|
on Experimental Economics |
|
Issue of 2021‒08‒30
29 papers chosen by |
| By: | Carli, Francesco; Suetens, Sigrid (Tilburg University, Center For Economic Research); Uras, Burak (Tilburg University, Center For Economic Research); Visser, Philine |
| Keywords: | group loan contracts; asymmetric contracts; joint liability; coordination game; microfinance; laboratory experiment |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:918d8091-4038-4d14-af04-84076368f1fd&r= |
| By: | Balafoutas, Loukas; Faravelli, Marco; Sheremeta, Roman |
| Abstract: | We conduct a field experiment on conflict in swimming pools. When all lanes are occupied, an actor joins the least crowded lane and asks one of the swimmers to move to another lane. The lane represents a contested scarce resource. We vary the actor’s valuation (high and low) for the good through the message they deliver. Also, we take advantage of the natural variation in the number of swimmers to proxy for their valuation. Consistent with theoretical predictions, a swimmer’s propensity to engage in conflict increases in scarcity (incentive effect) and decreases in the actor’s valuation (discouragement effect). We complement the results with survey evidence. |
| Keywords: | conflict; conflict resolution; field experiment |
| JEL: | C72 C91 D74 D91 |
| Date: | 2021–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:109380&r= |
| By: | Chua, Kenn; Li, Qingxiao; Rahman, Khandker Wahedur; Yang, Xiaoli |
| Keywords: | Productivity Analysis, International Development, Research Methods/Statistical Methods |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea21:312907&r= |
| By: | Aleksandr Alekseev (University of Regensburg); James Alm (Tulane University); Vjollca Sadiraj (Georgia State University); David L. Sjoquist (Georgia State University) |
| Abstract: | How do exogenous increases in resources to a government affect its expenditure decisions? Economic theory typically predicts that a lump-sum grant will have the same impact on government expenditures as an increase in income. However, empirical studies consistently find that government spending is stimulated far more by grants than by income; that is, grants have a “flypaper effect” because the money “sticks where it hits”. We conduct a laboratory experiment that controls for the most important factors that have been suggested in explaining the existence of the flypaper effect. Our experimental design crosses four transfer delivery methods with three voting frameworks. We examine three payoff-equivalent transfer delivery methods, all relative to a fourth baseline treatment with no transfer: an increase in income, a subsidy (repayment) for expenditures on the public good, and a lump-sum grant. Our two alternative voting frameworks are voting over levels of expenditures and voting over changes with information on public good externalities, each relative to a third baseline treatment where voting is over changes from a default (reference) level of expenditures. We find robust evidence of a flypaper effect: both the subsidy and the lump-sum grant increase expenditures more than does an equivalent increase in income. Our results are largely consistent with, and explained by, theoretical models that rely upon behavioral economics. |
| Keywords: | Laboratory experiment; intergovernmental grants; flypaper effect; reference dependence; public goods; incremental budgeting |
| JEL: | C9 H4 H8 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:2113&r= |
| By: | Silvia Angerer; E. Glenn Dutcher; Daniela Glätzle-Rützler; Philipp Lergetporer; Matthias Sutter |
| Abstract: | Large, macroeconomic shocks in the past have been shown to influence economic decisions in the present. We study in an experiment with 743 subjects whether small-scale, seemingly negligible, events also affect the formation of risk preferences. In line with a reinforcement learning model, we find that subjects who won a random lottery took significantly more risk in a second lottery almost a year later. The same pattern emerges in another experiment with 136 subjects where the second lottery was played more than three years after the first lottery. So, small-scale, random, events affect the formation of risk preferences significantly. |
| Keywords: | reinforcement learning, risk preferences, preference formation, experiment |
| JEL: | C91 D01 D83 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9270&r= |
| By: | Carli, Francesco; Suetens, Sigrid (Tilburg University, School of Economics and Management); Uras, Burak (Tilburg University, School of Economics and Management); Visser, Philine |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:918d8091-4038-4d14-af04-84076368f1fd&r= |
| By: | Vitus Püttmann; Jens Ruhose; Stephan L. Thomsen |
| Abstract: | Academics are increasingly expected to engage in public discussions. We study how engagement conditions affect academics’ engagement attitudes via a survey experiment among 4,091 tenured professors in Germany. Consistent with the crowding-out of intrinsic motivation, we find lesspositive attitudes when emphasizing public authorities’ demands and public expectations regarding science’s societal relevance. Effects are particularly strong among professors endorsing science–society relations. Moreover, effects are similar when highlighting risks associated with engagement, but more pronounced for females, and absent when emphasizing public support for academics’ engagement. We conclude that considering individual incentive structures and safeguarding against repercussions may promote academics’ engagement. |
