"Context effects in a negative externality experiment"

This study investigates the degree to which framing and context influence observed rates of free-riding behavior in a negative externality laboratory experiment. Building on the work of Andreoni (1995a) and Messer et al. (2007) we frame the decision not to contribute to a public fund as generating a negative externality on other group members. The experimental treatments involving 252 subjects vary communication, voting, and the status quo of the initial endowment. Results indicate that allowing groups the opportunity to communicate and vote significantly reduces rates of free-riding, and this effect is especially pronounced when initial endowments are placed in the private as opposed to the public fund.Negative externality; voluntary contribution mechanism; cheap talk; voting; status quo bias; experimental economics

A Global Analysis of the Relationship Between Urbanization and Fatalities in Earthquake-Prone Areas

Urbanization can be a challenge and an opportunity for earthquake risk mitigation. However, little is known about the changes in exposure (for example, population and urban land) to earthquakes in the context of global urbanization, and their impacts on fatalities in earthquake-prone areas. We present a global analysis of the changes in population size and urban land area in earthquake-prone areas from 1990 to 2015, and their impacts on earthquake-related fatalities. We found that more than two thirds of population growth (or 70% of total population in 2015) and nearly three quarters of earthquake-related deaths (or 307,918 deaths) in global earthquake-prone areas occurred in developing countries with an urbanization ratio (percentage of urban population to total population) between 20 and 60%. Holding other factors constant, population size was significantly and positively associated with earthquake fatalities, while the area of urban land was negatively related. The results suggest that fatalities increase for areas where the urbanization ratio is low, but after a ratio between 40 and 50% occurs, earthquake fatalities decline. This finding suggests that the resistance of building and infrastructure is greater in countries with higher urbanization ratios and highlights the need for further investigation. Our quantitative analysis is extended into the future using Shared Socioeconomic Pathways to reveal that by 2050, more than 50% of the population increase in global earthquake-prone areas will take place in a few developing countries (Pakistan, India, Afghanistan, and Bangladesh) that are particularly vulnerable to earthquakes. To reduce earthquake-induced fatalities, enhanced resilience of buildings and urban infrastructure generally in these few countries should be a priority

Essays In Behavioral And Energy Economics

This thesis presents three studies in behavioral and energy economics. The first two use laboratory experiment to show how individuals make decisions under risk and uncertainty. The third study uses a simulation tool to investigate the environmental effect of an institutional change. Study 1 studies reference dependent behavior under risk using a controlled laboratory experiment and demonstrates the need of probability weighting in explaining the observed behavior. The paper also suggests a behavioral model that explains reference dependence under risk using loss aversion and rankdependent probability weighting. The behavioral model used in the estimation is flexible enough to accommodate both expected utility theory and prospect theory as special cases. Study 2 conducts a set of laboratory experiments on a simulated hazard event to understand how individuals allocate resources between private insurance and public good measures to reduce the likelihood of the hazardous event. By inducing negative emotions with distressing video images and very loud unexpected sounds of explosions, we find that fear increases support for both public measures and private insurance in response to the threat. Our findings suggest that people purchase private insurance to address emotional as well as financial concerns even though private insurance may not help to reduce negative emotions associated with the simulated events. We also propose a model using Subjective Expected Utility (SEU) theory to explain the experimental data. Results imply that limited social resources may not be efficiently allocated between public and private solutions regarding uncertain hazardous events due to emotional responses. Study 3 uses a detailed simulation tool (E4ST) of the Eastern Interconnect (EI) to identify the environmental effect of RTP in different regions. The simulation uses a detailed network model which contains all high voltage lines in EI. Moreover, it also accommodates different hour types so we are able to simulate consumption pattern changes. Using generator level cost and emission data, we conduct two sets of simulations. The first set simulates consumption change under different demand elasticities while the second set keeps consumption constant and investigates how load variation affects emissions. We reach a similar conclusion as Holland and Mansur (2008) that RTP may lead to high emission levels in some regions but our results explain this conclusion with different reasons

Negotiating housing deal on a polluted day : consequences and possible explanations

The topic of air pollution has drawn considerable attention globally. In this paper, we examine the immediate effect of air pollution on a substantial decision, that is, a housing purchase. By linking housing purchasing behavior with the air quality in Beijing, we document market participants' behaviors unexplained by rational economic theories. Our main result suggests that the transaction prices on a severely polluted day are 0.65% higher than those of the days without pollution, other things being equal. This translates into approximately 3.51 million yuan daily increase based on the average transaction volume and price on a typical day in Beijing. The heterogeneity analysis further suggests that this effect is mostly driven by non-local and low income buyers. After ruling out rational explanations, we demonstrate that our empirical results are consistent with salience theory under weak assumptions.Ministry of Education (MOE)Qin acknowledges funding support from the Ministry of Education - Singapore: R-297-000-129-133. Wu acknowledges National Natural Science Foundation of China (No. 71874093 and 91546113) and Tsinghua University Initiative Scientific Research Program. Yan acknowledges the funding support from Nanyang Technological University Start Up Grant: 200604393R and AcRF Tier 1 grant from Ministry of Education - Singapore: RG84/17

