Field Experiments In Economics Research Articles

The role of time preferences in contract breach: Evidence from Chinese poultry farmers participating in contract farming

Farmers’ contract breach behavior is cited as one of the major stumbling blocks in the sustainable expansion of contract farming in many developing countries. This paper examines farmers’ contract breach decisions from the perspective of time preferences. The empirical analysis is based on a household survey and economic field experiments of poultry households participating in contract farming conducted in Jiangsu Province, China. A discounted utility model and a maximum likelihood technique are applied to estimate farmers’ time preferences and the effect of time preferences on contract breach in the production and sales phases are explored with a bivariate probit model. The results show that, on average, the poultry farmers in the sample are generally present biased and impatient regarding future utility. The regression results show that farmers with a higher preference for the present and a higher discount rate are more likely to breach contracts, and time preferences play a greater role in the production phase than in the sales phase. When considering heterogeneity, specific investments and transaction costs promote contract stability only for farmers with a low degree of impatience. Moreover, compared with large-scale farmers, small-scale farmers’ contract breach decisions are more significantly affected by their time preferences. These results have implications for contract stability policies and other issues that are impacted by the linking of behavioral preferences to agricultural decisions.

Peer feedback can decrease consumers’ willingness to pay for food: Evidence from a field experiment

The vast majority of consumer products fail to attract sufficient consumer demand. Word of mouth marketing and online feedback from other consumers have become focal marketing strategies for many products as social media has increased the size of networks and amplified the impact of messages from other consumers. The current literature on the influence that consumer feedback can have on consumers' willingness to pay (WTP) for food products is mixed and often draws upon studies with small samples and hypothetical situations. This study investigates how this feedback can impact other consumers' food preferences using an economic field experiment involving 1,068 adult consumers who make choices on oysters, mushrooms, and chocolate. Results suggest that knowledge of peer preferences, such as the willingness to pay for similar products and/or how often they consume these products, caused a decrease (5%–9%) in consumers’ willingness to pay.

How Field Experiments in Economics Can Complement Psychological Research on Judgment Biases

This review summarizes results of field experiments examining individual behaviors across several market settings—from open-air markets to rideshare markets to tax-compliance markets—where people sort themselves into market roles wherein they make consequential decisions. Using three distinct examples from my own research on the endowment effect, left-digit bias, and omission bias, I showcase how field experiments can help researchers understand mediators, heterogeneity, and causal moderation involved in judgment biases in the field. In this manner, the review highlights that economic field experiments can serve an invaluable intellectual role alongside traditional laboratory research.

Rents, Experiments, and the Perpetual Presence of Concessionary Weather Insurance

Geographers have interpreted the rise of weather insurance for small agricultural producers as emblematic of financialization’s inexorable march to capitalize the countryside. Yet this market has proved far less successful than advocates hoped or critics feared. Rather than a speculative tool for surplus extraction from smallholders or a mechanism for their financial subjectification, this article reinterprets weather insurance as an infrastructure of concessionary transfers from the development sector to make market-mediated mechanisms work. These transfers are emblematic of the new distributional terms struck between donors, states, and insurance capital as financial risk transfer is articulated with the extension of fragmentary safety nets. Economic field experiments with insurance have proliferated as venues in which the value of insurance is tested by both economists and experimenting subjects. Just as data from these trials have suggested some positive welfare impacts, they have also indicated target clients are unwilling or unable to pay full market price, thus performing a new justification for the perpetual presence of subsidies. Such transfers present opportunities for reinsurers to command rents through their control of large pools of capital and their interpretive authority over techniques for pricing risk under uncertainty. In a changing climate, reinsurers are poised to collect larger rents from donors’ and governments’ premium subsidies meant to decrease insurance costs for the vulnerable. These dynamics of rent cycling underscore the urgency of building more equitable, systematic risk-sharing infrastructures to replace the current fragmentary archipelagos of weather insurance.

Individual discount rates: a meta-analysis of experimental evidence

A key parameter estimated by lab and field experiments in economics is the individual discount rate—and the results vary widely. We examine the extent to which this variance can be attributed to observable differences in methods, subject pools, and potential publication bias. To address the model uncertainty inherent to such an exercise we employ Bayesian and frequentist model averaging. We obtain evidence consistent with publication bias against unintuitive results. The corrected mean annual discount rate is 0.33. Our findings also suggest that discount rates are independent across domains: people tend to be less patient when health is at stake compared to money. Negative framing is associated with more patience. Finally, the results of lab and field experiments differ systematically, and it also matters whether the experiment relies on students or uses broader samples of the population.