| Keywords: | science communication, public engagement, professor, survey experiment, intrinsic motivation |
| JEL: | I23 O33 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9258&r= |
| By: | Backhaus, Teresa (Center for Mathematical Economics, Bielefeld University); Breitmoser, Yves (Center for Mathematical Economics, Bielefeld University) |
| Abstract: | Reanalyzing 12 experiments on the repeated prisoner’s dilemma (PD), we robustly observe three distinct subject types: defectors, cautious cooperators and strong cooperators. The strategies used by these types are surprisingly stable across experiments and uncorrelated with treatment parameters, but their population shares are highly correlated with treatment parameters. As the discount factor increases, the shares of defectors decrease and the relative shares of strong cooperators increase. Structurally analyzing behavior, we next find that subjects have limited foresight and assign values to all states of the supergame, which relate to the original stage-game payoffs in a manner compatible with inequity aversion. This induces the structure of coordination games and approximately explains the strategies played using Schelling’s focal points: after (*c;c*) subjects play according to the coordination game’s cooperative equilibrium, after (*d;d*) they play according to its defective equilibrium, and after (*c;d*) or (*d;c*) they play according to its mixed equilibrium. |
| Keywords: | Repeated game, Behavior, Tit-for-tat, Mixed strategy, Memory, Belief-free equilibrium, Laboratory experiment |
| Date: | 2021–08–24 |
| URL: | http://d.repec.org/n?u=RePEc:bie:wpaper:652&r= |
| By: | Nicolas Jacquemet (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Stéphane Luchini; J Rosaz; J Shogren |
| Abstract: | In a competitive business environment, dishonesty can pay. Self-interested executives and managers can have incentive to shade the truth for personal gain. In response, the business community has considered how to commit these executives and managers to a higher ethical standard. The MBA Oath and the Dutch Bankers Oath are examples of such a commitment device. The question we test herein is whether the oath can be used as an effective form of ethics management for future executives/managers-who for our experiment we recruited from a leading French business school-by actually improving their honesty. Using a classic Sender-Receiver strategic game experiment, we reinforce professional identity by pre-selecting the group to which Receivers belong. This allows us to determine whether taking the oath deters lying among future managers. Our results suggest "yes and no." We observe that these future executives/managers who took a solemn honesty oath as a Sender were (a) significantly more likely to tell the truth when the lie was detrimental to the Receiver, but (b) were not more likely to tell the truth when the lie was mutually beneficial to both the Sender and Receiver. A joint product of our design is our ability to measure in-group bias in lying behavior in our population of subjects (comparing behavior of subjects in the same and different business schools). The experiment provides clear evidence of a lack of such bias. |
| Keywords: | Commitment,Lying,In-group bias |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-03277342&r= |
| By: | Florian Englmaier; Stefan Grimm; Dominik Grothe; David Schindler; Simeon Schudy |
| Abstract: | Companies increasingly shift from hierarchical to team-based organizational structures. Scholars and practitioners alike have emphasized the potential of leadership to foster performance in these settings. However, the causal impact of leadership is difficult to identify, as in agile and crossfunctional teams leadership is often determined endogenously. This study exploits a unique opportunity to uncover the value of leadership in a non-routine task performed by teams with flat hierarchies. In a large-scale natural field experiment (>1200 participants in 280 teams), we randomly encourage teams to select a leader before performing a complex task. The leadership encouragement increases the fraction of teams solving the task within the given time limit by about 25% and teams’ remaining times by roughly 75%. Choosing a leader not only improves performance time-wise, but also team organization, without reducing the originality of solutions. Hence, leadership encouragements can serve as a cost-effective tool to foster team performance. |
| Keywords: | teamwork, leadership, non-routine analytical task, complex problem-solving, flat hierarchies |
| JEL: | C92 C93 J33 D03 M52 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9273&r= |
| By: | Zhang, Hanzhe (Michigan State University, Department of Economics); He, Simin (Department of Economics, Shanghai University of Finance and Economics); Wu, Jiabin (Department of Economics, University of Oregon) |
| Abstract: | We experimentally study Becker-Shapley-Shubik matching models. We show that whether efficient matching is assortative and whether the pairwise Nash-Rubinstein bargaining outcome is stable affects matching and surplus; the canonical theory predicts no effect. In markets with equal numbers of participants on the two sides, individual payoffs in our and others’ experiments cannot be explained by existing refinements of the core, but are consistent with our noncooperative model’s prediction. In markets with unequal numbers of participants on the two sides, noncompetitive outcomes—subjects on the long side do not fully compete—are not captured by the canonical theory, but by our noncooperative model. |