Context Effects in a Negatively Framed Social Dilemma Experiment

A number of studies of the positively-framed voluntary contribution mechanism (VCM) public goods game have examined the role of context on participant behavior. Relatively little attention, however, has been given to the effects of context in negatively-framed VCM games even though this setting is relevant to a wide array of real world challenges, such as common pool resource use and pollution externalities. This study uses a carefully-controlled laboratory experiment to investigate the degree to which the context in which decisions are made influences decision making in a negatively-framed VCM laboratory experiment. The context treatments that we evaluate vary communication, voting, and the status quo of the initial endowment. Results indicate that providing groups the opportunity to communicate and vote significantly reduces choices that impose external costs. Importantly, the pro-social effects of communication and voting are strongest when the status quo endowment is the private account, which generates costs on other participants. This result suggests that the effect of the status quo endowment is a function of whether the social dilemma is framed positively or negatively when communication between participants is allowed

Perceived economic prospects during the early stage of COVID-19 breakout

How does a new epidemic affect individuals' expectations on economic prospects in the early stage of the breakout? We implemented an incentivized longitudinal online survey soon after the outbreak of the coronavirus disease 2019 (COVID-19) epidemic in China to answer this question. Results show that fewer new confirmed COVID-19 cases significantly increase individuals' expectations on gross domestic product and consumer price index growth rates. Our finding provides evidence that at the early stage of an unfamiliar epidemic, containing the spread of the disease may help to maintain positive economic expectations among individuals.Ministry of Education (MOE)Nanyang Technological UniversityWu thanks National Natural Science Foundation of China (No. 71373006 and 91546113) for financial support. Yan thanks Nanyang Technological University (NTU), Start Up Grant for financial support. Yan also thanks the Ministry of Education of Singapore (MOE) Tier 1 Grant (RG84/47) and CoHASS Research Support Grant for financial support

University Licensing of Patents for Varietal Innovations in Agriculture

There has been a sharp increase in the number of patented fruit varieties developed by breeding programs at public universities in the United States. We developed an experiment to examine the revenue stream to universities from the licensing of these varietal innovations. In the experiment we asked subjects to bid for access for a patented input that would be used to manufacture a differentiated product; treatments were employed to solicit bids that were financed by fees, royalties, and a combination of the two mechanisms under exclusive and non-exclusive contracts. All treatments also considered the impact of demand uncertainty for the product that used the patented input. Our empirical results suggest that innovator revenues are greatest when royalties are used alone. In the absence of demand uncertainty, innovator revenues are greatest with an exclusive contract, but with demand uncertainty innovator revenues are greatest with non-exclusive contracts

University Licensing of Patents for Varietal Innovations in Agriculture

WP 2013-19 October 2013JEL Classification Codes: L24; O32; Q16There has been a sharp increase in the number of patented agricultural products from public universities in the United States. We develop an experiment to examine the revenue stream to universities from licensing plant-based innovations. In the experiment we asked subjects to bid for access for a patented input that would be used to manufacture a differentiated product; treatments were employed to solicit bids that were financed by fees, royalties, and a combination of the two mechanisms under exclusive and non-exclusive contracts. The literature studying the economics of downstream duopoly competition in quantity suggests that revenues for the innovator would be greatest under a non-exclusive contract that uses fees and royalties. In our experiment we allow more than two firms to obtain access to the patent in the non-exclusive treatments, and our empirical results suggest that innovator revenues are greatest when royalties are used alone in a non-exclusive contract

The sound of cooperation : musical influences on cooperative behavior

Music as an environmental aspect of professional workplaces has been closely studied with respect toconsumer behavior while sparse attention has been given to its relevance for employee behavior. In this arti-cle, we focus on the influence of music upon cooperative behavior within decision-making groups. Based onresults from two extended 20-round public goods experiments, we find that happy music significantly andpositively influences cooperative behavior. We also find a significant positive association between moodand cooperative behavior. Consequently, while our studies provide partial support for the relevance of affectin relation to cooperation within groups, we also show an independently important function of happy musicthat fits with a theory of synchronous and rhythmic activity as a social lubricant. More generally, our findingsindicate that music and perhaps other atmospheric variables that are designed to prime consumer behaviormight have comparably important effects for employees and consequently warrant closer investigation.Published versio