The effect of legacy pollution information on landowner investments in water quality: lessons from economic experiments in the field and the lab

To address the legacy effects of human activity on water quality, it is helpful to understand how land managers make decisions that directly impact legacy sources of pollutantion generated by previous generations, as opposed to current practices. Using data from an economic field experiment, we examine the effect of information about the cause and relative quantity of streambank erosion on rural landowners’ willingness to invest in stream restoration initiatives. Data from the field is supplemented with data from laboratory sessions in which students are presented with similar decision scenarios. We find that landowners assigned to legacy sediment sites characterized by high erosion rates relative to others in the community increased investment levels by 29%–40% of their budget in comparison to the control, with similar results observed among students. Our results suggest that informational outreach targeted to pollution hot spots, including those created by legacy sources, would significantly increase investments in mitigation efforts that improve water quality.

Improving Cooperation among Farmers for Communal Land Conservation in Ethiopia: A Public Goods Experiment

Farmers in developing countries depend on communal natural resources, yet countries in Sub-Saharan Africa are facing the severe degradation of communal lands due to the so-called “tragedy of the commons”. For the sustainable management of common resources, policy interventions, such as farmer seminars, are necessary to ensure high-level cooperation among farmers for land conservation. However, the effects of this type of information provision are not well known. The purpose of this study is to examine the effects of the dissemination of conservation information on collaborative communal forest management using an economic field experiment with 936 farmers selected by random sampling from 11 villages in the northern Ethiopian Highlands. We conducted a public goods game experiment using a framework of voluntary contribution to communal land conservation with an intervention to remind participants about the consequence of their behaviors. The results show that the volunteer contribution increased after the intervention, and thereafter the decay of the contribution was slow. The results indicate that providing information about the consequences leads to a higher contribution. The effects of information provision are heterogeneous in terms of social condition, such as access to an urban area and social capital, and individual characteristics, such as wealth. These findings imply that information provision effectively improves farmer collaboration toward natural resource conservation in developing countries.

Challenges in Recruiting U.S. Farmers for Policy‐Relevant Economic Field Experiments

AbstractTo develop evidence‐based agricultural policies, researchers increasingly use insights from economic field experiments. These insights are often limited by the challenges of recruiting large and representative samples of farmers. To improve the effectiveness and cost efficiency of farmer recruitment, researchers should apply the same experimental methods to the recruitment process that they apply to their main research questions. Here we experimentally evaluate ten recruiting strategies in two large‐scale, high stakes experiments. We find that monetary incentives and reminders are effective, but costly. Costless strategies, such as prominently citing a well‐known institution as the sponsor, had positive but small, effects on recruitment.

Risk Attitude, Contract Arrangements and Enforcement in Food Safety Governance: A China's Agri-Food Supply Chain Scenario.

Frequent food safety problems in recent years have seriously affected China’s public health. The complexity, diversity, and technicality of food safety problems are intertwined, which constantly promotes the Chinese government and the food industry to explore effective food safety governance mechanisms. As the dominant form of vertical coordination in agri-food supply chain, contract farming is conducive to promoting farmers’ safe production behavior, improving food quality and safety, and ensuring public health. However, the low contract performance rate seriously restricts the effect of contract farming on reducing the risk of food safety in China. This paper empirically investigates the role of farmers’ risk attitude and contract arrangements in their enforcement. The data is derived from a household survey and economic field experiment of fruit farmers participating in contract farming in Anhui and Jiangsu provinces of China. We measure farmers’ risk attitude by using an economic field experiment, and examine how risk attitude and contract arrangements affect contract enforcement with a probit model. The results show that contract enforcement is significantly (1% level) influenced by farmers’ risk attitude. Farmers with greater risk aversion and loss aversion and farmers who are more accurate in evaluating probability information are more likely to fulfill the contract. Additionally, most contract arrangements have a significant effect on contract enforcement at the 5% level. Contract arrangements with floor pricing, bonus, and long duration are related to a higher rate of farmers’ contract performance. Furthermore, the factors influencing contract enforcement differ based on the levels of farmer’ risk attitude. The findings of the study may be conducive to formulating relevant agricultural policy to influence farmers’ decision-making and thus improving food safety and ensuring public health.

