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on Experimental Economics |
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Issue of 2015‒08‒25
23 papers chosen by |
| By: | David Dickinson (Department of Economics - Appalachian State University); David Masclet (CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal, CREM - Centre de Recherche en Economie et Management - CNRS - Université de Caen Basse-Normandie - UR1 - Université de Rennes 1); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS) |
| Abstract: | Do individuals trained in law enforcement punish or reward differently from typical student-subjects? We analyze norm enforcement behavior of newly appointed police commissioners in both a game with positive externalities (based on a Voluntary Contribution Mechanism) and a similar game with negative externalities. Depending on the treatment, a reward or sanction institution is either exogenously or endogenously implemented. Police commissioners cooperate significantly more in both games and bear a higher burden of the sanction costs compared to non-police subjects. When the norm enforcement institution is endogenous, subjects favor rewards over sanctions, but police subjects are more likely to vote for sanctions. Police subjects also reward and sanction more than the others when the institution results from a majority vote. Our experiment suggests that lab evidence on social dilemma games with positive or negative externalities and enforcement institutions is rather robust. |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01137702&r=exp |
| By: | Min Zhu (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS) |
| Abstract: | Boundedly rational people may engage in strategic behavior under the Deferred Acceptance mechanism, resulting in unstable outcome and reducing overall welfare. How to reduce strategic behavior is thus of importance for field implementation. I address this issue in a laboratory experiment by looking at whether experienced people can transmit what they have learned and promote truth-telling behavior. In this experiment, subjects repeatedly play the matching game induced by the Deferred Acceptance mechanism for a finite number of periods, and then offer advice about best strategies to their successors. Participants in succeeding sessions are either given advice from their predecessors or observe histories of previous sessions. I find that advice given by predecessors can help subjects coordinate on truth-telling behavior and the Pareto efficient stable outcome (but this effect is not statistically significant in correlated preference environment). On the contrary, observing histories has ambiguous effect on truth-telling adoption. This implies that policy makers can encourage real people to adopt truth-telling in the field by providing them with collections of good advice from people who have already participated in matching market. |
| Date: | 2015–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01176926&r=exp |
| By: | Marie Boltz (IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Karine Marazyan (IEDES); Paola Villar (INED - Institut national d'études démographiques, PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics) |
| Abstract: | Informal redistribution play a preponderant role in individual risk management in developing economies. However, strategies to reduce the pressure to redistribute are rather widespread and often costly, while under-explored in the economic literature. In this paper, we identify the potentially distortionary effects of informal redistribution on individual resource allocation choices, through exogenous variations on one hand of the share of unobservable income and on the other hand, of the pool of observers. For this, we conducted an original experiment combining both a lab-in-the-field and a randomized controlled trial in poor urban communities in Senegal on a randomly selected sample. A first contribution of the paper is to elicit in the lab the willingness-to-pay to hide one’s lab lottery gains from kin and neighbors. Second, we estimate the impact of the non-observability of this windfall income on resource allocation decisions of participants out of the lab. We find a high willingness-to-pay for hiding: 65% of subjects prefer to receive their gains in private rather than in public and among them, they are ready to forgo on average 14.3% of their unobserved income for the privacy option. Also, we find that the determinants of the willingness-to-pay to hide income while correlated with redistributive pressure differ across gender. Moreover, while lottery public winners are found to spend 22% of their windfall income on transfers to kin, lottery private winners showing preferences for hidden income transfer 24% less and reallocate this extra money in health and private expenditures. |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-01157710&r=exp |
| By: | John D Hey; Konstantina Mari |
| Abstract: | The disinvestment decision is of importance in many contexts: if funds are tied up for too long in a poorly-performing project, then opportunities for re-investment may be missed. Optimal disinvestment theory is a component of real options theory, but is relatively ignored by experimentalists. Two recent papers conclude that decision-makers stay in projects longer than that prescribed by the optimal behaviour of a risk-neutral agent. This departure is explained through riskaversion, but without a formal hypothesis under test. We report here on an experiment which explains the behaviour of the subjects through an estimationof risk-aversion. We also explore an alternative hypothesis – that subjects are myopic. Our results show that few subjects appear to be risk-neutral, many seem to be risk-averse but few are myopic. |
| Keywords: | disinvestment, experiments, myopia, real options, risk-aversion, rolling horizon |
| JEL: | C9 G02 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:15/13&r=exp |
