SALIENCE AND THE GOVERNMENT PROVISION OF PUBLIC GOODS

This paper examines how behavioral biases caused by salient events affect the government provision of public goods. We develop a theory in which competing communities lobby the government for allocations of a local public good. Salient events bias community demands for the good, which results in inefficient allocations. We empirically test this theory using salient wildfires and government projects to reduce wildfire risk. Wildfires reduce risk to nearby communities, but may increase demand for fuels management projects because of biases induced by salient wildfires. We find that communities experiencing recent nearby fires are more likely to receive fuels management projects. (JEL D03, H41, Q24)     

A CLEAR AND PRESENT MINORITY: HETEROGENEITY IN THE SOURCE OF ENDOWMENTS AND THE PROVISION OF PUBLIC GOODS

We conduct public goods experiments in which participant groups are heterogeneous in regards to the source of their endowments. We find that this dimension of heterogeneity significantly reduces contributions to the public good, yielding strong support for the Nash prediction of minimal contributions. These minimal contributions arise in environments in which there exists a clear minority in terms of source of endowments. We discuss these results in light of current research on the influence of heterogeneous populations on public goods provision and redistributive policies. (JEL C9, D63, H4, J15)     

BILATERAL OLIGOPOLY IN POLLUTION PERMIT MARKETS: EXPERIMENTAL EVIDENCE

We experimentally investigate behavior in a bilateral oligopoly using a supply function equilibria model discussed by Klemperer and Meyer (1989), Hendricks and McAfee (2010), and Malueg and Yates (2009). We focus on the role that market size and the degree of firm heterogeneity have on the market equilibrium. Our results indicate that subjects within the experiment recognize the strategic incentives in a bilateral oligopoly, but they do not exploit these incentives to the exact magnitude predicted by theory. We find weaker support for predicted market outcomes, as market efficiency does not depend on market size, and in some cases buyers or sellers are more successful at extracting the rents from the market. (JEL L13, Q5, C9)     

Using Suggested Contributions in Fundraising for Public Good

This article presents a provision point mechanism experiment designed to investigate the impact of suggested contributions in a public-good contribution process. We find that suggesting contributions is ineffective if subjects value the public good equally. However, if valuations for the public good differ among individuals, as they do in the real world, we find that contribution suggestions increase the likelihood of providing the public good, increase the fraction of individuals contributing their suggested share, and improve the equity of the distribution of contributions.     

DUBIOUS AND DUBIOUSER: CONTINGENT VALUATION AND THE TIME OF DAY

We collect contingent valuation data from 524 student survey respondents over a 3‐day, 72‐hour period. Data analysis of a hypothetical campus referendum focuses on time‐of‐day effects on willingness to pay for a renewable energy project. We find that subjects responding to the survey during the night‐time hours (i.e., between 12 a.m. and 6 a.m.) do not display the law of demand, offering theoretically invalid responses to questions with important policy implications. Results from this research may have serious implications for the contingent valuation method (CVM). In short, just like your father said, nothing good happens after midnight when using the CVM. (JEL Q51)     

EFFICIENT TAX REPORTING: THE EFFECTS OF TAXPAYER LIABILITY INFORMATION SERVICES

The complexity of the individual income tax system can give rise to both under‐ and overreporting of liability, thus creating a wedge between taxpayer perceptions of the price of public services and their actual cost, and potentially leading to budget misallocations and associated efficiency losses. This study uses theory and experiments to evaluate the effectiveness of taxpayer service programs that endeavor to resolve uncertainty over tax liability. To do so, we induce uncertainty over tax liability and investigate the effects of both service accuracy and reliability. We find participants are less likely to file when tax liability is uncertain but the provision of information offsets this effect; furthermore, it appears that simply providing a service, even one that imperfectly reveals liability, increases the propensity to file and the accuracy of the filing. When a service that promises to resolve uncertainty completely is requested but not delivered, the result is underreporting even more severe than in a setting where no service is available. (JEL H2, H26, C91)     

EXPERIMENTAL ANALYSIS OF RISK AND UNCERTAINTY IN PROVISIONING PRIVATE AND PUBLIC GOODS

This paper uses laboratory evidence from public goods games to examine how in payoff-equivalent situations, decision makers contribute toward private or public goods when they are exposed to different kinds of risks and uncertainties in the provision of these goods. We find that location matters with subjects moving away from the environmental uncertainty in favor of strategic uncertainty when that uncertainty is located on the private good. When the uncertainty relates to the public good, subjects face both kinds of uncertainties on the same good, leading to a significant drop in contributions. An opportunity to reduce uncertainty increases cooperation. ( JEL C90, D81, H41)     