Holding back from theory: limits and methodological alternatives of randomized field experiments in development economics

ABSTRACT In this paper, we critically and constructively examine the methodology of evidence-based development economics, which deploys randomized field experiments (RFEs) as its main tool. We describe the context in which this movement started, and illustrate in detail how RFEs are designed and implemented in practice, drawing on a series of experiments by Pascaline Dupas and her colleagues on the use of bednets, saving and governance in Kenya. We show that this line of experiments have evolved to address the limitation of obtaining policy-relevant insights from RFEs alone, characterized as their lack of external validity in the literature. After examining the two prominent responses by leading figures of evidence-based development economics, namely machine learning and structured speculation, we propose an alternative methodological strategy that incorporates two sub-fields, namely experimental economics and behavioral economics, to complement RFEs in investigating the data-generating process underlying the treatment effects of RFEs. This strategy highlights promising methodological developments in RFEs neither captured by the two proposals nor recognized by methodologists, and also guides how to combine different sub-fields of economics.

Two Strands of Field Experiments in Economics: A Historical-Methodological Analysis

While the history and methodology of laboratory experiments in economics have been extensively studied by philosophers, those of field experiments have not attracted much attention until recently. What is the historical context in which field experiments have been advocated? And what are the methodological rationales for conducting experiments in the field as opposed to in the lab? This article addresses these questions by combining historical and methodological perspectives. In terms of history, we show that the movement toward field experiments in economics has two distinct roots. One is the general orientation of medical and social sciences to evidence-based policy evaluation, which gave rise to randomized field experiments in economics (e.g., behavioral public policy, poverty alleviation policy). The other is an awareness of several methodological limitations of lab experiments in economics, which required practitioners to get out of the lab and into the field. In these senses, the movement is a consequence of influences from both outside and inside economics: the general evidence-based trend in policy science and an internal methodological development of experimental economics. In terms of methodology, we show that these two roots resulted in two somewhat different notions of “external validity” as methodological rationales of field experiment. Finally, we suggest that analysis of experiments as exhibits highlights a methodological strategy in which both strands complement each other.

An Experimental Approach to Exploring Market Responses in Small-Scale Fishing Communities

Small-scale fishing communities are increasingly connected to international seafood trade via exports to a growing global market. Understanding how this connectedness impacts local fishery systems, both socially and ecologically, has become a necessary challenge for fisheries governance. Market prices are a potential mechanism by which global market demands are transferred to small-scale fishery actors. In most small-scale fisheries this happens through various traders (intermediaries, middlemen/women or patrons). By financing fishing operations, buying and selling products and transferring market information, traders can actively pass international market signals, such as price, to fishers. How these signals influence fishers' decisions and consequent fishing effort is still poorly understood yet significant for future social-ecological sustainability. The paper uses an economic framed field experiment, in combination with interviews, to shed light on this. It does so in the context of the Philippine patron-client 'suki' arrangement. Over 250 fishers in Concepcion, Iloilo were asked in an economic experiment, to make decisions about fuel loans in light of changing market prices. Interviews with participants and their patrons gathered additional information on relevant contextual variables potentially influencing borrowing. They included fisher characteristics and socio-economic conditions. Contrary to our hypotheses, fishers showed no response in their borrowing behaviour to experimental price changes. Instead, gender and the previous experiment round were predictive of their choice of loans in the experiment. We explore possible reasons for this.

TOOLS FOR RE‐RANDOMIZATION

ABSTRACTWith the rising popularity of field experiments in economics, re‐randomization schemes have emerged as tools to induce balance in observable variables across treatment groups. However, re‐randomization is not fully understood and the methodologies to estimate its effects on the distribution of parameters are still under‐developed. This paper helps to close that gap by suggesting an asymptotically normal re‐randomization scheme and bootstrapping procedure to carry inference under a wide range of estimators and re‐randomization schemes.

How do Success and Failure Experiences Affect Children’s Goal-Setting and Competition Entry? Evidence from Field Experiments in Central Rural China