| Keywords: | decentralized matching; matching with transfers; assignment games; bargaining experiments |
| JEL: | C71 C72 C78 C90 |
| Date: | 2021–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:ris:msuecw:2021_002&r= |
| By: | Chakravorty, Bhaskar (University of Warwick); Arulampalam, Wiji (University of Warwick); Imbert, Clement (University of Warwick); Rathelot, Roland (University of Warwick) |
| Abstract: | Using a randomised experiment, we show that providing better information about prospective jobs to vocational trainees can improve their placement outcomes. The study setting is the vocational training programme DDU-GKY in India. We find that including in the training two information sessions about placement opportunities make trainees 17% more likely to stay in the jobs in which they are placed. We argue that this effect is likely driven by improved selection into training. As a result of the intervention, trainees that are over-optimistic about placement jobs are more likely to drop out before placement. |
| Keywords: | JEL Classification: |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:567&r= |
| By: | Janet Hua Jiang; Peter Norman; Daniela Puzzello; Bruno Sultanum; Randall Wright |
| Keywords: | Money; mechanism design; experimental economics |
| JEL: | E4 E5 |
| Date: | 2021–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedrwp:92995&r= |
| By: | Anselm Hager (Humboldt-Universität zuBerlin); Lukas Hensel (Peking University); Johannes Hermle (University of California,Berkeley); Christopher Roth (University of Cologne, ECONtribute, briq, CESifo, CAGE Warwick, CEPR) |
| Abstract: | Many social movements face fierce resistance in the form of a countermovement. When deciding to become politically active, a movement supporter, therefore, has to consider both her own movement’s activity, but also that of the opponent. This paper studies the decision of a movement supporter to attend a protest when faced with a counterprotest. We implement two field experiments among supporters of a right- and left-leaning movement ahead of two protest-counterprotest interactions in Germany. Supporters were exposed to low or high official estimates about their own and the opposing group’s turnout. We find that the size of the opposing group has no effect on supporters’ protest intentions. However, as the own protest gets larger, supporters of the right-leaning movement become less, while supporters of the left-leaning movement become more willing to protest. We argue that the difference is best explained by stronger social motives on the political left. |
| Keywords: | social movements; right-wing populism; political activism; field experiment |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:114&r= |
| By: | McCann, Laura M.; Michler, Jeffrey D.; Estrada Carmona, Natalia; Raneri, Jessica; McCann, Laura E. |
| Keywords: | International Development, Food Consumption/Nutrition/Food Safety, Resource/Energy Economics and Policy |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea21:312894&r= |
| By: | Yim, Hyejin; Katare, Bhagyashree; Wetzstein, Michael E.; Park, Timothy A.; Wang, Hong Holly |
| Keywords: | Marketing, Agricultural and Food Policy, Research Methods/Statistical Methods |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea21:312685&r= |
| By: | Nicolas Jacquemet (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Stéphane Luchini (CNRS - Centre National de la Recherche Scientifique, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université); Antoine Malézieux (CEREN - Centre de Recherche sur l'ENtreprise [Dijon] - BSB - Burgundy School of Business (BSB) - Ecole Supérieure de Commerce de Dijon Bourgogne (ESC)) |
| Abstract: | Does giving taxpayers a voice over the destination of tax revenues lead to more honest income declarations? Previous experiments have shown that giving participants the opportunity to select the organization that receives their tax funds tends to increase tax compliance. The aim of this paper is to assess whether this increase in compliance is induced by the sole fact of giving subjects a choice — a "direct democracy effect". To that aim, we ask participants to a tax evasion game to choose, in a collective or individual choice setting, between two very similar organizations which provide the same social (ecological) benefits. We elicit compliance for both organizations before the choice is made so as to control for the counter-factual compliance decision. We find that democracy does not increase compliance, and even observe a slight negative effect — in particular for women. Our results confirm the existence of a commitment effect of democracy, leading to favor more the selected organization when it was actively chosen. The commitment effect of democracy is however not enough to overcome the decrease in the level of compliance. Thanks to response times data, we show that prior choice on similar options as compared to a purely random selection weakens the preference for honesty. One important field application of our results is that democracy in tax spending must offer real choices to tax payers to improve compliance. |
| Keywords: | Commitment,Direct democracy effect,Voting,Tax evasion game |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-03277339&r= |
| By: | Chopra, Felix (University of Bonn); Haaland, Ingar (University of Bergen and CESifo); Roth, Christopher (University of Warwick, briq, CESifo, CEPR, CAGE) |
