the economics of a blend mandate for biofuels a biofuel blend mandate may increase or decrease consumer fuel prices with endogenous oil prices depending on relative supply elasticities biofuel tax credits always reduce fuel prices tax credits result in lower fuel prices than under a mandate for the same level of biofuel production if tax credits are implemented alongside mandates then tax credits subsidize fuel consumption instead of biofuels this contradicts energy policy goals by increasing oil dependency co 2 emissions and traffic congestion while providing little benefit to either corn or ethanol producers these social costs will be substantial with tax credits costing taxpayers 28 7 billion annually by 2022 copyright 2008 oxford university press

the causes of preference reversal observed preference reversal cannot be adequately explained by violations of independence the reduction axiom or transitivity the primary cause of preference reversal is the failure of procedure invariance especially the overpricing of low probability high payoff bets this result violates regret theory and generalized nonindependent utility models preference reversal and a new reversal involving time preferences are explained by scale compatibility which implies that payoffs are weighted more heavily in pricing than in choice copyright 1990 by american economic association

learning by bidding we analyze a dynamic second price auction with an informed bidder and an uninformed bidder who upon seeing a posted price learns whether his valuation is above that price in the essentially unique equilibrium an informed bidder bids in the first period if her valuation is below some cutoff and bids only in the last period otherwise an uninformed bidder bids in every period to optimally change the price unless the price is above his valuation or he is the high bidder this model also provides a rationale behind the use of a secret reserve price in private value settings

higher us crop prices trigger little area expansion so marginal land for biofuel crops is limited abstract by expanding energy biomass production on marginal lands that are not currently used for crops food prices increase and indirect climate change effects can be mitigated studies of the availability of marginal lands for dedicated bioenergy crops have focused on biophysical land traits ignoring the human role in decisions to convert marginal land to bioenergy crops recent history offers insights about farmer willingness to put non crop land into crop production the 2006 09 leap in field crop prices and the attendant 64 gain in typical profitability led to only a 2 increase in crop planted area mostly in the prairie states at this rate a doubling of expected profitability from biomass crops would expand cropland supply by only 3 2 yet targets for cellulosic ethanol production in the us energy independence and security act imply boosting us planted area by 10 or more with perennial biomass crops given landowner reluctance to expand crop area with familiar crops in the short run large scale expansion of the area in dedicated bioenergy crops will likely be difficult and costly to achieve

the climate for innovation in industry the role of management attitudes and practices in consumer electronics abstract this article explores policy factors that may have systematically influenced the innovative vitality of the u s consumer electronics industry during the post world war ii period a series of successful innovations in electronic equipment that have become the foundation of international rivalry in this industry are examined with a focus on the several factors that might explain the relatively sluggish performance of u s firms in comparison with counterparts from japan and elsewhere the article suggests that the institutional climate for innovation pertaining to considerations that are internal to the firm like management attitudes practices and conventions are predominantly important in explaining the innovative behavior of the industry these tend to dominate the more frequently cited external or macroeconomic factors like inflation industry structure government regulation the propensities to save and invest etc a great potential for improving economic progress lies in opportunities in research and education to provide a better basis for top executives to understand the key role of technology in management and corporate strategy

the effect of utility time varying pricing and load control strategies on residential summer peak electricity use a review abstract peak demand for electricity in north america is expected to grow challenging electrical utilities to supply this demand in a cost effective reliable manner therefore there is growing interest in strategies to reduce peak demand by eliminating electricity use or shifting it to non peak times this strategy is commonly called demand response in households common strategies are time varying pricing which charge more for energy use on peak or direct load control which allows utilities to curtail certain loads during high demand periods we reviewed recent north american studies of these strategies the data suggest that the most effective strategy is a critical peak price cpp program with enabling technology to automatically curtail loads on event days there is little evidence that this causes substantial hardship for occupants particularly if they have input into which loads are controlled and how and have an override option in such cases a peak load reduction of at least 30 is a reasonable expectation it might be possible to attain such load reductions without enabling technology by focusing on household types more likely to respond and providing them with excellent support a simple time of use tou program can only expect to realise on peak reductions of 5

