nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2017‒01‒08
six papers chosen by
Arvi Kuura
Tartu Ülikool

  1. Crowdfunding: Platform Dynamics under Asymmetric Information By Wessel, Michael
  2. Cost-benefit analysis of small hydroelectric generation project utilizing resident volunteers By Eiji Ohno; Ryuta Mori; Akira Matsumoto
  3. Agricultural research impact assessment: Issues, methods and challenges By Pierre-Benoit Joly; Laurence Colinet; Ariane Gaunand; Stéphane Lemarié; Mireille Matt
  4. Economic Research and Education Policy: Project STAR and Class Size Reduction By Moshe Justman
  5. Job security and long-term investment: An experimental analysis By Gary Charness; Ramon Cobo-Reyes; Natalia Jimenez; J. Antonio Lacomba; Francisco Lagos
  6. Financing energy innovation: The role of financing constraints for directed technical change from fossil-fuel to renewable innovation By Noailly, Joëlle; Smeets, Roger

  1. By: Wessel, Michael
    Abstract: Platform ecosystems are a growing trend in various industries and many companies that rely on this organizational structure have seen unprecedented growth rates in recent years. Compared to traditional service providers, platforms do not offer products or services directly to their customers, but almost exclusively through complementors who develop and deliver complementary content. Platforms therefore create value by enabling and coordinating interactions between the demand and the supply side. As these platforms are two-sided markets, they are characterized by distinct cross-side network effects, meaning that each side of the market derives externalities from the participation of the respective other group. Crowdfunding platforms rely on this concept and facilitate transactions between individuals who seek funding for a specific project or venture and prospective investors. Crowdfunding platforms are, however, special as the transactions made via the platforms are particularly risky for end-users because of a high level of information asymmetry existing between the market sides. Though a certain level of information asymmetry exists between the distinct market sides in every two-sided market, a number of factors amplify this problem in the crowdfunding context. For instance, there is usually little to no publicly available information such as customer reviews to evaluate the investments ex-ante. The creators of crowdfunding campaigns are therefore able to overstate quality or withhold information as they control the flow of information towards potential investors. Furthermore, many of the projects that are published on crowdfunding platforms are still in their infancy, making it difficult to accurately predict project outcomes. Compared to other types of two-sided markets, the issue of information asymmetry is also more difficult to resolve in crowdfunding because mechanisms such as reputation systems that are frequently applied in other contexts to mitigate this issue are less relevant on crowdfunding platforms. The actual utility of crowdfunding projects is therefore difficult to ascertain at the time the investment decision has to be made and dynamics of crowdfunding are thus different from those in other platform settings. Many open questions still remain with respect to the optimal market design of crowdfunding platforms in order to mitigate information asymmetries. Against this backdrop, four research studies have been conducted to investigate how the behaviors and actions of the distinct groups of market participants (i.e., platform provider, project creators, backers) influence the decision-making of potential backers on crowdfunding platforms. The first study is concerned with the effects actions taken by platform providers can have for the decision-making of backers. More specifically, it is examined how relaxing the input control for crowdfunding projects on Kickstarter affected the decision-making of backers. The second and third study are concerned with the role of social buzz and contribution behavior by previous backers. While the second study is focused on the dynamic interplay of social buzz, prior-contribution behavior, and the respective effects on backer decision-making, the third study describes the repercussions of non-genuine social media likes for project creators. The final study is focused on the influence project creators can have on backers by signaling certain personality traits through their project description and video. Overall, this thesis highlights that, as a result of the high level of information asymmetry on crowdfunding platforms, prospective backers seek alternative information and signals to use for decision support in the face of uncertainty. Platform providers and project creators may use the results to better understand how and why certain actions or behaviors of market participants on crowdfunding platforms affect the decision-making of prospective backers. The findings may therefore help platform providers to optimize the market design of crowdfunding platforms in order to avoid information-related market failure in the long term.
    Date: 2016–12–07
  2. By: Eiji Ohno; Ryuta Mori; Akira Matsumoto
    Abstract: Small-scale renewable electricity generation projects have the potential to address not just the need to reduce greenhouse gas emissions to combat climate change, but also to provide local, sustainable economic and community revitalization. In this paper, we have proposed a small hydroelectric generation project with citizen participation which includes cooperation in some activities such as cleaning and patrols, and have evaluated the project economically by using the regional input-output (I-O) analysis in which the willingness to work (WTW) is incorporated. The WTW for the project have been estimated by using the conjoint analysis as a function of its various attributes, namely revenue from the project?s electricity sales, profits earned for the local community, and rewards given to contributors. The results show that the amount of WTW provided by resident volunteers will increase with increasing unit value of reward, but the amount of reward paid to volunteers will also increase. On the other hand, the operating income of the establishment that has contracted maintenance of the small hydroelectric supply sector will decrease, and its influence will spread through the inter-industry relations. Then, we have analyzed such economic ripple effect by using the regional I-O table for analysis of small hydroelectric generation project. By considering the range of the "unit value of reward" and the "substitution rate of resident volunteers", even if the project is deficit, we have found a good countermeasure which can be expected positive effects. As a result, it is possible to reduce the subsidies of regional governments with respect to the project, and it is possible to devote that amount of budget to improvement of other administrative services. Although introduction of volunteer activities is finished when the amount of WTW exceeds the consignment work load in this case study, more volunteer activities may be introduced if external economic benefits of volunteers are expected. For example, if the bond of community are strengthened by that residents participate in volunteer activities, the bond strengthened can compensate for the lack of government services such as disaster prevention and welfare, and improvement of resident satisfaction may be expected. By evaluating such external economic benefits and practicing social cost benefit analysis, it is possible to discuss that more volunteer activities should be introduced or not. Such external economic benefits can be measured by the opportunity cost of volunteer activities or the time value of WTW, but this matter will be discussed at the next stage. When this type of small hydroelectric generation project utilizing resident volunteers is introduced, household utility levels increase. Understanding the dynamism between these factors can allow regional governments to adapt the scheme to best fit the needs of individual regions.
