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D - Microeconomics

Microeconomics

JEL Code: 
D

Motivating Political Candidacy and Performance: Experimental Evidence from Pakistan

In developing countries, political office is considered the domain of the privileged. We show that political mobilization of randomly sampled citizens increases their candidacy rate five-fold. In addition, the way in which politics is portrayed during mobilization matters. If social benefits of office - such as the ability to help others - are publicly highlighted, candidacy increased and performance, as measured by the alignment of village spending with citizens' preferences one year after elections, improves.

When No Bad Deed Goes Punished: Relational Contracting in Ghana versus the UK

In relational contracting the threat of punishment in future periods provides an incentive to not to cheat. However, to what extent do people actually carry out this punishment? We compare relational contracting patterns in Ghana and the United Kingdom by conducting a repeated principal agent lab experiment, framed in a labour market setting. Each period, employers make offers to workers, who can choose to accept or reject this offer and, after accepting and being paid, what effort to exert. The employers and workers interact repeatedly over several periods.

Pledging, Praising, and Shaming: Experimental Labour Markets in Ghana

Firm surveys have shown that labour management in developing countries is often problematic. Earlier experimental research (Davies & Fafchamps, 2017) has shown that managers in Ghana are reluctant to use monetary incentives to motivate workers. This paper presents the results from a giftexchange game experiment in Ghana in which the worker can make a promise to the employer before a contract is offered (ex ante communication) and in which the employer can send negative or positive feedback to the worker after the worker has chosen effort (ex post communication).

The Economic Origins of Conflict in Africa

We study the impact of plausibly exogenous global food price shocks on local violence across the African continent. In food-producing areas, higher food prices reduce conflict over the control of territory (what we call “factor conflict”) and increase conflict over the appropriation of surplus (“output conflict”). We argue that this difference arises because higher prices raise the opportunity cost of soldiering for producers, while simultaneously inducing net consumers to appropriate increasingly valuable surplus as their real wages fall.

Firm Investment Decisions Under Hyperbolic Discounting

This paper constructs a model of corporate investment decisions under hyperbolic discounting of present values. The hyperbolic discounted present value can be interpreted as reflecting irrational myopic preferences or, as this paper demonstrates, reduced-form implications of corporate agency issues. Both cases in an underinvestment problem for the firm, but the firm valuation criteria differ.

Reprisals Remembered: German-Greek Conflict and Car Sales During the Euro Crisis

Limited attention and selective memory are key behavioral factors identified in the literature on cognitive biases and economic outcomes. We investigate how events trigger selective recall and thus change economic behavior. Following public disagreement between German and Greek politicians, Greek consumers drastically reduced their purchased of German automobiles - especially in areas affected by German reprisals during World War II.

Banking the Unbanked? Evidence From Three Countries

We experimentally test the impact of expanding access to basic bank accounts in Uganda, Malawi, and Chile. Over two years, 17 percent, 10 percent, and 3 percent of treatment individuals made five or more deposits, respectively. Average monthly deposits for them were at the 79th, 91st, and 96th percentiles of baseline savings. Survey data show no clearly discernible intention–to–treat effects on savings or any downstream outcomes.

Governance and the Effectiveness of Public Health Subsidies: Evidence from Ghana, Kenya, and Uganda

Distributing subsidized health products through existing health infrastructure could substantially and cost-effectively improve health in sub-Saharan Africa. There is, however, widespread concern that poor governance – in particular, limited health worker accountability – seriously undermines the effectiveness of subsidy programs. We audit targeted bednet distribution programs to quantify the extent of agency problems. We find that around 80 percent of the eligible receive the subsidy as intended, and up to 15 percent of subsidies are leaked to ineligible people.

Social Networks, Reputation and Commitment: Evidence from a Savings Monitors Experiment

We study whether individuals save more when information about their savings is shared with another village member (a “monitor”). We focus on whether the monitor’s effectiveness depends on her network position. Central monitors may be better able to disseminate information, and more proximate monitors may pass information to individuals who interact with the saver frequently. In 30 villages, we randomly assign monitors. Average monitors increase savings by 35 percent.

Testing Models of Social Learning on Networks: Evidence from a Lab Experiment in the Field

Agents often use noisy signals from their neighbors to update their beliefs about a state of the world. The effectiveness of social learning relies on the details of how agents aggregate information from others. There are two prominent models of information aggregation in networks: (1) Bayesian learning, where agents use Bayes’ rule to assess the state of the world and (2) DeGroot learning, where agents instead consider a weighted average of their neighbors’ previous period opinions or actions.

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