Essays in behavioural and experimental economics

This thesis is a Thesis by Series of papers. It covers three topics in behavioural and experimental economics: financial decision-making, the endowment effect, and risk preferences in an experimental setting. The first paper is a novel topic that emerges from the increased availability of “Buy Now, Pay Later” (BNPL) financial services. It aims to address whether these types of loans are helpful or harmful to consumers by mimicking an online marketplace and measuring consumer welfare through late fees and bankruptcies. Our experimental results show that when BNPL is accessible, individuals could financially suffer from these consequences. These results are also exacerbated when individuals are given more autonomy in loan repayments. The second paper seeks to add something new to the well-researched topic of the endowment effect by incorporating probabilistic ownership and tangibility into the well-known coffee mug experiment (Kahneman et al. 1990). We use the BDM mechanism (Becker et al., 1964) to measure the endowment effect. Individuals in this study appear to be unaffected by our experimental variables, however, the disparity between Buyers and Sellers, in general, when the mug is tangible, is strong. Finally, the third paper challenges the notion that risk preferences are robust and are an immutable characteristic. Individuals participate in a version of the Gneezy and Potters (1997) investment task where the experimental environment moves from a static to a dynamic setting and also introduces insurance to cover partial losses. Our results show that risk preferences remain to be robust.