| By: | Nobuyuki Hanaki (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université); Nicolas Jacquemet (GATE - Groupe d'analyse et de théorie économique - CNRS - UL2 - Université Lumière - Lyon 2 - Ecole Normale Supérieure Lettres et Sciences Humaines, PSE - Paris-Jourdan Sciences Economiques - CNRS - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC)); Stéphane Luchini (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université); Adam Zylbersztejn (GATE - Groupe d'analyse et de théorie économique - CNRS - UL2 - Université Lumière - Lyon 2 - Ecole Normale Supérieure Lettres et Sciences Humaines) |
| Abstract: | How is one's cognitive ability related to the way one responds to strategic uncertainty? We address this question by conducting a set of experiments in simple 2 × 2 dominance solvable coordination games. Our experiments involve two main treatments: one in which two human subjects interact, and another in which one human subject interacts with a computer program whose behavior is known. By making the behavior of the computer perfectly predictable, the latter treatment eliminates strategic uncertainty. We find that subjects with higher cognitive abilities are more sensitive to strategic uncertainty than those with lower cognitive abilities. |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-01095897&r=exp |
| By: | Seeun Jung (ESSEC Business School - Essec Business School, PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Radu Vranceanu (Economics Department - Essec Business School) |
| Abstract: | This paper reports results from a real-eort experiment in which men and women are paired to form a two-member team and asked to execute a real-effort task. Each participant receives an equal share of the team's output. Workers who perform better than their partner can punish him/her by imposing a fine. We manipulate the teams' gender composition (man-man, man-woman, and woman-woman) to analyze whether an individual's performance and sanctioning behavior depends on his/her gender and the gender interaction within the team. The data show that, on average, men perform slightly better than women. A man's performance will deteriorate when paired with a woman, while a woman's performance will improve when paired with a woman. When underperforming, women are sanctioned more often and more heavily than men; if sanctioned, men tend to improve their performance, while women's performance does not change. |
| Date: | 2015–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:hal-01171161&r=exp |
| By: | Fabio Galeotti (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS); Daniel John Zizzo (University of Newcastle, UK) |
| Abstract: | We set up an experiment to measure voter preferences trade-offs between competence and honesty. We measure the competence and honesty of candidates by asking them to work on a real effort task and decide whether to report truthfully or not the value of their work. In the first stage, the earnings are the result of the competence and honesty of one randomly selected participant. In the second stage, subjects can select who will determine their earnings based on the fi rst stage's competence and honesty of the alternative candidates. We find that most voters tend to have a bias towards caring about honesty even when this results in lower payoffs. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01180812&r=exp |
| By: | Burdín, Gabriel (Leeds University Business School); Halliday, Simon (Smith College); Landini, Fabio (LUISS Guido Carli University) |
| Abstract: | This paper studies the role of autonomy and reciprocity in explaining control averse responses in principal-agents interactions. While most of the social psychology literature emphasizes the role of autonomy, recent economic research has provided an alternative explanation based on reciprocity. We propose a simple model and an experiment to test the relative strength of these two motives. We compare two treatments: one in which control is exerted directly by the principal (second-party control); and the other in which it is exerted by a third party enjoying no residual claimancy rights (third-party control). If control aversion is driven mainly by autonomy, then it should persist in the third-party treatment. Our results, however, suggest that this is not the case. Moreover, when a third party instead of the principal exerts control, control results in a greater expected profit for the principal. The implications of these results for organizational design are discussed. |
| Keywords: | third party, second party, control aversion, autonomy, principal-agent game, social preferences, trust, reciprocity |
| JEL: | C72 C91 D23 M54 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9251&r=exp |
| By: | Damien Bol (Université de Montréal - UdeM (CANADA) - Université de Montréal - UdeM (CANADA)); André Blais (Université de Montréal - UdeM (CANADA) - Université de Montréal - UdeM (CANADA)); Jean-François Laslier (PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Antonin Macé (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université) |
| Abstract: | We know that electoral systems have an effect on the number of competing candidates. However, a mystery remains concerning the impact of majority runoff. According to theory, the number of competing candidates should be equal (or only marginally larger) under majority runoff than under plurality. However, in real-life elections, this number is much higher under majority runoff. To provide new insights on this puzzle, we report the results of a laboratory experiment where subjects play the role of candidates in plurality and majority runoff elections. We use a candidate-only and sincere-voting model to isolate the effect of the electoral system on the decision of candidates to enter the election. We find very little difference between the two electoral systems. We thus re-affirm the mystery of the number of competing candidates under majority runoff. |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-01168722&r=exp |