ESTIMATING TIME‐VARYING BARGAINING POWER: A FISHERY APPLICATION

We propose an unobserved‐components‐inspired approach to estimate time‐varying bargaining power in bilateral bargaining frameworks. We apply the technique to an ex‐vessel fish market that changed management systems from a regulated open‐access system to an individual fishing quota (IFQ) system over the timespan analyzed. We find that post‐IFQ implementation fishers do improve their bargaining power and thus accrue more of the rents generated by the fishery. However, unlike previous studies, we find that fishers do not move to a point of complete rent extraction. Rather, fishers and processors appear to be in a near‐symmetric bargaining situation post‐IFQ implementation. (JEL C22, L11, Q22)     

Binary participation and incremental provision of public goods

This paper presents a comprehensive analysis of voluntary binary participation in the provision of public goods in a full information setting where the marginal product of participation is positive but decreases with the number of participants. Our study extends Palfrey and Rosenthal's (1984) binary model. It deals with an important special case of uniform multi-person prisoner's dilemma, Schelling (1978), that might be conceived of as the discrete counterpart of the continuous model where both players' contributions and the production function of the public good are continuous, Olson (1965), Chamberlin (1974), McGuire (1974). For pure strategies, we find that as in the continuous setting, Nash equilibria are inefficient and the public good is underprovided. Surprisingly, for mixed strategies, the symmetric equilibria are inefficient, however, even in expected terms, the public good can be overprovided. The concurrence between inefficiency and underprovision of the public good reemerges, provided that one of the following holds: (i) the number of potential participants is sufficiently large, (ii) the marginal product of participation is sufficiently stable, (iii) the costs of participation are sufficiently low or sufficiently high, or (iv) the identical players are constrained to select identical strategies.We would like to thank Howard Rosenthal and two anonymous referees for very helpful comments and suggestions.     

SIMULTANEOUS DECISION‐MAKING IN COMPETITIVE AND COOPERATIVE ENVIRONMENTS

We experimentally investigate simultaneous decision‐making in two contrasting environments: one that encourages competition (lottery contest) and one that encourages cooperation (public good game). We find that simultaneous participation in the public good game affects behavior in the contest, decreasing sub‐optimal overbidding. Contributions to the public good are not affected by participation in the contest. The direction of behavioral spillover is explained by differences in strategic uncertainty and path‐dependence across games. Our design allows us to compare preferences for cooperation and competition. We find that in early periods, there is a negative correlation between decisions in competitive and in cooperative environments. (JEL C72, C91)     

A voluntary participation game through a unit-by-unit cost share mechanism of a non-excludable public good

The strategic analysis of voluntary participation in the public good provision has shown two distinct results. First, when the provision of public goods is binary, there are Nash equilibria supporting efficient allocations, and these are Strong Nash equilibria of the game. On the other hand, a model of a continuous public good (Saijo–Yamato, J Econ Theory 84:227–242, 1999) showed that the participation of all agents is not an equilibrium in many situations. This article considers the provision of a discrete and multi-unit public good, and examines a unit-by-unit participation game. Namely, people are asked to participate in each unit of public good provision, and those who chose to participate share the marginal cost of public good. In this game of public good provision, there are subgame-perfect equilibria that are Pareto efficient. We also use the refinement concepts to eliminate inefficient subgame-perfect equilibria and also to characterize the efficient subgame-perfect equilibria.     

COMPARING THE EFFECTIVENESS OF REGULATION AND PRO‐SOCIAL EMOTIONS TO ENHANCE COOPERATION: EXPERIMENTAL EVIDENCE FROM FISHING COMMUNITIES IN COLOMBIA

This paper presents the results from a series of framed field experiments conducted in fishing communities off the Caribbean coast of Colombia. The goal is to investigate the relative effectiveness of exogenous regulatory pressure and pro‐social emotions in promoting cooperative behavior in a public goods context. The random public revelation of an individual's contribution and its consequences for the rest of the group leads to significantly higher public good contributions and social welfare than regulatory pressure, even under regulations that are designed to motivate fully efficient contributions. (JEL C93, H41, Q20, Q28)     

ROLE‐REVERSAL CONSISTENCY: AN EXPERIMENTAL STUDY OF THE GOLDEN RULE

We report an experiment that asks whether people in a strategic situation behave according to the Golden Rule, that is, do not treat others in ways that they find disagreeable to themselves, a property that we call role‐reversal consistency. Overall, we find that over three quarters of the subjects are role‐reversal consistent. Regression analysis suggests that this finding is not driven by players maximizing their subjective expected monetary earnings given their stated beliefs about their opponents' behavior. We find that subjects' stated beliefs and actions reveal mild projection bias. (JEL C78, C91)     

THE IMPACT OF PEER PRESENCE ON CHEATING

Recent research has shown that the presence of peers can increase individual output both in the lab and the field. This paper tests for negative side effects of such peer settings. We investigate whether peer settings are particularly prone to cheating even if they do not provide additional monetary benefits of cheating. Participants in our real‐effort experiment had the opportunity to cheat when declaring their output levels. Although cheating did not have different monetary consequences when working alone than when working in the presence of a peer, we find that cheating is a more severe problem in peer settings.(JEL J20, J30, M50)     

