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Abstract

This dissertation studies the role of peer effects, social preferences, and social shaming in decision-making. The first chapter, co-authored with Bocar Ba and Roman Rivera, studies peer effects in a police officer's decision to use force. This chapter shows that peer injuries increase the probability of using force by 7% in the subsequent week. Officers are also more likely to injure suspects and receive complaints about neglecting victims and violating suspects' constitutional rights. The effect is concentrated in a narrow time window near the event and is not associated with significantly lower injury risk to the officer. Together, these findings suggest that emotional responses by the officers might drive the increase in force. The second chapter, co-authored with Rafael Jimenez-Duran and Eduardo Laguna-Muggenburg, demonstrates how social preferences can lead consumers to enforce price-ceilings. Thirty-four states have laws against increasing the price of necessary goods during crises, and individuals take costly actions to report violators of these laws. We provide a theoretical explanation for how these consumer reports reflect a willingness to pay to prevent third-party transactions, called repugnance by Roth (2007). We then introduce a new experimental paradigm to measure revealed preferences against illicit transactions with imperfect enforcement, called an Incentivized Reporting Experiment (IRE). We implement IRE during the first wave of COVID-19 to measure the willingness to pay to report sellers who increase personal protective equipment prices. Subjects in the experiment pay to report sellers for price-gouging even when they would be willing to buy the goods at the sellers' price. Subjects also support third-party transactions at high prices even when they are willing to pay to report the seller. The mechanism driving the repugnance towards price-gouging is good specific. Individuals oppose the price-gouging of face masks out of a concern for external consumption. In contrast, individuals oppose the price-gouging of hand sanitizer due to a distaste for firm profits. The final chapter, co-authored with Alejandro Zentner, John List, Marvin Cardoza, and Joaquin Zentner, explores the effect of social shaming on tax compliance in the Dominican Republic. We use two large-scale natural field experiments to examine the effectiveness of deterrence nudges on tax compliance in the Dominican Republic. In collaboration with the tax authority, we sent messages to 84,500 businesses who collectively paid $800 million in the year before the experiment. We provide the first experimental evidence that social shaming is an effective way to increase tax compliance. However, it is much less effective than a prison deterrence message. Overall, we find that increasing the salience of prison sentences or the public disclosure of evasion increases tax revenue by $193 million (0.23% of GDP). Using a unique sample of large firms, we show that the largest firms, who pay 84% of all corporate income taxes, are considerably more responsive to nudges than typically-studied smaller firms.

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