| By: | Sandip Mitra (Sampling and Ocial Statistics Unit, Indian Statistical Institute); Dilip Mookherjee (Department of Economics, Boston University); Maximo Torero (International Food Policy Research Institute); Sujata Visaria (Department of Economics, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology) |
| Abstract: | In the Indian state of West Bengal, potato farmers sell to local middlemen because they lack direct access to wholesale markets. In high-frequency farmer marketing surveys we find that farmers are poorly informed about wholesale and retail prices, and there is a large gap between wholesale and farmgate prices. To test alternative models of farmer-middlemen trades, we conduct a field experiment providing farmers in randomly chosen villages with market price information. Information provision had negligible average effects on farmgate sales and revenues, but increased pass-through from wholesale to farmgate prices. The results are inconsistent with models of risk-sharing via contracts between middlemen and farmers. They are consistent with a model of ex post bargaining and sequential price competition between a cartel of village middlemen and a cartel of external middlemen. |
| Keywords: | agricultural finance, agent based lending, group lending, selection, repayment |
| JEL: | O12 L14 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:hku:wpaper:201529&r=exp |
| By: | Radu Vranceanu (ESSEC - Economics Department - Essec Business School); Fouad El Ouardighi (Operation management Department - Essec Business School); Delphine Dubart (ESSEC Business School - Essec Business School) |
| Abstract: | This paper reports the results from a real-effort team production experiment, where best performers can impose either tacit or explicit sanctions on their less-performing partners. The behavior of the best performer in the team differs from one condition to another. When explicit sanctions are not allowed, good performers reduce their effort in response to the advantageous difference in scores; when they can impose sanctions, their change in effort is no longer related to the difference in scores. To some extent, a mechanism of explicit sanctions allows good performers to focus on their own performance. Not sanctioning an opponent who under-performs, what we refer to as forgiveness, prompts the latter to improve his performance, but applying the sanction has a stronger effect. |
| Abstract: | L'article propose une étude expérimentale appliquée au problème du travail d'équipe. La tache consiste à compter le nombre d'occurrences du chiffre 7 dans des blocs de chiffre. Les équipes sont composées de deux joueurs. A chaque tour, le joueur qui fait le meilleur score peut appliquer une sanction à l'autre. Nous étudions les stratégies et les comportements des deux joueurs, dans une interaction qui dure quatre tours. |
| Date: | 2013–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00857364&r=exp |
| By: | Emmanuel Duguet (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS); Yannick L'Horty (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS); Pascale Petit (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS) |
| Abstract: | We performed a correspondence testing in order to assess the potential discrimination at job access level against young people of ethnic origin from the underprivileged suburbs of the Paris area (Ile-de-France). We measure simultaneously the effects of place of residence (privileged or underprivileged city), of nationality (French or Moroccan), and of sound of surname and of forename (French or Arab), on the chances of obtaining a job interview when answering a job ad. We base our assessment on a controlled experiment conducted on the profession of waiter. We constructed 16 jobseeker profiles and sent 938 resumes in reply to 118 job vacancies. We obtain two results. First, there is evidence of a significant effect against the candidates with an Arab origin; second, there is evidence of residential discrimination against the candidates that are either the most qualified or of French origin. Overall, discrimination would tend to level down the employment opportunities of the candidates in underprivileged suburbs by putting at a disadvantage the candidates that are usually the most favored. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01100294&r=exp |
| By: | Elise Huillery (ECON - Département d'économie - Sciences Po); Juliette Seban (ECON - Département d'économie - Sciences Po) |
| Abstract: | Financial incentives for service providers are becoming a common strategy to improve service delivery. However, this strategy will only work if demand for the service responds as expected. Using a eld experiment in the Democratic Republic of Congo, we show that introducing a performance-based financing mechanism in the health sector has counterproductive effects because demand is non-standard: despite reduced prices and eased access, demand for health decreased, child health deteriorated, workers' revenue dropped. Ironically, expected perverse effects of incentives on worker behavior were not realized: incentives led to more effort from health workers on rewarded activities without deterring effort on non-rewarded activities, nor inducing significant score manipulation or free-riding. We also find a decline in worker motivation following the removal of the incentives, below what it would have been in the absence of exposure to the incentives. Management tools used in for-pro t sectors are thus inappropriate in non-pro t sectors such as health where user and worker rationalities are specific. |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01164460&r=exp |
| By: | Fabio Galeotti (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon) |
