Climate change catastrophes and insuring decisions: A study in the presence of ambiguity

This paper attempts to study how individuals respond to the availability of an insurance that would safeguard their interests if a climate change catastrophe occurred. If such an insurance is available to them, do individuals insure themselves su¢ ciently? Further, the study investigates if information regarding the past occurrence of the catastrophic event leads to an increase in insurance subscriptions and/or the emergence of a lemons market. Finally, policy implications are investigated: can an indirect intervention in the form of a "nudge" ensure a better outcome

An experimental study on the effect of ambiguity in a coordination game

Article“The final publication is available at Springer via http://dx.doi.org/10.1007/s11238-015-9483-2”."This paper is based on a chapter from Sara le Roux’s PhD thesis.We report an experimental test of the influence of ambiguity on behaviour in a coordination game. We study the behaviour of subjects in the presence of ambiguity and attempt to determine whether they prefer to choose an ambiguity-safe option. We find that this strategy, which is not played in either Nash equilibrium or iterated dominance equilibrium, is indeed chosen quite frequently. This provides evidence that ambiguity-aversion influences behaviour in games. While the behaviour of the Row Player is consistent with randomising between her strategies, the Column Player shows a marked preference for avoiding ambiguity and choosing his ambiguity-safe strategy

Ambiguity in Games: Theory and Experiments

Ambiguity arises when a decision maker fails to assign a subjective probability to an event. This failure to attach a subjective probability to an event is caused by a lack of information about the event. Ambiguity provides a gap in the scope of game theory, since the basic assumption of being able to assign meaningful probabilities to one's opponent's actions is no longer valid. It thus opens the debate of how inviduals would react if faced by an ambiguous event. Risk is a special case of ambiguity, where the decision maker has information about the probabilities of events. There is considerable experimental evidence documenting the fact that individuals show a marked preference for situations in which they face a known level of risk, as opposed to being in a situation where they are faced by an opponent whose strategies are ambiguous. Ambiguity averseness is the tendency of individuals to prefer known risk situations to ambiguous ones. Although there is extensive experimental literature which shows that ambiguity affects decision making, most of these studies are restricted to single-person decisions. Relatively few experiments test whether ambiguity affects behaviour in games, where individuals interact with each other. The research documented in this thesis aims to study the effect of ambiguity in games. Since many economic problems can be represented as games we believe this research will be useful for understanding the impact of ambiguity in economics. Moreover, though previous studies have established that ambiguity affects decision making, they do not document the nature of the impact that it has on decision making. It is thus difficult to predict the effect of ambiguity, and the direction in which it will cause behaviour to change. This thesis aims at studying the effect of ambiguity in strategic situations, by analysing individual behaviour in games

Strategic ambiguity and decision-making: An experimental study

We conducted a set of experiments to compare the e¤ect of ambiguity in single person decisions and games. Our results suggest that ambiguity has a bigger impact in games than in ball and urn problems. We …nd that ambiguity has the opposite e¤ect in games of strategic substitutes and complements. This con…rms a theoretical prediction made by Eichberger and Kelsey (2002). The experiments also test whether subjects’perception of ambiguity di¤ers when faced by a local opponent as opposed to a foreign one. Our results show that there is little evidence of more in‡uence of ambiguity on behaviour when faced by foreign subjects

Reducing Information Asymmetry with ICT: A critical review of loan price and quantity effects in Africa

This study investigates loan price and quantity effects of information sharing offices with ICT, in a panel of 162 banks consisting of 42 African countries for the period 2001-2011.The empirical evidence is based on Generalised Method of Moments and Instrumental Quantile Regressions. Our findings broadly show that ICT with public credit registries decrease the price of loans and increase the quantity of loans. While the net effects from the interaction of ICT with private credit bureaus do not lead to enhanced financial access, corresponding marginal effects show that ICT can complement private credit bureaus to increase loan quantity and decrease loan prices when certain thresholds of ICT are attained. We compute and discuss the ICT thresholds that are required to make this possible

