Alexander Coutts

Assistant Professor of Economics, Schulich School of Business

Publications
People often receive feedback that is influenced by factors beyond their ability, yet little is known about how this affects self-serving biases. Our theoretical model shows how environments with multi-dimensional uncertainty can provide additional degrees of freedom that facilitate self-serving bias. In our Primary experiment, individuals receive feedback about their ability, bundled with another dimension of uncertainty - a teammate's ability. We observe self-serving biases in belief updating, enabled by positive distortions about the teammate's performance. Yet, in a Follow-up experiment where the teammate is replaced by a random fundamental, individuals exhibit unbiased updating of both the fundamental and their own ability. A Validation experiment affirms that people find it easier to distort beliefs when outcomes originate from human actions. Overall, our experiments demonstrate that multi-dimensional environments can enable self-serving biases when individuals have sufficient leeway to manipulate their beliefs.
Beyond the direct destructive nature of war, conflict may also have complex impacts on social preferences and norms, as well as on risk-taking behavior. This paper examines the enduring impact of conflict on preferences and behavior by studying different versions of public goods games conducted nearly two decades after the Rwandan genocide, leveraging variation in radio reception among villages in 1994, which determined exposure to hate-propaganda messages inciting conflict. Results indicate that communities exposed to greater violence exhibit increased cooperation, active punishment, and risk-taking. Exploiting the heterogeneity in participants' ages of conflict experience, enhanced cooperation is entirely driven by those who were children during the genocide, while norm enforcement through punishment and reward is more prominent among older individuals. Risk-taking increases are observed across all age groups. The results allow for a reassessment of previous research and highlight the psychological imprint of conflict exposure in line with the literature on early childhood development.
Corruption is often harmful for economic development, yet it is difficult to measure due to its illicit nature. We propose a novel corruption game to characterize the interaction between actual political leaders and citizens, and implement it in Northern Mozambique. Contrary to the game-theoretic prediction, both leaders and citizens engage in corruption. Importantly, corruption in the game is correlated with real-world corruption by leaders: citizens send bribes to leaders whom we observe appropriating community money. In corrupt behavior, we identify an important trust dimension captured by a standard trust game.
Use of lab-in-the-field experiments has steadily increased, given benefits of studying relevant populations and their preferences. In the field, researchers must often relinquish the control of a standard laboratory, raising the specter of communication from past to future participants. Little is known about the consequences of such spillovers, and recent literature indicates variation in how authors deal with them. I provide estimates of communication spillovers using existing data from public goods games in Rwanda, leveraging variation in planning the sequence of visiting 147 villages. The resulting order created opportunities for some villages to communicate with past participants. Using ex-post matching of villages with and without these opportunities I find that communication led to substantial increases in cooperation, suggesting that unanticipated spillovers can bias inference. I conclude with advice for creating protocols to deal with communication spillovers.
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Natural resources can have a negative impact on the economy through corruption and civil conflict. This paper tests whether information can counteract this political resource curse. We implement a large-scale field experiment following the dissemination of information about a substantial natural gas discovery in Mozambique. We measure outcomes related to the behavior of citizens and local leaders through georeferenced conflict data, behavioral activities, lab-in-the-field experiments, and surveys. We find that information targeting citizens and their involvement in public deliberations increases local mobilization and decreases violence. By contrast, when information reaches only local leaders, it increases elite capture and rent-seeking.
Bayesian updating remains the benchmark for dynamic modeling under uncertainty within economics. Recent theory and evidence suggest individuals may process information asymmetrically when it relates to personal characteristics or future life outcomes, with good news receiving more weight than bad news. I examine information processing across a broad set of contexts: 1) ego relevant, 2) financially relevant, and 3) non value relevant. In the first two cases, information about outcomes is valenced, containing either good or bad news. In the third case, information is value neutral. In contrast to a number of previous studies I do not find differences in belief updating across valenced and value neutral settings. Updating across all contexts is asymmetric and conservative: the former is influenced by sequences of signals received, a new variation of confirmation bias, while the latter is driven by non-updates. Despite this, posteriors are well approximated by those calculated using Bayes' rule. Most importantly these patterns are present across all contexts, cautioning against the interpretation of asymmetric updating or other deviations from Bayes' rule as being motivated by psychological biases.
Optimistic beliefs affect important areas of economic decision making, yet direct knowledge on how belief biases operate remains limited. To better understand these biases I introduce a theoretical framework that trades off anticipatory benefits against two potential costs of forming biased beliefs: (1) material costs which result from poor decisions, of Brunnermeier and Parker (2005), and (2) direct psychological costs of distorting reality, of Bracha and Brown (2012). The experiment exploits the potential of the increasingly popular BDM elicitation procedure adopted to lotteries to distort beliefs in different directions, depending on which costs are most important. Relative to an elicitation procedure without distortionary incentives, beliefs are biased in the optimistic direction. Increasing payments for accuracy further increases belief reports, in many cases away from the truth, consistent with psychological costs of belief distortion. Yet the overall results suggest that theories of optimism based on anticipatory benefits and material or psychological costs fail to explain how beliefs respond to financial incentives.
Working Papers
Feedback is a vital tool used by organizations and educators to improve performance, spark learning, and foster individual growth. Yet, anecdotal evidence suggests that many individuals are hesitant to provide others with feedback. Moreover, gender biases may influence its provision, with consequences for the representation of women in leadership and competitive professions. We study feedback provision under different conditions that vary the precision and valence of performance signals, their instrumentality, and gender of the recipient. Our results reveal that a substantial degree of feedback is obscured. Moreover, negative feedback is more likely to be obscured from women in conditions characterized both by a lack of complete information about performance, and feedback that is not immediately instrumental for the recipient's decision-making. This effect is driven by male advisors. Our findings showcase how gender biases can arise in feedback provision, and highlight when these biases may be more likely to appear.
Work in Progress