the effects of moral licensing and moral cleansing in contingent valuation and laboratory experiments on the demand to reduce externalities recent field experiments show that peer information can induce people to reduce their production of negative externalities related work in psychology demonstrates that inducing feelings of relative culpability in one domain can induce spillover pro social behavior in another domain we use a contingent valuation and parallel lab experiment to explore patterns of cross domain responses to norm based interventions asymmetric responses between those whose impacts are above or below the norm are found to be robust across decision settings substantial heterogeneity in responses is observed across a number of dimensions not explored in large field experiments raising questions about the universality of peer information effects and the design of such programs

social comparisons and contributions to online communities a field experiment on movielens we design a field experiment to explore the use of social comparison to increase contributions to an online community we find that after receiving behavioral information about the median user s total number of movie ratings users below the median demonstrate a 530 percent increase in the number of monthly movie ratings while those above the median decrease their ratings by 62 percent when given outcome information about the average user s net benefit score above average users mainly engage in activities that help others our findings suggest that effective personalized social information can increase the level of public goods provision

social norms and moral hazard the probability of income loss depends on talent and effort effort has positive externalities and therefore individuals are awarded status in proportion to their perceived diligence the social no

are positional concerns stronger in some domains than in others for more than one hundred years economists have discussed the concept of positional goods that the utility conferred by many perhaps even most goods depends not only on the amount the individual consumes but also on the amount others consume e g thorstein veblen 1899 james duesenberry 1949 john k galbraith 1958 robert frank 1985 while economic interest in positional goods is increasing e g mark pingle and mike mitchell 2002 kenneth arrow et al 2004 ed hopkins and tatiana kornienko 2004 the literature remains largely theoretical rather than empirical if status concerns affect all items in the utility function equally leisure as well as goods the positional effect would operate like a lump sum tax reducing well being without changing the allocation of time or money arrow et al 2004 however if positional concerns are stronger for some things than for others then in order to understand how people can become better off in well being not simply in wealth we must investigate how interpersonal competition interacts with material gains frank 1997 evidence about what goods are more positional than others is essential for correct policy recommendations gregory besharov 2002 but little is actually known about the relative positional rankings of items in the typical consumer s utility function four hypotheses proposed in the literature are

channels of interstate risk sharing united states 1963 1990 we develop a framework for quantifying the amount of risk sharing among states in the united states and construct data that allow us to decompose the cross sectional variance in gross state product into several components which we refer to as levels of smoothing we find that 39 percent of shocks to gross state product are smoothed by capital markets 13 percent are smoothed by the federal government and 23 percent are smoothed by credit markets the remaining 25 percent are not smoothed we also decompose the federal government smoothing into subcategories taxes transfers and grants to states

a new paradigm for valuing non market goods using referendum data maximum likelihood estimation by censored logistic regression abstract this paper challenges the w m hanemann amer j agr econom 66 332 341 1984 and c sellar j p chavas and j r stoll j environ econom management 13 382 390 1986 utilizations of logit models to estimate the value of non market resources from referendum survey data these data are more informative than conventional choice data the random utility interpretation of logit models is therefore too restrictive bypassing the utility function entirely it will be shown that parameters and standard errors for utility theoretic inverse hicksian demand functions can be extracted directly and much more simply estimated demand functions need not be limited to those corresponding to the linear in parameters utility difference specifications which can be handled by packaged logit programs

how elastic are preferences for redistribution evidence from randomized survey experiments we analyze randomized online survey experiments providing interactive customized information on us income inequality the link between top income tax rates and economic growth and the estate tax the treatment has large effects on views about inequality but only slightly moves tax and transfer policy preferences an exception is the estate tax informing respondents of the small share of decedents who pay it doubles support for it the small effects for all other policies can be partially explained by respondents low trust in government and a disconnect between concerns about social issues and the public policies meant to address them jel d31 d72 h23 h24

rules of thumb for social learning this paper studies agents who consider the experiences of their neighbors in deciding which of two technologies to use we analyze two learning environments one in which the same technology is optimal for all players and another in which each technology is better for some of them in both environments players use exogenously specified rules of thumb that ignore historical data but may incorporate a tendency to use the more popular technology in some cases these naive rules can lead to fairly efficient decisions in the long run but adjustment can be slow when a superior technology is first introduced

