Pigouvian tax aversion and inequity aversion in the lab

We use an experimental market with externalities to test whether inequality aversion could help explain the popularity of earmarking tax revenues. We find that voter opposition is not fully explained by material self-interest: Results indicate that preferences for fairness influence voting behavior, with greater inequality in tax revenue distribution negatively affecting the acceptability of the tax. In addition to this, we also discover a significant degree of tax-aversion in the votes. Our findings provide greater understanding of the behavioral underpinnings of the positive impact that earmarking has on the acceptability of Pigouvian taxes.Pigouvian taxes, public acceptability, earmarking, fairness, inequity aversion, laboratory experiments

Valuing Options in Water Markets: A Laboratory Investigation

Risk and reliability dominate water supply discussions in the arid western United States in light of increasing demand and finite, weather-dependant supply. Thus water agencies increasingly turn to contractual mechanisms such as dry-year options to manage supply risk in advance of need. Although a few water agencies across the West have implemented dry-year options, sufficient data for conventional econometric analysis do not yet exist. We thus utilize experimental economics to analyze the effect of annual dry-year options on water markets. We consider how market structure (competitive versus monopsony power) and option contract availability affect water price and allocation within a market and find that realized gains from trade are on average higher when options can be traded, by 46% in competitive markets and by 63% in dominant buyer markets. Important for the political feasibility of such markets, we also find that gains from trade, once an options market is available, are much more evenly distributed between the single buyer and the many sellers in the case of monopsony.Resource /Energy Economics and Policy, D23, L22, Q25,

Do Taste Buds Trump Labels and Information? A Sensory Test and Economic Experiment on Organic and Local Apples

Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,

Local and Organic: Substitutes or Complements? An In-Store Evaluation of Labels for Apples

Over the past two decades, consumer demand for niche products has grown substantially. The primary objective of this paper is to disentangle the value consumers place on two prominent food claims, organic and local (defined as Colorado Proud in this study) as they relate to fresh produce. Using primary data from a choice experiment conducted in a grocery store that has conducted co-promotional efforts with the Colorado Proud program, we found the value of the “local” claims trumps that of “organic” in apples. However, the difference in results between the experiments that offered participants either one- or two-pounds is far more pronounced, illustrating how scaling may influence estimates in such market-based research.choice experiment, local foods, organic, apple consumer demand, Agricultural and Food Policy, Consumer/Household Economics, Marketing, D12, Q11, Q18,

Valuing Options in California Water Markets: A Laboratory Investigation

Risk and reliability dominate water supply discussions in the arid western United States. In the past, water managers built additional storage to mitigate supply risk. The optimal, least expensive storage sites have now been taken, and there are strong, environmental objections to new facilities. Reliability of existing supplies is further diminished due to concerns about endangered species and global climate change. Thus water agencies increasingly turn to contractual mechanisms such as dry-year options to manage supply risk in advance of need. However, although a few water agencies across the West have implemented dry-year options, sufficient data for conventional econometric analysis do not yet exist. We thus utilize experimental economics to analyze the effect of annual dry-year options on water markets. How do market structure (competitive versus market power) and option contract availability affect water price and allocation within a market? Experiment participants trade stochastic realizations of water in a non-uniform double auction parameterized to resemble the California water market. We find that realized gains from trade are on average higher when options can be traded, by 11% in competitive markets and by 21% in dominant buyer markets. Findings in this analysis may assist policymakers in preparing for the next multi-year drought in California.Resource /Energy Economics and Policy,

Food beliefs

November 2013.Includes bibliographical references (page 3).Product attributes (such as whether the product is organic) have been used to analyze consumer choices in market data. However, rather than generating utility directly, these attributes may instead be valued as a signal of a product outcome (such as nutritional benefits). For example, organic products may be valued because they are perceived as healthier, or they may be perceived as having a reduced environmental impact; "no sodium added" may communicate healthiness and improved flavor; and "cage free" may suggest improved animal welfare. In this paper, we examine how attribute information on food packaging influences outcome expectations. We show that when attributes are labeled but outcomes are unknown, the utility derived from the product attributes depends on the tradeoffs between alternative outcomes (preferences) and the perception of how those attributes determine outcomes (beliefs). In the second part of the research, we study consumer beliefs: specifically, how food labels and other package information influence expectations about nutritional and environmental outcomes for fluid milk products. Here we provide evidence that some attribute labels can bias consumers' expectations and are therefore potentially misleading

Risky Investment Decisions: How Are Individuals Influenced by Their Groups?

We investigate the effect of group versus individual decision-making in the context of risky investment decisions in which all subjects are fully informed of the probabilities and payoffs. Although there is full information, the lottery choices pose cognitive challenges so that people may not be sure of their expected utility-maximizing choice. Making such decisions in a group context provides real-time information in which group members can observe others’ choices and revise their own decisions. Our experimental results show that simply observing what others in the group do has a significant impact on behavior. Coupling real-time information with group decisions based on the median value, i.e., majority rule, makes the median investment choice focal, leading people with low values to increase investments and those with high values decrease investments. Group decisions based on the minimum investment amount produce more asymmetric effects

Bargaining power does not matter when sharing losses: Experimental evidence of Inequality Aversion in the Nash bargaining game

While experimental research on social dilemmas focuses on the distribution of gains, this paper analyzes social preferences in the case of losses. In this experimental study, participants share a loss in a Nash bargaining game. Instead of monetary losses, we use waiting time as an incentive. We assume that participants prefer less to more waiting time. Our experiment consists of four versions of the Nash bargaining game, which vary in a way that allows a comparison of four classical concepts on negotiations (Nash, Equal Loss, Equal Gain, and Kalai-Smorodinski), and Inequality Aversion. We find an equal split of waiting time for all parameter variations. Therefore, our experimental evidence shows that Inequality Aversion provides a better prediction than do classical concepts for the outcome of a Nash bargaining game involving losses. Furthermore, participants resort to Inequality Aversion at the cost of overall welfare

Conditional cooperation on three continents

We show in a public goods experiment on three continents that conditional cooperation is a universal behavioral regularity. Yet, the number of conditional cooperators and the extent of conditional cooperation are much higher in the U.S.A. than anywhere else

Perceived exposure to hazardous working conditions in Germany

Data on the prevalence of perceived exposure to hazardous working conditions were gathered for the GEDA 2014/2015-EHIS study using a simple graduated question. Approximately one-fifth of people in employment state that they face serious or very serious occupational health hazards. However, women (18.6%) are significantly less likely to have this perception than men (27.0%). The differences between women and men can be explained by the variation in working hours and by the continued gender specific division of the labour market (segregation). There are pronounced differences among men with regard to educational and vocational qualifications, with lower qualified men viewing their employment as posing a higher risk to their health than higher qualified men; no similar differences exist between women. Finally, perceived health risks are highest among women and men in the passenger and freight transport sectors. The results of this study underline the importance of occupational safety and workplace health promotion