    Keywords: small hydroelectric generation; resident volunteers; regional input-output analysis; willingness to work
    JEL: Q42 Q51 R13
    Date: 2016–12
  3. By: Pierre-Benoit Joly; Laurence Colinet; Ariane Gaunand; Stéphane Lemarié; Mireille Matt
    Abstract: The Research Impact Assessment (RIA) is expected to increase the efficiency with which public funds are used, and to improve more broadly the functioning of the research and innovation system and its contribution to address a wide range of socio-economic and environmental issues. Both standard economic approaches, which aim to estimate the economic benefits of research investments, and case-study approaches, which aim to analyse the processes of impact generation, have been applied to agricultural research in practice. Standard economic approaches generally focus on public research as information on private efforts in agricultural research is limited, and on economic impacts such as productivity growth. Case studies provide richer information, through a narrative, and highlight the complex relationships among the various variables, events and actors, but it is difficult to standardise results and scale them up. The challenge for RIA is to take into account broader impacts that go beyond science and economic impacts, and to improve knowledge on impact-generating mechanisms. This has become more difficult as agricultural research and innovation systems are increasingly open and complex, and changing quickly. Observation of practices applied to agricultural research in five selected organisations confirms the difference found in RIA between academic research and in practice. In both, the assessment systems pursue the same objectives: 1) Learning: enhance the know-how to produce an environment conducive to socio-economic impact; 2) Capacity building: spread the culture of socio-economic impact to its researchers; and 3) Reporting to stakeholders: from accountability purposes to advocacy targeted to various audiences. The accountability objective, including estimating returns on the financial investment, poses complex challenges and is in tension with the learning and capacity building objectives. The future of RIA will depend on the capacity to improve estimation methods and gather quality information (which also takes into account non-economic impacts) and the sharing of good practices.
    Keywords: agricultural research, research impact evaluation
    JEL: O31 O38 Q16
    Date: 2016–12–23
  4. By: Moshe Justman (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; and Department of Economics, Ben Gurion University of the Negev)
    Abstract: The use of randomized controlled trials (RCTs) and related randomization strategies to eliminate selection biases in establishing causality is a key element of the “modern experimentalist paradigm” (MEP). Yet, its emphasis on precisely identifying causal factors often limits its capacity to provide an evidence base for policy. We illustrate this through a detailed look at Project STAR, an extensively analyzed, well-funded, large-scale, rigorous RCT commissioned by the Tennessee legislature to help it decide whether to mandate statewide class-size reductions (CSR) from kindergarten to the third grade. Project STAR randomly assigned students to classes of different size and compared test results across these classes, to obtain an unbiased answer to the research question, “Does reducing class size improve test scores?” However, this shed little light on whether reducing class size was a good use of increased education financing. Analyses of Project STAR ignored general equilibrium effects of CSR on both the demand for teachers and the value of test scores. Moreover, its emphasis on estimating average class-size effects in a particular setting diverted attention from their heterogeneity, and the need to understand how class size affects learning, and how its effect is moderated by circumstances. Rather than considering the full chain of evidence necessary for shaping class-size policy, Project STAR concentrated its effort on maximizing the accuracy of a single link in that chain; internal validity trumped policy relevance.
    Keywords: Class size, Project STAR, randomized controlled trials, field experiments, internal validity, external validity, modern experimentalist paradigm
    JEL: C54 I28
    Date: 2016–12
  5. By: Gary Charness (Department of Economics, University of California, Santa Barbara); Ramon Cobo-Reyes (Department of Economics, University of Granada & University of Exeter Business School); Natalia Jimenez (Department of Economics, Universidad Pablo de Olavide & Middlesex University); J. Antonio Lacomba (Departamento de Teoria e Historia Economica, University of Granada & Globe); Francisco Lagos (Departamento de Teoria e Historia Economica, University of Granada & Globe)
    Abstract: This article considers three different types of experimental labor contracts. A novel aspect of our experimental design is that workers have the chance of investing money in a long-term project in order to increase their income. We find a strong relationship between what happens inside the labor market (worker’s performance) and what happens outside the labor market (long-term investment). Long-term labor relationships seem to provide a safer environment for undertaking successful long-term projects. In the other direction, investing in long-term projects leads workers to improve their performance inside the labor market. We also introduce a new type of performance-based dismissal-barrier contract, whereby firms are required to retain workers if they have satisfied the effort level required by the firms. We find that performance-based dismissal barriers in the labor market leads to more long-term employment relationships and higher overall productivity.
    Keywords: Incomplete contracts, long-term relationships, renewable dismissal barriers, workers’ stability, investment and experiments.
    JEL: J41 J3 C91 D01
    Date: 2016
  6. By: Noailly, Joëlle; Smeets, Roger
    Abstract: Addressing both the challenge of climate change and the world's growing energy needs will only be possible by achieving a breakthrough in clean technologies in order to deliver safe, clean and sustainable energy for future generations. Such a large-scale technological transition will require massive investments in research and development (R&D) of clean energy production. Within the sector of electricity generation, renewable (REN) energy technologies, such as solar, wind or geothermal energy, can provide a clean alternative to electricity produced from carbon-intensive fossil-fuels (FF). Nonetheless, private firms' investments in advancing innovation for renewable energy technologies face important challenges. [...]
    Date: 2016

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