| Abstract: | An important branch of economic research on emotions has used power-to-take game experiments to study the impact of negative emotions, such as anger, irritation and contempt, on the decision to punish. We investigate experimentally the role that the specific punishment technology adopted plays in this context, and test to what extent punishing behavior can be truly attributed to negative emotions. We find that a large part (around 70%) of the punishment behavior observed in previous PTTG studies is explained by the technology of punishment adopted instead of negative emotions. Once this effect is removed, negative emotions do still play an important role, but the efficiency costs associated to them are much smaller. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01128873&r=exp |
| By: | Zafer; Emin (Department of Management, Ipek University) |
| Abstract: | In this paper, we experimentally investigate how goal setting and feedback policies affect work performance. In particular, we study the effects of (i) absolute performance feedback, (ii) self-specified goals and (iii) exogenous goals and relative performance feedback. Our results show that the average performance of the subjects who are provided self-performance feedback is 11% lower than the ones who get no feedback. Moreover, setting a non-binding personal goal does not affect performance. Finally, assigning an exogenous goal and providing relative performance feedback decreases performance by 8%. We discuss the insights our findings offer for the optimal design of goal setting and feedback mechanisms. |
| Keywords: | Feedback, Goal, Relative Performance, Piece-rate, Motivation |
| JEL: | M50 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:ipk:wpaper:1506&r=exp |
| By: | Conti, Gabriella (University College London); Heckman, James J. (University of Chicago); Pinto, Rodrigo (University of California, Los Angeles) |
| Abstract: | This paper examines the long-term impacts on health and healthy behaviors of two of the oldest and most widely cited U.S. early childhood interventions evaluated by the method of randomization with long-term follow-up: the Perry Preschool Project (PPP) and the Carolina Abecedarian Project (ABC). There are pronounced gender effects strongly favoring boys, although there are also effects for girls. Dynamic mediation analyses show a significant role played by improved childhood traits, above and beyond the effects of experimentally enhanced adult socioeconomic status. These results show the potential of early life interventions for promoting health. |
| Keywords: | health, early childhood intervention, social experiment, randomized trial, Abecedarian Project, Perry Preschool Project |
| JEL: | C12 C93 I12 I13 J13 J24 |
| Date: | 2015–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9247&r=exp |
| By: | Gilles Grolleau (Unité MIAJ - INRA - Mathématiques et Informatique Appliquées - Institut national de la recherche agronomique (INRA)); Angela Sutan (ESC Dijon Bourgogne - ESC Dijon Bourgogne); Radu Vranceanu (ESSEC - Economics Department - Essec Business School) |
| Abstract: | We investigate the dynamics of cooperation in public good games when contributions to the public good are immediately redistributed across contributors (intra-temporal transfers) and when contributions to the public good by the current group are transferred over time to a future group (inter-temporal transfers). We show that people are more cooperative in inter-temporal contexts than in intra-temporal contexts. We also find that subjects invest more on average in public goods when they know in advance their inheritance from the past. |
| Abstract: | Nous étudions un jeu du bien public avec transferts inter temporels. Les résultats indiquent une forme d'altruisme intergénérationnel. |
| Date: | 2013–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00866970&r=exp |
| By: | Jeroen Van de Ven (ACLE - Amsterdam Center for Law & Economics - University of Amsterdam [Amsterdam] - UNIVERSITY OF AMSTERDAM); Marie Claire Villeval (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon) |
| Abstract: | We investigate how different forms of scrutiny affect dishonesty, using Gneezy’s (2005) deception game. We add a third player whose interests are aligned with those of the sender. We find that lying behavior is not sensitive to revealing the sender’s identity to the observer. The option for observers to communicate with the sender, and the option to reveal the sender’s lies to the receiver also do not affect lying behavior. Even more striking, senders whose identity is revealed to their observer do not lie less when their interests are misaligned with those of the observer. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01080189&r=exp |
| By: | Deininger,Klaus W.; Jin,Songqing; Liu,Shouying; Shao,Ting; Xia,Fang |
| Abstract: | As part of a national experiment, in 2008 Chengdu prefecture implemented ambitious property rights reforms, including complete registration of all land together with measures to ease transferability and eliminate labor market restrictions. This study uses a discontinuity design with spatial fixed effects to compare 529 villages just inside and outside the prefecture?s border. The results suggest that the reforms increased tenure security, aligned land use closer to economic incentives, mainly through market transfers, and led to an increase in enterprise start-ups. These impacts, most of which are more pronounced for villages with lower travel time to Chengdu city, point toward high potential gains from factor market reform. |
| Keywords: | Municipal Housing and Land,National Urban Development Policies&Strategies,Urban Housing,Urban Housing and Land Settlements,Land and Real Estate Development |
| Date: | 2015–08–11 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7389&r=exp |
| By: | Raymond P. Guiteras; Ahmed Mushfiq Mobarak |
