This is the sixth in a series of papers prepared by a collection of economists and policy experts in the United States, the UK, and the European Union who have studied, and are committed to the improvement of, competition in digital markets. Previous papers addressed consumer protection in online markets, regulating the market for general search services, the concepts of “fairness” and “contestability” as used in the Digital Markets Act, the use of “equitable interoperability” as a “super tool” to restore and encourage competition in online markets, and coherence between US and European approaches to digital regulation.
We study the effects of defaults on charitable giving in a large-scale field experiment on an online fundraising platform. We exogenously vary default options along two choice dimensions: the charitable donation decision and the “co-donation” decision regarding how much to contribute to supporting the platform. We document a strong effect of defaults on individual behavior but nevertheless find that aggregate donation levels are unaffected by defaults. In contrast, co-donations increase in the default amount. We complement our experimental results with a structural model that investigates whether personalizing defaults based on individuals' donation histories can increase donation revenues.
We explore conclusions a person draws from observing society when he allows for the possibility that individuals' outcomes are affected by group-level discrimination. Injecting a single non-classical assumption, that the agent is overconfident about himself, we explain key observed patterns in social beliefs, and make a number of additional predictions. First, the agent believes in discrimination against any group he is in more than an outsider does, capturing widely observed self-centered views of discrimination. Second, the more group memberships the agent shares with an individual, the more positively he evaluates the individual. This explains one of the most basic facts about social judgments, in-group bias, as well as "legitimizing myths" that justify an arbitrary social hierarchy through the perceived superiority of the privileged group. Third, biases are sensitive to how the agent divides society into groups when evaluating outcomes. This provides a reason why some ethnically charged questions should not be asked, as well as a potential channel for why nation-building policies might be effective. Fourth, giving the agent more accurate information about himself increases all his biases. Fifth, the agent is prone to substitute biases, implying that the introduction of a new outsider group to focus on creates biases against the new group but lowers biases vis a vis other groups. Sixth, there is a tendency for the agent to agree more with those in the same groups. As a microfoundation for our model, we provide an explanation for why an overconfident agent might allow for potential discrimination in evaluating outcomes, even when he initially did not conceive of this possibility.
We explore conclusions a person draws from observing society when he allows for the possibility that individuals' outcomes are affected by group-level discrimination. Injecting a single non-classical assumption, that the agent is overconfident about himself, we explain key observed patterns in social beliefs, and make a number of additional predictions. First, the agent believes in discrimination against any group he is in more than an outsider does, capturing widely observed self-centered views of discrimination. Second, the more group memberships the agent shares with an individual, the more positively he evaluates the individual. This explains one of the most basic facts about social judgments, in-group bias, as well as "legitimizing myths" that justify an arbitrary social hierarchy through the perceived superiority of the privileged group. Third, biases are sensitive to how the agent divides society into groups when evaluating outcomes. This provides a reason why some ethnically charged questions should not be asked, as well as a potential channel for why nation-building policies might be effective. Fourth, giving the agent more accurate information about himself increases all his biases. Fifth, the agent is prone to substitute biases, implying that the introduction of a new outsider group to focus on creates biases against the new group but lowers biases vis a vis other groups. Sixth, there is a tendency for the agent to agree more with those in the same groups. As a microfoundation for our model, we provide an explanation for why an overconfident agent might allow for potential discrimination in evaluating outcomes, even when he initially did not conceive of this possibility.