Date of Award

Spring 5-15-2010

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

Ragan A. Petrie

Second Advisor

H. Spencer Banzhaf

Third Advisor

James C. Cox

Fourth Advisor

Vjollca Sadiraj

Abstract

The chapters of this dissertation explore complementary areas of applied microeconomics, within the fields of experimental and environmental economics. In each case, preferences and institutions interact in ways that enhance or subvert efficiency.

The first chapter, "The Girl Scout Cookie Phenomenon," uses a laboratory experiment to study favor trading in a public goods setting. The ability to practice targeted reciprocity increases contributions by 14%, which corresponds directly to increased efficiency. Subjects discriminate by rewarding group members who have been generous and withholding rewards from ungenerous group members. At least some reciprocal behavior is rooted in other-regarding preferences. When someone is outside the "circle of reciprocity," he gives less to the public good than in other settings. We find no evidence of indirect reciprocity. We find two behavioral types in each treatment, differing in baseline giving but not in tendency to reciprocate.

The second chapter, "The Effects of Conservation Reserve Program Participation on Later Land Use," studies another public goods issue: conservation. The Conservation Reserve Program (CRP) pays farmers to retire farmland. We use a treatment effect framework to find that ex-CRP land is 21-28% more likely to be farmed than comparable non-CRP land. This implies that the CRP improves low-quality land, making it more attractive to farm. This could demonstrate inefficiency, since farmers gain private benefit from a program meant to provide a public good. On the other hand, farmed ex-CRP land is more likely to adopt conservation practices, although this may not be caused by CRP participation.

The third chapter, "Learning from Mistakes," examines financial decisions by adult Rwandans in institutions inside and outside the lab. Over 50% of subjects make irrational choices over risk—choices that likely do not reflect their preferences, and are therefore likely inefficient—and these subjects share tendencies in their take-up of financial instruments. Risk-averse individuals are more likely to belong to a savings group and less likely to take out an informal loan. For those who make mistakes, however, as they become more risk averse, they are less likely to belong to a savings group and more likely to take up informal credit.

Included in

Economics Commons

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