Understanding Sub-Saharan Africa’s extreme poverty tragedy

Motivated by a recent World Bank report on achieving of Millennium Development Goals which shows that poverty has been declining in all regions of the world with the exception of sub-Saharan Africa (SSA), this study puts some empirical structure to theoretical and qualitative studies on the reconciliation of the Beijing Model with the Washington Consensus. It tests the hypothesis that compared to middle income countries, low income countries would achieve more inclusive development by focusing on economic governance as opposed to political governance. The empirical evidence is based on interactive and non-interactive fixed effects regressions and 49 countries in SSA for the period 2000-2012. The findings confirm the investigated hypothesis. As the main policy implication, in order to address inclusive development challenges in the post-2015 development agenda in SSA, it would benefit low income countries in the sub-region to prioritise economic governance. Other theoretical and practical contributions are also discussed

Dragon Slaying with Ambiguity: Theory and Experiments

This paper studies the impact of ambiguity in the best-shot and weakest-link models of public good provision. The models are first analyzed theoretically. Then, we conduct experiments to study how ambiguity affects behavior in these games. We test whether subjects' perception of ambiguity differs between a local opponent and a foreign one. We find that an ambiguity-safe strategy is often chosen by subjects. This is compatible with the hypothesis that ambiguity aversion influences behavior in games. Subjects tend to choose contributions above (respectively, below) the Nash equilibrium in the best-shot (respectively, weakest-link) model

Enhancing ICT for Inclusive Human Development in Sub-Saharan Africa

This study assesses if increasing information and communication technology (ICT) enhances inclusive human development in a sample of 49 countries in Sub-Saharan Africa for the period 2000-2012. The empirical evidence present in this study, is based on instrumental variable Tobit regressions, in order to account for simultaneity and the limited range in the dependent variable. In the interest of increasing room for policy implications and controlling for the unobserved heterogeneity, the analysis is decomposed into the fundamental characteristics that human development based on: income levels, legal origins, religious dominations, political stability, landlockedness and resource-wealth. Our findings show that policies designed to boost ICT (mobile phone, internet, telephone) penetration will increase inclusive development in the post-2015 sustainable development agenda. The degree of positive responsiveness of inclusive development to ICT varies across fundamental characteristics of human development and ICT dynamics. The study has substantial policy relevance because the adoption and/or penetration rate of ICT can be influenced by policy to achieve inclusive development outcomes. Further policy implications are also discussed

Enhancing ICT for Inclusive Human Development in Sub-Saharan Africa

This study assesses if increasing information and communication technology (ICT) enhances inclusive human development in a sample of 49 countries in Sub-Saharan Africa for the period 2000-2012. The empirical evidence present in this study, is based on instrumental variable Tobit regressions, in order to account for simultaneity and the limited range in the dependent variable. In the interest of increasing room for policy implications and controlling for the unobserved heterogeneity, the analysis is decomposed into the fundamental characteristics that human development based on: income levels, legal origins, religious dominations, political stability, landlockedness and resource-wealth. Our findings show that policies designed to boost ICT (mobile phone, internet, telephone) penetration will increase inclusive development in the post-2015 sustainable development agenda. The degree of positive responsiveness of inclusive development to ICT varies across fundamental characteristics of human development and ICT dynamics. The study has substantial policy relevance because the adoption and/or penetration rate of ICT can be influenced by policy to achieve inclusive development outcomes. Further policy implications are also discussed

The Mobile Phone as an Argument for Good Governance in Sub-Saharan Africa

Purpose- This study presents theoretical and empirical arguments for the role of mobile telephony in promoting good governance in 47 sub-Saharan African countries for the period 2000-2012. Design/methodology/approach- The empirical inquiry uses an endogeneity-robust GMM approach with forward orthogonal deviations to analyse the linkage between mobile phone usage and the variation in three broad governance categories — political, economic and institutional. Findings- Three key findings are established: First, in terms of individual governance indicators, mobile phones consistently stimulated good governance by the same magnitude, with the exception of the effect on the regulation component of economic governance. Second, when indicators are combined, the effect of mobile phones on general governance is three times higher than that on the institutional governance category. Third, countries with lower levels of governance indicators are catching-up with their counterparts with more advanced dynamics. Originality/value- The study makes both theoretical and empirical contributions by highlighting the importance of various combinations of governance indicators and their responsiveness to mobile phone usage