USING BOTH SOCIOLOGICAL AND ECONOMIC INCENTIVES TO REDUCE MORAL HAZARD

Economists tend to focus on monetary incentives. In the model developed here, both sociological and economic incentives are used to diminish the apparent moral hazard problem existing in commodity grading. Training that promotes graders' response to sociological incentives is shown to increase expected benefits. The model suggests that this training be increased up to the point where the marginal benefit due to training equals its marginal cost. It may be more economical to influence the grader's behavior by creating cognitive dissonance through training and rules rather than by using economic incentives alone.Marketing,

Grader Bias in Cattle Markets? Evidence from Iowa

Participants in U.S. markets for live cattle increasingly rely on federal grading standards to price slaughtered animals. This change is due to the growing prominence of ﾓgridﾔ pricing mechanisms that specify explicit premiums and discounts contingent on an animal's graded quality class. Although there have been recent changes in the way cattle are priced, the technology for sorting animals into quality classes has changed very little: human graders visually inspect each slaughtered carcass and call a ﾓqualityﾔ and ﾓyieldﾔgrade in a matter of seconds as the carcass passes on a moving trolley. There is anecdotal evidence of systematic bias in these called grades across time and regions within U.S. markets, and this paper empirically examines whether such claim is supported in a sample of loads delivered to three different Iowa packing plants during the years 2000-02. Keywords: cattle markets, grader bias, quality measurement.

Using Both Sociological and Economic Incentives to Reduce Moral Hazard

Economists tend to focus on monetary incentives. In the model developed here, both sociological and economic incentives are used to diminish the apparent moral hazard problem existing in commodity grading. Training that promotes graders' response to sociological incentives is shown to increase expected benefits. The model suggests this training be increased up to the point where the marginal benefit due to training equals its marginal cost. It may be more economical to influence the grader's behavior by creating cognitive dissonance through training and rules rather than by using economic incentives alone.grading, incentives, moral hazard, norms, social sanctions, Institutional and Behavioral Economics,

CONSUMER PREFERENCES FOR MAPLE SYRUP GRADE NAMES

Consumer/Household Economics,

SMALL FRESH FRUIT AND VEGETABLE GROWERS IN TENNESSEE: FACTORS ASSOCIATED WITH THEIR USE OF COMMERCIAL OUTLETS

Crop Production/Industries,

Hog Round Marketing, Seed Quality, and Government Policy: Institutional Change in U.S. Cotton Production, 1920-1960

Between 1928 and 1960 U.S. cotton production witnessed a revolution with average yields roughly tripling while the quality of the crop increased significantly. This paper analyzes the key institutional and scientific developments that facilitated the revolution in biological technologies, pointing to the importance of two government programs -- the one-variety community movement and the Smith-Doxey Act -- as catalysts for change. The story displays two phenomena of interest in light of the recent literature: 1. an important real-world example of the workings of Akerlof's lemons model and 2. a case where inventors, during an early phase of the product cycle, actually encouraged consumers to copy and disseminate their intellectual property.

GRID PRICING VERSUS AVERAGE PRICING FOR SLAUGHTER CATTLE: AN EMPIRICAL ANALYSIS

The paper compares weekly producer revenue under grid pricing and average dressed weight pricing methods for 2560 cattle over a period of 102 weeks. Regression analysis is applied to identify factors affecting the revenue differential.Livestock Production/Industries,