| Abstract: | Using a large-scale online experiment with more than 8,000 U.S. respondents, we examine how the demand for a politics newsletter changes when the newsletter content is fact-checked. We first document an overall muted demand for factchecking when the newsletter features stories from an ideologically aligned source, even though fact-checking increases the perceived accuracy of the newsletter. The average impact of fact-checking masks substantial heterogeneity by ideology: factchecking reduces demand among respondents with strong ideological views and increases demand among ideologically moderate respondents. Furthermore, factchecking increases demand among all respondents when the newsletter features stories from an ideologically non-aligned source. |
| Keywords: | Fact-checking, News Consumption, Information, Media Bias, Belief Polarization JEL Classification: D83, D91, L82 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:563&r= |
| By: | Choi, Eseul; DePaula, Guilherme M.; Kyveryga, Peter; Fey, Suzanne |
| Keywords: | Environmental Economics and Policy, Production Economics, Risk and Uncertainty |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea21:312893&r= |
| By: | Drydakis, Nick |
| Abstract: | The study replicates the first European field experiment on gay men's labor market prospects in Greece. Utilizing the same protocol as the original study in 2006-2007, two follow-up field experiments took place in 2013-2014 and 2018-2019. The study estimated that gay men experienced occupational access constraints and wage sorting in vacancies offering lower remuneration. It was found that in 2013-2014 and 2018-2019, gay men experienced increasingly biased treatment compared to 2006-2007. Moreover, the results suggested that unemployment bore an association with occupational access constraints and wage sorting in vacancies offering lower remuneration for gay men. In each of the three experiments, this study captured recruiters' attitudes toward gay men. A one standard deviation increase in taste-discrimination attitudes against gay men decreased their access to occupations by 9.6%. Furthermore, a one standard deviation increase in statistical-discrimination attitudes against gay men decreased their access to occupations by 8.1%. According to the findings, in 2013-2014 and 2018-2019, firms excluding gay applicants expressed a higher level of taste- and statistical-discrimination attitudes compared to 2006-2007. A gay rights backlash due to the LGBTIQ+ group's attempt to advance its agenda, rising far-right rhetoric, and prejudice associated with economic downturns experienced in Greece might correspond with increasing biases against gay men. |
| Keywords: | Field experiment,Sexual orientation,Hiring discrimination,Wage sorting,Replication,Backlash,Unemployment,Economic recession |
| JEL: | C93 J7 J16 J31 J42 J64 J71 J83 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:915&r= |
| By: | Dietmar Fehr; Yannick Reichlin |
| Abstract: | We show that perceptions of relative rank in the wealth distribution shape individuals’ willingness to take risks. Using a representative large-scale survey, we manipulate perceptions of relative standing by randomly varying response categories when asking respondents about their wealth level. Respondents who are induced to perceive their relative position as low display more tolerance towards risk in a subsequent incentivized lottery task. This effect is mainly driven by individuals who more firmly believe that life outcomes are beyond their control. This interaction between risk preferences and underlying beliefs spotlights the benefits of incorporating personality traits into economic analysis. |
| Keywords: | relative wealth, risk taking, survey, experiment, locus of control |
| JEL: | D31 D63 D81 D91 E21 I31 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9253&r= |
| By: | Lee, Sunyoung; Zhang, Yu Yvette; Nayga, Rodolfo M. |
| Keywords: | Institutional and Behavioral Economics, Research Methods/Statistical Methods, Food Consumption/Nutrition/Food Safety |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea21:312733&r= |
| By: | Leonardo Bursztyn; David Y. Yang |
| Abstract: | People’s perceptions about others play an important role in shaping their own attitudes and behaviors, as well as social norms more broadly. This review presents a meta-analysis of the recent empirical literature that examines perceptions about others in the field. We document a number of stylized facts. Misperceptions about others are widespread, asymmetric, much larger when about out-group members, and positively associated with one’s own attitudes. Experimental treatments to re-calibrate misperceptions generally work as intended; they sometimes lead to meaningful changes in behaviors, though this often occurs only immediately after the treatments. We discuss different conceptual frameworks that could explain the origin, persistence, and rigidity of misperceptions about others. We point to several directions for future research. |
| JEL: | D8 D84 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29168&r= |
| By: | Gatti, Nicolas; Gomez, Miguel I.; Bennett, Ruth; Bowe, Justine |
| Keywords: | Marketing, Environmental Economics and Policy, Agribusiness |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea21:312754&r= |
| By: | Pangallo, Marco; Heinrich, Torsten; Jang, Yoojin; Scott, Alex; Tarbush, Bassel; Wiese, Samuel; Mungo, Luca |
