# problem set

problem set

In this problem set you will summarize the paper [“Do Workers Work More if Wages Are High? Evidence from a Randomized Field Experiment”](https://www.aeaweb.org/articles?id=10.1257/aer.97.1.298) (Fehr and Goette, AER 2007) and recreate some of its findings.

# Big picture

>**[Q1]** What is the main question asked in this paper?

“{block q1, type = ‘written_answer’}

“

>**[Q2]** Recall the taxi cab studies where reference dependence is studied using observational data. What can an experimental study do that an observational study can’t?

“{block q2, type = ‘written_answer’}

“

>**[Q3]** Summarize the field experiment design.

“{block q3, type = ‘written_answer’}

“

>**[Q4]** Summarize the laboratory experiment design. Why was it included with the study?

“{block q4, type = ‘written_answer’}

“

>**[Q5]** Summarize the main results of the field experiment.

“{block q5, type = ‘written_answer’}

“

>**[Q6]** Summarize the main results of the laboratory experiment

“

>**[Q7]** Why are these results valuable? What have we learned? Motivate your discussion with a real-world example.

“

# Replication

<p style=”color:red”>

*Use theme_classic() for all plots.*

<p style=”color:red”>

## Correlations in revenues across firms

<p style=”color:red”>

*For this section please use dailycorrs.csv.*

<p style=”color:red”>

“

>**[Q8]** The authors show that earnings at Veloblitz and Flash are correlated. Show this with a scatter plot with a regression line and no confidence interval. Title your axes and the plot appropriately. Do not print the plot but assign it to an object called p1.

“{r q8}

“

>**[Q9]** Next plot the kernel density estimates of revenues for both companies. Overlay the distributions and make the densities transparent so they are easily seen. Title your axes and the plot appropriately. Do not print the plot but assign it to an object called p2.

“{r q9}

“

>**[Q11]** Now combine both plots using library(patchwork) and label the plots with letters.

“{r q11, message=FALSE}

“

## Tables 2 and 3

<p style=”color:red”>

*For this section please use tables1to4.csv.*

<p style=”color:red”>

“

### Table 2

On page 307 the authors write:

“Table 2 controls for **individual fixed effects** by showing how, on average, the messengers’ revenues deviate from their person-specific mean revenues. Thus, a positive number here indicates a positive deviation from the person-specific mean; a negative number indicates a negative deviation.”

>**[Q12]** Fixed effects are a way to control for *heterogeneity* across individuals that is *time invariant.* Why would we want to control for fixed effects? Give a reason how bike messengers could be different from each other, and how these differences might not vary over time.

“

>**[Q13]** Create a variable called totrev_fe and add it to the dataframe. This requires you to “average out” each individual’s revenue for a block from their average revenue: $x_i^{fe} = x_{it} – \bar{x}_i$ where $x_i^{fe}$ is the fixed effect revenue for $i$.

“{r q13}

“

>**[Q14]** Use summarise() to recreate the findings in Table 2 for “Participating Messengers” using your new variable totrev_fe. (You do not have to calculate the differences in means.)

>

> In addition to calculating the fixed-effect controled means, calculate the standard errors. Recall the standard error is $\frac{s_{jt}}{\sqrt{n_{jt}}}$ where $s_{jt}$ is the standard deviation for treatment $j$ in block $t$ and $n_{jt}$ are the corresponding number of observations.

>

> (Hint: use n() to count observations.) Each calculation should be named to a new variable. Assign the resulting dataframe to a new dataframe called df_avg_revenue.

“{r q14}

“

>**[Q15]** Plot df_avg_revenue. Use points for the means and error bars for standard errors of the means.

>

*To dodge the points and size them appropriately, use*

“{r, eval = FALSE}

geom_point(position=position_dodge(width=0.5), size=4)

“

*To place the error bars use*

“{r, eval=FALSE}

geom_errorbar(aes(

x=block,

ymin = [MEAN] – [SE], ymax = [MEAN] + [SE]),

width = .1,

position=position_dodge(width=0.5))

“

*You will need to replace [MEAN] with whatever you named your average revenues and [SE] with whatever you named your standard errors.*

“{r q15}

“

>**[Q16]** Interpret the plot.

“

### Table 3

>**[Q17]** Recreate the point estimates in Model (1) in Table 3 by hand (you don’t need to worry about the standard errors). Assign it to object m1. Recreating this model requires you to control for individual fixed effects and estimate the following equation where $\text{H}$ is the variable high, $\text{B2}$ is the second block (block == 2) and $\text{B3}$ is the third block (block == 3`):

$$y_{ijt} – \bar{y}_{ij} = \beta_1 (\text{H}_{ijt} – \bar{\text{H}}_{ij}) + \beta_2 (\text{B2}_{ijt} – \bar{\text{B2}}_{ij}) + \beta_3 (\text{B3}_{ijt} – \bar{\text{B3}}_{ij}) + (\varepsilon_{ijt} – \bar{\varepsilon}_{ij})$$

Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

## Calculate the price of your order

Total price:
\$0.00

How it works?

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

## Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.