norms and economic motivation in the swedish green electricity market abstract the purpose of this paper is to provide an econometric analysis of the most important determinants of swedish households choice to pay a price premium for green electricity we draw on recent developments in the literature on integrating norm motivated behavior into neoclassical consumer theory and assume that individuals have a preference for keeping a self image as a morally responsible person consumer behavior in the green market place will then be heavily determined by how purchases of different goods affect this self image the analysis is based on postal survey responses from 655 swedish households which are analyzed within a binary choice econometric framework the results indicate that the impact of choosing green on the household budget largely influences the choice between green and brown electricity as does the degree of perceived personal responsibility for the issue and the felt ability to affect the outcome in a positive way we find limited support for the notion that perceptions about others behavior in general affect individual moral norms and ultimately expressed behavior but this is also complemented by the influence of explicit social influence the difficulty in observing others purchases makes it however difficult to distinguish between social and moral norms in the case of green electricity

intranational business cycles in the united states abstract we established a comprehensive set of stylized facts for intranational business cycles across states and regions in the u s notable findings are that the cross correlations of our consumption measure is much less than that for output and the volatility of the real exchange rate between states is much less than that for output these findings are contrasted with the quantity and price anomalies found in international business cycle data additional results for labour and non labour earnings suggest that the observed amount of intratemporal risk sharing is quite limited as compared to that for intertemporal risk sharing

understanding the backus smith puzzle it s the nominal exchange rate stupid backus kehoe and kydland bkk 1992 showed that if international capital markets are complete consumption growth correlations across countries should be higher than their corresponding output growth correlations in stark contrast to the theory however in actual data the consumption growth correlation is lower than the output growth correlation by assuming trade imperfections due to non traded goods backus and smith 1993 showed that there is an additional impediment that works to lower the consumption growth correlation while backus and smith s argument was successful in partially explaining the low growth correlation puzzle it contributed to generating another puzzle because the data forcefully showed that consumption growth is negatively correlated with the real exchange rate which is a violation of the theory in this paper by decomposing the real exchange rate growth of the oecd countries into the nominal exchange rate growth and the inflation differential we find that nominal exchange rate movements are the main source for the backus smith puzzle we find that the nominal exchange rate moves counter cyclically with consumption movements which is a violation of the risk sharing theory with non traded goods we also find that the violations are more pronounced when nominal exchange rate changes are larger in absolute value in contrast the negative of bilateral inflation differentials is positively correlated with bilateral consumption movements the latter finding is in accordance with the theory furthermore using intranational data for the united states where the nominal exchange rate is constant the backus smith puzzle disappears although complete risk sharing is rejected

economics and identity this paper considers how identity a person s sense of self affects economic outcomes we incorporate the psychology and sociology of identity into an economic model of behavior in the utility function we propose identity is associated with different social categories and how people in these categories should behave we then construct a simple game theoretic model showing how identity can affect individual interactions the paper adapts these models to gender discrimination in the workplace the economics of poverty and social exclusion and the household division of labor in each case the inclusion of identity substantively changes conclusions of previous economic analysis

consumption real exchange rates and the structure of international asset markets abstract international real business cycle irbc models that assume complete asset markets yield strong restrictions for consumption and bilateral real exchange rate series empirical tests with data for the us japan france uk italy canada and sweden suggest that neither the trend behavior nor high frequency movements of consumption and real exchange rates are well explained by irbc models with complete markets it appears however that high frequency fluctuations of consumption and real exchange rates are consistent with unrestricted international trade in risk free bonds

decoy effects in choice experiments and contingent valuation asymmetric dominance while a dominated choice involves a situation in which one option clearly dominates another on all relevant dimensions an asymmetrically dominated choice typically arises where at least two options do not dominate each other and one but not both of those options does dominate a third option we demonstrate that the introduction of such an asymmetrically dominated option can have a significant impact upon choices between non dominated options within the same choice set for non market goods furthermore we show that this effect can then translate into significant impacts upon subsequent valuations for those non dominated options