| Abstract: | We show that the playing sequence–the order in which players update their actions–is a crucial determinant of whether the best-response dynamic converges to a Nash equilibrium. Specifically, we analyze the probability that the best-response dynamic converges to a pure Nash equilibrium in random n-player m-action games under three distinct playing sequences: clockwork sequences (players take turns according to a fixed cyclic order), random sequences, and simultaneous updating by all players. We analytically characterize the convergence properties of the clockwork sequence best-response dynamic. Our key asymptotic result is that this dynamic almost never converges to a pure Nash equilibrium when n and m are large. By contrast, the random sequence best-response dynamic converges almost always to a pure Nash equilibrium when one exists and n and m are large. The clockwork best-response dynamic deserves particular attention: we show through simulation that, compared to random or simultaneous updating, its convergence properties are closest to those exhibited by three popular learning rules that have been calibrated to human game-playing in experiments (reinforcement learning, fictitious play, and replicator dynamics). |
| Keywords: | Best-response dynamics, equilibrium convergence, random games, learning models in games |
| JEL: | C62 C72 C73 D83 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:amz:wpaper:2021-02&r= |
| By: | Borsboom, Charlotte; Füllbrunn, Sascha |
| Abstract: | Companies actively manipulate stock price ranges through IPOs, stock splits, and repurchases. Indeed, empirical results suggest that the stock's price range, whether at a high or low price level, affects market performance. Unfortunately, archival data does not allow us to test the effect of stock price levels on investor behavior due to uncontrolled confound effects. We thus conduct a controlled online experiment with 900 US retail investors to test whether a difference in stock price levels affects the investor's risk perception, the price forecast, and the investment. Even though we �nd no differences in risk perception and forecasts, our results show signi�cantly higher investments in high-priced stocks in comparison to low-priced stocks. This effect disappears when we allow fractional share purchases or restrict naive trading strategies. |
| Keywords: | stock price, nominal stock price puzzle, stock splits, number processing, fractional share purchases, naive trading strategies, numerosity |
| JEL: | C90 D14 G11 |
| Date: | 2021–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:109286&r= |
| By: | Arjan Non (Erasmus University Rotterdam, Erasmus School of Economics); Ingrid Rohde (Open University Netherlands and University of Bonn, Institute for Applied Microeconomics); Andries de Grip (Maastricht University, Research Centre for Education and the Labor Market); Thomas Dohmen (University of Bonn, Institute for Applied Microeconomics; Maastricht University; IZA) |
| Abstract: | We conduct a discrete choice experiment to investigate how the mission of high-tech companies affects job attractiveness and contributes to self-selection of science and engineering graduates who differ in prosocial attitudes. We characterize mission by whether or not the company combines its profit motive with a mission on innovation or corporate social responsibility (CSR). Furthermore, we vary job design (e.g. autonomy) and contractible job attributes (e.g. job security). We find that companies with a mission on innovation or CSR are considered more attractive. Women and individuals who are more altruistic and less competitive feel particularly attracted to such companies. |
| Keywords: | Mission of the company, sorting, discrete choice experiment, job characteristics, social preferences |
| JEL: | J81 J82 M52 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:113&r= |
| By: | Victor Ajayi (EPRG, CJBS, University of Cambridge); David Reiner (EPRG, CJBS, University of Cambridge) |
| Keywords: | Bio-based plastics, mixed logit, discrete choice experiment, willingness to pay, industrial decarbonisation, carbon capture |
| JEL: | D12 C25 Q51 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:enp:wpaper:eprg2033&r= |
| By: | Yau-Huo Shr; Wendong Zhang (Center for Agricultural and Rural Development (CARD)) |
| Abstract: | Discrete choice experiments have been extensively used to value environmental quality; however, some important attributes may often be omitted due to design challenges. In the case of agricultural water pollution, omitting downstream water quality benefits could lead to biased estimates and misinterpretations of local water quality attributes presented in choice experiments. Using a split-sample design and a statewide survey of Iowa residents, we provide the first systematic evaluation of how households' willingness-to-pay for water quality improvement when downstream water quality benefits, hypoxic zone reduction in our case, are omitted. We find that omitting non-local water quality attributes significantly reduces the total economic value of nutrient reduction programs but does not bias the marginal willingness-to-pay for local water quality attributes. We also find suggestive evidence showing that such omission, in line with the theoretical prediction, only changes the preferences of respondents who are aware of the downstream impacts of plans that led to local water quality improvement. In addition, our results show that providing information on the non-local water quality benefits of nutrient reduction increases support for water quality improvement plans but only among local residents who are less informed on water quality issues. |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ias:cpaper:21-wp620&r= |