| Abstract: | Comprehensive evaluation requires tracking indirect effects of interventions, such as politicians and constituents reacting to the arrival of a development program. We study political economy responses to a large scale intervention in Bangladesh, where 346 communities consisting of 16,600 households were randomly assigned to control, information or subsidy treatments to encourage investments in improved sanitation. In one intervention where the leaders’ role in program allocation was not clear to constituents, leaders react by spending more time in treatment areas, and treated constituents appear to attribute credit to their local leader for a randomly assigned program. In contrast, in another lottery where subsidy assignment is clearly and transparently random, the lottery winners do not attribute any extra credit to the politician relative to lottery losers. These reactions are consistent with a model in which constituents have imperfect information about leader ability. A third intervention returns to a random subset of treated households to inform them that the program was externally funded and randomly assigned. This simple, scalable information treatment eliminates the excess credit that leaders received in villages that received subsidies. These results suggest that while politicians may respond to try to take credit for development programs, it is not easy for them do so. Political accountability is not easily undermined by development aid. |
| JEL: | O1 O43 P16 Q56 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21434&r=exp |
| By: | Cunha, Jesse M. (Naval Postgraduate School); De Giorgi, Giacomo (Federal Reserve Bank of New York); Jayachandran, Seema (Northwestern University) |
| Abstract: | This paper examines the effect of cash versus in-kind transfers on local prices. Both types of transfers increase the demand for normal goods; in-kind transfers also increase supply in recipient communities, which should cause prices to fall relative to cash transfers. We test and confirm this prediction using a program in Mexico that randomly assigned villages to receive boxes of food (trucked into the village), equivalently valued cash transfers, or no transfers. We find that prices are significantly lower under in-kind transfers compared with cash transfers; relative to the control group, in-kind transfers lead to a 4 percent fall in prices while cash transfers lead to a positive but negligible increase in prices. Prices of goods other than those transferred are also affected, but by a small amount. Thus, households' purchasing power is only modestly affected by these price effects, even in this setting where program eligibility is high, the transfer per household is sizeable, and hence the supply influx is large. The exception is in remote villages, where the price effects (both the negative effects of in-kind transfers and the positive effects of cash transfers) are larger in magnitude. The effects do not dissipate over the two years of program duration we observe. |
| Keywords: | price; policy |
| JEL: | O00 O12 |
| Date: | 2015–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:735&r=exp |
| By: | Maurizio Iacopetta (OFCE - OFCE - Sciences Po) |
| Abstract: | An algorithm for computing Dynamic Nash Equilibria (DNE) in an extended ver- sion of Kiyotaki and Wright (1989) (hereafter KW) is proposed. The algorithm com- putes the equilibrium pro.le of (pure) strategies and the evolution of the distribution of three types of assets across three types of individuals. It has two features that together make it applicable in a wide range of macroeco- nomic experiments: (i) it works for any feasible initial distribution of assets; (ii) it allows for multiple switches of trading strategies along the transitional dynamics. The algorithm is used to study the relationship between liquidity, production, and inequality in income and in welfare, in economies where assets fetch di¤erent returns and agents have heterogeneous skills and preferences. One experiment shows a case of reversal of fortune. An economy endowed with a low-return asset takes over a similar economy endowed with a high-return asset because, in the former economy, a group of agents abandon a rent-seeking trading behavior and increase their income by trading and producing more intensively. A second experiment shows that a reduction of market frictions leads both to higher income and lower inequality. Other experiments evaluate the propagation mechanism of shocks that hit the assets.returns. A key result is that trade and liquidity tend to squeeze income inequality. |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01099374&r=exp |
| By: | Mckenzie,David J. |
| Abstract: | Almost all firms in developing countries have fewer than 10 workers, with the modal firm consisting of just the owner. Are there potential high-growth entrepreneurs with the ability to grow their firms beyond this size? And, if so, can public policy help alleviate the constraints that prevent these entrepreneurs from doing so? A large-scale national business plan competition in Nigeria is used to help provide evidence on these two questions. The competition was launched with much fanfare, and attracted almost 24,000 entrants. Random assignment was used to select some of the winners from a pool of semi-finalists, with US$36 million in randomly allocated grant funding providing each winner with an average of almost US$50,000. Surveys tracking applicants over three years show that winning the business plan competition leads to greater firm entry, higher survival of existing businesses, higher profits and sales, and higher employment, including increases of over 20 percentage points in the likelihood of a firm having 10 or more workers. These effects appear to occur largely through the grants enabling firms to purchase more capital and hire more labor. |
| Keywords: | E-Business,Business Environment,Microfinance,Competitiveness and Competition Policy,Business in Development |
| Date: | 2015–08–12 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7391&r=exp |