impure altruism in dictators giving abstract we design an experiment to test whether incomplete crowding out in dictator games can be rationalized by the impurely altruistic preferences by giving the recipients an endowment of varying levels we create an environment in which crowding out may occur we find that the behavior of 66 of the dictators can be rationalized by the impurely altruistic utility function

nudges that hurt those already hurting distributional and unintended effects of salience nudges abstract nudges are becoming increasingly popular policy tools yet distributional effects of nudges are largely unknown we first design an economic laboratory experiment to examine the incidence of an opportunity cost reminder nudge a salience nudge designed to curb spending while accounting for heterogeneity in emotional responses specifically the pain of paying pain of paying is optimal for unconflicted consumers but too low for spendthrifts and too high for tightwads causing sub optimal spending our empirical results imply the nudge increases pain of paying for tightwads thereby reducing spending by tightwads who already spend too little while it entirely fails to reduce the spending of those who would have benefited from a spending reduction spendthrifts overall the nudge therefore might reduce consumer welfare we next examine if the adverse impact of the opportunity cost reminder nudge is explained by a general tendency for all nudges to exacerbate peoples underlying spending preferences we specifically test whether a salience nudge designed to boost spending correspondingly adversely affects spendthrifts we unexpectedly find that subjects perceive the spending booster nudge as a spending reminder which again reduces spending by tightwads only while not affecting spending by the other consumer types our results highlight two important aspects of salience nudges given the complexity of consumer emotions and information processing salience nudges can have undesired welfare effects and the direction of their impact may be the opposite of what was intended

energy conservation nudges and environmentalist ideology evidence from a randomized residential electricity field experiment nudges are being widely promoted to encourage energy conservation we show that while the electricity conservation nudge of providing feedback to households on own and peers home electricity usage works with liberals it can backfire with conservatives our regression estimates predict that a democratic household that pays for electricity from renewable sources that donates to environmental groups and that lives in a liberal neighborhood reduces its consumption by 3 percent in response to this nudge a republican household that does not pay for electricity from renewable sources and that does not donate to environmental groups increases its consumption by 1 percent

an examination of the asymmetric effects of money supply shocks in the pre world war i and interwar periods we test whether monetary shocks had asymmetric output effects before world war ii ball and mankiw 1994 show that expectations of persistent inflation under fiat money can explain why negative monetary shocks had larger effects than positive shocks after world war ii consistent with this explanation we find such asymmetry in the interwar period following the abandonment of the gold standard and before it when agents arguably anticipated this development we find no monetary asymmetry before world war i which is consistent with ball and mankiw 1994 because under a credible gold standard agents do not expect persistent inflation jel e31 es2

guilt in games a clear conscience is a good pillow why does this old proverb contain an insight the emotion of guilt holds a key psychologists report that the prototypical cause of guilt would be the infliction of harm loss or distress on a relationship partner roy baumeister arlene m stillwell and todd f heatherton 1994 245 june price tangney 1995 moreover guilt is unpleasant and may affect behavior to render the associated pangs counterfactual baumeister stillwell and heatherton state if people feel guilt for hurting their partners and for failing to live up to their expectations they will alter their behavior to avoid guilt in ways that seem likely to maintain and strengthen the relationship avoided guilt is the down of the sound sleeper s bolster how can guilt be modeled how are human interaction and economic outcomes influenced we offer a formal approach for providing answers start with an extensive game form which associates a monetary outcome with each end node say that player i lets player j down if as a result of i s choice of strategy j gets a lower monetary payoff than j expected to get before play started player i s guilt may depend on how much he lets j down player i s guilt may also depend on how much j believes i believes he lets j down we develop techniques to analyze equilibria when players are motivated in part by a desire to avoid guilt the intellectual home for our exercise is what has been called psychological game theory this framework originally developed by john geanakoplos david pearce and ennio stacchetti 1989 and recently extended by battigalli and dufwenberg 2005 henceforth b d allows players utilities to depend on beliefs about choices states of nature

externalities and corrective policies in experimental markets this paper reports on the behaviour of simple laboratory markets which have an externality experiences with these markets provide some help in answering two broad questions 1 do markets with externalities behave in accordance with the law of supply and demand 2 how do the pollution tax pollution standard and pollution licenses compare as methods for correcting the externality