween during trick-or-treating and correlated this with their choice of costumes. We find that children wearing the most commonly chosen costumes are more likely to avoid a gamble with ambiguous odds. This inquiry is in line with a series of recent papers observing whether choices in simple experimental economics games correlate with theoretically similar non-laboratory behavior.
They actually conducted two experiments, but the second one resulted in such a long queue outside one of the author's house that it proved infeasible. In the results section, they discuss a number of kids who particpated in the experiment but were not wearing costumes. Who shows up to go trick-or-treating without a costume? Maybe you forget a bag or something to carry your Halloween bounty in, but no costume? Which brings up the other question, who gives kids with no costume a treat on Haloween? If they don't have a costume, aren't they chaperones? I usually offer the adults in this "trick-or-treaters" a choice between an urn with an ambiguous distribution of beer or known candy. When given this type of offer, they display no ambiguity aversion.

The complete paper is available here.

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