Working papers results

Gender stereotypes are well established also among women. Yet, a recent literature suggests that earning from other women experience about the effects of maternal employment on children outcomes may increase female labor force participation. To further explore this channel, we design a randomized survey experiment, in which 1500 Italian women aged 20 to 40 are exposed to two informational treatments on the positive consequences of formal childcare on children future educational attainments. Surprisingly, we find that women reduce their intended labor supply.
However, this result hides strong heterogenous effects: high educated non-mothers are persuaded by the informational treatments to increase their intended use of formal child care (and to pay more); whereas low educated non-mothers to reduce their intended labor supply. These findings are consistent with women responding to monetary incentive and/or having different preferences for maternal care. These heterogenous responses across women send a warning signal about the true effectiveness - in terms of take up rates - of often advocated public policies regarding formal child care.

We performed a new test of transitivity based on individual measurements of the main intransitive choice models in decision under uncertainty. Our test is tailor-made and, therefore, more likely to detect violations of transitivity than previous tests. In spite of this, we observed only few intransitivities and we could not reject the hypothesis that these were due to random error. A possible explanation for the poor predictive performance of the intransitive choice models is that they only allow for interactions between acts, but exclude within-act interactions by retaining the assumption that preferences are separable overstates of nature. Prospect theory, which relaxes separability but retains transitivity, predicted choices significantly better than the nontransitive choice models. We conclude that descriptively realistic models need to allow for within-act interactions, but may retain transitivity.

Subject classifications: Utility/preference: Estimation. Decision analysis: Risk.

Area of review: Decision Analysis.

This work addresses the early phases of the elicitation of multiattribute value functions proposing a practical method for assessing interactions and monotonicity. We exploit the link between multiattribute value functions and the theory of high dimensional model representations. The resulting elicitation method does not state any a-priori assumption
on an individual's preference structure. We test the approach via an experiment in a riskless context in which subjects are asked to evaluate mobile phone packages that differ on three attributes.

We provide experimental evidence that subjects blame others based on events they are not
responsible for. In our experiment an agent chooses between a lottery and a safe asset; payment from the chosen option goes to a principal who then decides how much to allocate between the agent and a third party. We observe widespread blame: regardless of their choice, agents are blamed by principals for the outcome of the lottery, an event they are not responsible for. We provide an explanation of this apparently irrational behavior with a delegated-expertise principal-agent model, the subjects' salient perturbation of the environment.

Trading venues often impose a minimum trade unit constraint (MTUC) to facilitate order execution. This paper examines the effects of a natural experiment at Borsa Italiana where the exchange reduced the MTUC to one share for all stocks. After the removal of the MTUC, we observe a substantial improvement in liquidity, measured by a decrease in the bid-ask spread and an increase in market depth. The cross-sectional evidence shows that those firms for which the MTUC was more binding benefit the most from the microstructure change. These findings are consistent with a model of asymmetric information in which the MTUC affects traders' choice of order size. As the model predicts, liquidity improves following the reduction in adverse selection costs.

We show that following a tick size reduction in a decimal public limit order book (PLB) market quality and welfare fall for illiquid but increase for liquid stocks. If a Sub-Penny Venue (SPV) starts competing with a penny-quoting PLB, market quality deteriorates for illiquid, low priced stocks, while it improves for liquid, high priced stocks. As all traders can demand liquidity on the SPV, traders' welfare increases. If the PLB facing competition from a SPV lowers its tick size, PLB spread and depth decline and total volume and welfare increase irrespective of stock liquidity.

A structural Factor-Augmented VAR model is used to evaluate the role of 'news' shocks in generating the business cycle. We find that (i) existing small-scale VAR models are affected by 'non-fundamentalness' and therefore fail to recover the correct shock and impulse response functions; (ii) news shocks have a smaller role in explaining the business cycle than previously found in the literature; (iii) their effects are essentially in line with what predicted by standard theories; (iv) a substantial fraction of business cycle
uctuations are explained by shocks unrelated to technology.

We exploit a change in compulsory schooling laws in Turkey to estimate the causal effects of
education on religiosity and women's empowerment. A new law implemented in 1998 resulted in individuals born after a specific date to be more likely to complete at least 8 years of schooling while those born earlier could drop out after 5 years. This allows the implementation of a Regression Discontinuity (RD) Design and the estimation of meaningful causal estimates of schooling. Using the 2008 Turkish Demographic Health Survey, we show that the reform resulted in a one-year increase in years of schooling among women on average. Over a period of ten years, this education increase resulted in women reporting lower levels of religiosity, greater decision rights over marriage and higher household consumption (of durables). We find that these effects work through different channels, depending on women's family background. For women whose mothers had no formal education, the reform resulted in them only finishing the compulsory schooling and having higher labor force participation. For women whose mothers had some formal education, the reform had persistent effects beyond compulsory schooling, and these women were subsequently married to more educated (and possibly wealthier) husbands but remained outside the labor force. We interpret these findings as evidence that education may empower women across a wide spectrum of a Muslim society, yet, depending on pre-reform constraints to participation, its effects may not be strong enough to fully overcome participation constraints (in education or the labor force).

In this paper we estimate the marriage market returns to being admitted to a higher ranked (i.e. more "elite") university by exploiting unique features of the Chilean university admission system.This system centrally allocates applicants based on their university entrance test score, which allows us to identify causal effects by using a regression discontinuity approach. Moreover, the Chilean context provides us with the necessary data on the long run outcome 'partner quality'. We find that being admitted to a higher ranked university has substantial returns in terms of partner quality for women, while estimates for men are about half the size and not significantly different from zero.

Many violations of the Independence axiom of Expected Utility can be traced to subjects' attraction to risk-free prospects. Negative Certainty Independence, the key axiom in this paper, formalizes this tendency. Our main result is a utility representation of all preferences over monetary lotteries that satisfy Negative Certainty Independence together with basic rationality postulates. Such preferences can be represented as if the agent were unsure of how risk averse to be when evaluating a lottery p; instead, she has in mind a set of possible utility functions over outcomes and displays a cautious behavior: she computes the certainty equivalent of p with respect to each possible function in the set and picks the smallest one. The set of utilities is unique in a well-defined sense. We show that our representation can also be derived from a 'cautious' completion of an incomplete preference relation.