This paper for the first time adopts economic field experiments for 267 children aged 8 to 11 from the third to fifth grades of a rural primary school in central China as subjects to study the impact of success and failure in a competition on children’s follow-up goal-setting and competition entry decision-making. The study finds that after the feedback of competition results, winning children will set a goal that is lower than their own ability, and losers will set a goal that is similar to their own ability while increasing their efforts to improve their performance. Ultimately losers achieve scores similar to the successful ones. In terms of the competition entry decision, success in a competition generates significant positive incentives for follow-up competition entry. Children getting success in the first round are significantly more active to choose to compete with others in the follow-up competition choice and ultimately obtain higher scores. We also find that success and failure experiences have a more significant impact on girls’ goal-setting and competition entry decision. Winning girls become more conservative in following rounds, such as setting a goal that is significantly lower than their ability, and less active to choose to compete with others. Compared with the existing literature, this study verifies the positive effect of failure experiences on self-improvement and the negative impact on competition entry with others from a new perspective. It also provides new insights into understanding the impact of winning and losing experiences on children’s subsequent competitive behaviors. The research results of this paper are consistent with many existing research conclusions, except for gender differences. The gender differences of this study are different from the results of the study of Dutch students, which may be due to the differences between Eastern and Western cultures. This paper has certain implications for guiding children’s development. In the process of children’s growth, on the one hand, we must follow the traditional Chinese concept of victory and defeat, that is, winning without arrogance, and losing without discouragement”. On the other hand, we also need to balance children’s success and failure experiences. The inspiring role of success experiences and the introspective role of failure experiences allow children to learn to cope with victory and defeat in their experiences. In particular, for rural children, we should use the incentive mechanism of winning experience to guide them in underprivileged circumstances to actively participate in social interaction and social competition.

Association between time preference, present-bias and physical activity: implications for designing behavior change interventions

BackgroundThe decision to initiate or maintain a healthy habit, such as physical activity involves a trade-off between a short-term cost, such as time and effort, which are commonly identified as barriers to physical activity, and a long-term health benefit. Research suggests that individual time preference may be associated with unhealthy behaviors. However, empirical evidence of this for physical activity is scant. This study investigated the relationship between time preference and physical activity, and how this might influence behavior change.MethodsEmployees (n = 176; mean age 42.2 years) who participated in a physical activity intervention were invited to take part in a behavioral economic field experiment. Two economic experiments, using multiple price lists and monetary trade-off tables involving real money choices, were conducted face-to-face with participants to measure the two components of time preference, namely present-bias and discount rate. Together with individual risk preferences, these three variables were jointly estimated by maximum likelihood. These three parameters were expressed as a linear function of the levels of physical activity while controlling for socio-demographic variables within the same maximum likelihood framework.ResultsThose who were present-biased and who had higher discount rates did significantly less physical activity than their patient and non present-biased counterparts. A 3% lower discount rate and 1.14 unit decrement in the present-bias parameter was associated with a 30 min increase of physical activity per week. This negative association was more significant for certain sub-groups, such as younger and married adults and those with higher staff grade and those who have children. Participants who dropped out of the study earlier were more present-biased.ConclusionsResults demonstrated that discount rate and present-biasedness have a significant impact on physical activity levels. Such concepts have been largely overlooked and underutilized in physical activity interventions. Promising implications include 1) utilizing individuals’ time preferences to better target interventions; 2) taking account of time preferences in the intervention design; 3) interventions attempting to correct for present-biasedness.

The Role of Homogeneity and Heterogeneity Among Resource Users on Water Governance: Lessons Learnt from an Economic Field Experiment on Irrigation in Uzbekistan

The governance of common-pool resources, such as irrigation systems, is a highly debated topic in research. Numerous studies suggest that actors can successfully manage these resources through cooperation, especially in hybrid governance structures, if they are able to design and enforce their own rules. Thereby, certain factors, such as the composition of a group of resource users, influence the likelihood of cooperation and the performance of self-managed resource systems. This study employed an economic framed field experiment to compare the effects of externally imposed and self-set rules of water distribution on homogeneous and heterogeneous groups of irrigation users who differ in their economic endowment. The experiment was conducted with 20 farmers in an Uzbek community. Furthermore, questionnaires, group discussions and interviews complemented the analytical method. The results show that groups, homogeneous in their economic endowment are more inclined to comply with self-designed rules than groups that are economically heterogeneous. Thus, homogenous groups achieve a better performance in terms of resource maintenance and water harvest under self-governance. However, water distribution was more equal and the illegal activities decreased in both the homogeneous and heterogeneous groups with self-implemented rules. It was found that trust was a crucial factor regarding both greater individual rule adherence and more cooperative behavior within homogeneous entities compared to heterogeneous groups of irrigation users. Finally, the results support the argument that economic heterogeneity among resource users lowers the likeliness of cooperation in self-governed common-pool resource systems.