Demanding hosts and ungrateful guests – the everyday drama of public transportation in three acts and academic prose

In their own view, public transportation companies make a very hospitable offer to commuters: if you are ready to travel with us, we will take you for a reasonable price nearly anywhere, every day and almost at any time of the day, under good conditions of comfort and safety. Please, step onboard. But commuters resist being reduced to the thankful guests of their commuting service providers. Commuting is an experience whose rhythm structures daily lives. It is not an innocuous in-between-doors passage, but a social practice intertwined with the routines bound to the home, workplace, and places of leisure which they commute to and from. Commuting routines are a constitutive part of commuters’ lives. Correspondingly, commuters own their commuting space. They do not own it in terms of legal ownership, although they possess a valid ticket; they own it via the degree to which they are at home in their routines and intuitively know through the senses and feelings produced through the normal flow of daily practices, that they are on their own home turf. Home is more than the physical space of the house; it is an embodied perception of a familiar cultural space which is organized in such a way that one has some control and responsibility over. Because commuters grant transportation companies daily access to the intimacy of their homes, they are hosting the companies, not the opposite. Public transportation hospitality is thus a tension-filled drama, co-produced by transportation companies and commuters. In this drama managerial routines meet routines of daily life, legal definitions of ownership meet practice-based ones, and organizational hospitality stands against individual hospitality. Our claim is that the fact that each party considers itself to be the host of the other, the prevailing situation consequently frames the provision and experience of public transportation services as a drama: the drama of hospitality.     

High Hopes but Even Higher Expectations: The Retreat From Marriage Among Low‐Income Couples

This study examines why low‐income, unmarried parents who say that they plan to marry at the time their child is born do not follow through on their plans. We use data from a nationally representative birth cohort survey—the Fragile Families and Child Wellbeing Study (N =3,710)—combined with data from an embedded qualitative study—Time, Love, Cash, Caring, and Children (n =47)—to explore the reasons behind this apparent discrepancy. We find that some of the difference between parents’ expectations and behavior may be because of the overstatement of intentions at the time of the birth. Most of the discrepancy, however, results from parents’ perceived social and economic barriers to marriage. Specifically, unmarried parents have a long list of financial and relationship prerequisites they believe must be met in order for them to wed. Combined with other factors, these standards lead to an indeterminate delay in marriage.     

ON THE PREFERENCES OF PRINCIPALS AND AGENTS

One of the reasons why market economies are able to thrive is that they exploit the willingness of entrepreneurs to take risks that laborers might prefer to avoid. Markets work because they remunerate good judgment and punish mistakes. Indeed, modern contract theory is based on the assumption that principals are less risk averse than agents. We investigate if the risk preferences of entrepreneurs are different from those of laborers by implementing experiments with a random sample of the population in a fast‐growing, small‐manufacturing, economic cluster. As assumed by theory, we find that entrepreneurs are more likely to take risks than hired managers. These results are robust to the inclusion of a series of controls. This lends support to the idea that risk preferences is an important determinant of selection into occupations. Finally, our lotteries are good predictors of financial decisions, thus giving support to the external validity of our risk measures and experimental methods (JEL C93, D81, D86).     

The Association of Couples’ Relationship Status and Quality With Breastfeeding Initiation

Using data from the Fragile Families and Child Wellbeing Survey (N= 3,567), we examine the links between relationship status, relationship quality, and race and ethnicity in breastfeeding initiation. We consider four relationship types: married, cohabiting, romantically involved but not cohabiting (termed visiting), and nonromantically involved mothers. We find that even after adjusting for a wide range of sociodemographic factors, married mothers were more likely to breastfeed than unmarried mothers and that racial and ethnic differences in breastfeeding do not result from differences in marriage rates. Among unwed mothers, paternal provision of money or other assistance during pregnancy decreases the likelihood of breastfeeding. We conclude that relationship status, above and beyond demographic characteristics, is an important correlate of breastfeeding.     

Cohabitation in the Philippines: Attitudes and Behaviors Among Young Women and Men

We examine data from a national survey of 15 – 27 year olds in the Philippines to assess attitudes toward marriage and cohabitation, and we analyze the marital and nonmarital union experiences of 25 – 27 year olds. We find that attitudes toward cohabitation remain quite conservative among young Filipinos, although men view cohabitation more favorably than do women. We also find that men’s socioeconomic status affects their ability to enter unions, particularly marriage, whereas women’s union formation patterns are influenced by the family in which they grew up, their participation in religious services, and to some degree by their place of residence. Both men and women who hold more liberal attitudes on a range of issues are more likely to have cohabited than are individuals who do not share those views. For now, however, we do not expect cohabitation to become a widespread substitute for marriage in the Philippines.