Nudgitize me! A behavioral Finance Approach to minimize losses and maximize profits from Heuristics and Biases

Behavioral Finance is one of the most novel developments in Behavioral Economics. Since the end of the 1970ies a wide range of psychological, economic and sociological laboratory and field experiments proved human beings deviating from rational choices. Standard neoclassical profit maximization axioms were outlined to fail to explain how human actually behave. Human beings were rather found to use heuristics in the day-to-day decision making. These mental short cuts enable to cope with information overload in a complex world. Behavioral economists proposed to nudge and wink citizens to make better choices for themwith many different applications in very many different domains. This paper reviews and proposes how to use mental heuristics, biases and nudges in the finance domain to profit from markets.

Nudgitize me! A behavioral Finance Approach to minimize losses and maximize profits from Heuristics and Biases

Behavioral Finance is one of the most novel developments in Behavioral Economics. Since the end of the 1970ies a wide range of psychological, economic and sociological laboratory and field experiments proved human beings deviating from rational choices. Standard neoclassical profit maximization axioms were outlined to fail to explain how human actually behave. Human beings were rather found to use heuristics in the day-to-day decision making. These mental short cuts enable to cope with information overload in a complex world. Behavioral economists proposed to nudge and wink citizens to make better choices for them with many different applications in very many different domains. This paper reviews and proposes how to use mental heuristics, biases and nudges in the finance domain to profit from markets.

Nudgital: Critique of Behavioral Political Economy

Behavioral Economics revolutionized mainstream neo-classical economics. A wide range of psychological, economic and sociological laboratory and field experiments proved human beings deviating from rational choices as standard neo-classical profit maximization axioms failed to explain how human actually behave. Human beings rather use heuristics in their day-to-day decision making. These mental short cuts enable to cope with a complex world yet also often leave individuals biased and falling astray to decision making failures. What followed was the powerful extension of these behavioral insights for public administration and public policy making. Behavioral economists proposed to nudge and wink citizens to make better choices for them and the community. Many different applications of rational coordination followed ranging from improved organ donations, health, wealth and time management, to name a few. Yet completely undescribed remains that the implicit hidden persuasion opens a gate to deception and is an unprecedented social class division means. Social media forces are captures as unfolding a class dividing nudgital society, in which the provider of social communication tools can reap surplus value from the information shared of social media users. The social media provider is outlined as capitalist-industrialist, who benefits from the information shared by social media users, or so-called consumer-workers, who share private information in their wish to interact with friends and communicate to public.

Nudgital: Critique of Behavioral Political Economy

Behavioral Economics revolutionized mainstream neo-classical economics. A wide range of psychological, economic and sociological laboratory and field experiments proved human beings deviating from rational choices as standard neo-classical profit maximization axioms failed to explain how human actually behave. Human beings rather use heuristics in their day-to-day decision making. These mental short cuts enable to cope with a complex world yet also often leave individuals biased and falling astray to decision making failures. What followed was the powerful extension of these behavioral insights for public administration and public policy making. Behavioral economists proposed to nudge and wink citizens to make better choices for them and the community. Many different applications of rational coordination followed ranging from improved organ donations, health, wealth and time management, to name a few. Yet completely undescribed remains that the implicit hidden persuasion opens a gate to deception and is an unprecedented social class division means. Social media forces are captures as unfolding a class dividing nudgital society, in which the provider of social communication tools can reap surplus value from the information shared of social media users. The social media provider is outlined as capitalist-industrialist, who benefits from the information shared by social media users, or so-called consumer-workers, who share private information in their wish to interact with friends and communicate to public. The social media capitalist-industrialist reaps surplus value from the social media consumer-workers’ information sharing, which stems from nudging social media users. For one, social media space can be sold to marketers who can constantly penetrate the consumer-worker in a subliminal way with advertisements. But also nudging occurs as the big data compiled about the social media consumer-worker can be resold to marketers and technocrats to draw inferences about consumer choices, contemporary market trends or individual personality cues used for governance control, such as, for instance, border protection and tax compliance purposes. To draw attention to this implicit struggle within society is important for various reasons: Addressing the nudgital society allows to better understand the laws of motion of governance in the digital age, leading to the potentially unequal accumulation and concentration of power. Technological improvement in the age of information has increased the possibilities to control the innocent social media users and reap the benefits of their existence in hidden persuasion. In the age of populism, nudging can be criticized to be used by the ruling class to exploit the governed populace. In modern democracies, the right to rule was recently plundered in democratic votes through misguiding information of alternative facts and fake news circulated on social media. The socio-ethical crises that are rooted in the contradictory class division of the nudgital society are presented in this paper for the first time and from there on demand for further description and research on capitalism and democracy in the digital age. The paper advocates for a democratisation of information, education about nudges and well-informed distribution of transparent governance control.