information disclosure policies evidence from the electricity industry i introduction developed nations environmental policies have evolved substantially in the past several decades early pollution control programs involved command and control approaches policies then frequently included pollution charges tradable permits and other market based instruments most recently a third wave of environmental policy has emerged that emphasizes information provision as an integral part of the risk mitigation strategy here government regulation is replaced or augmented by publicly provided information presumed to assist more cost effective private market and legal forces common examples include the toxics release inventory lead paint disclosures drinking water quality notices and eco labels the empirical effects of such programs however remain largely undetermined this paper examines the impact of a prominent mandatory disclosure program on the fuel mix percentages of large electric utility corporations the prominence of mandatory information policies is not restricted to environmental arenas for example developed countries equity markets generally require firm level financial information provision in many countries agricultural goods require country of origin and other health labels domestic colleges and universities are required by law to inform current and prospective students of crime statistics equity data and performance metrics even significant medical errors must now be disclosed to the community there are several potential advantages of information provision policies and theory suggests that disclosure programs may effectively achieve their goals healy and palepu 2001 provided a survey of the evidence in capital markets brouhle and khanna 2007 demonstrated that information provision can improve product quality in the environmental area kennedy laplante and maxwell 1994 arora and gangopadhyay 1995 maxwell lyon and hackett 2000 kirchhoff 2000 and khanna 2001 showed that the provision of information about pollution may correct a market failure improve performance and enhance welfare despite the literature s theoretical findings the empirical effects of disclosure programs remain inconclusive early studies of securities regulation found mixed results see stigler 1964 robbins and werner 1964 and benston 1973 a more recent literature suggested that disclosure programs in financial markets can achieve their desired effects la porta and lopez de silanes 2006 and greenstone oyer and vissing jorensen 2006 found that both market size and market returns were positively influenced by mandatory disclosure programs in product quality settings chipty and witte 1998 established that resource and referral agencies significantly influenced childcare prices but had no impact on the quality of care in contrast jin and leslie 2003 found that mandatory hygiene grade cards positively affected restaurant quality and health outcomes studies of environmental performance yielded similarly mixed results desvousges smith and rink 1992 found that information based programs influenced attitudes favorable to radon testing but testing itself only increased when mass media dissemination was coupled with community based implementation programs konar and cohen 1997 and khanna quimio and bojilova 1998 found that stock movements associated with toxics release inventory tri announcements led to increased abatement and reduced emissions however bui 2005 found that the declines in emissions after tri reporting events may have been attributable to regulation rather than investor pressure bennear and olmstead 2006 found that drinking water quality notices lowered violations for some systems but not others this paper is the first empirical economic study of the impacts of mandatory information provision in the electric utility industry the disclosure programs considered here differ significantly from the tri information programs examined previously

examining crop price effects on production decision and resource allocation an ex ante approach this article examines the output price effects on the us crop production employing an ex ante approach to the differential systems of input demand and output supply the estimation results of the

preference reversals and the independence axiom of all of the paradoxical patterns of behavior reported in laboratory experiments one of the most perplexing for decision theorists is the preference reversal phenomenon a subject in a preference reversal experiment is typically given a choice between a lottery with a high probability of winning a modest amount of money a p bet and a lottery with a low probability of winning a large amount of money a bet the lowest amount of money for which the subject would willingly sell either of these lotteries is also elicited the most common reversal is for a subject to choose the p bet over the bet but to put a higher selling price on the bet preference reversals were first reported by harold lindman 1971 and sarah lichtenstein and paul slovic 1971 in discussing the psychologists discovery of such reversals david grether and charles plott remark the inconsistency is deeper than mere lack of transitivity or even stochastic transitivity it suggests that no optimization principles of any sort lie behind even the simplest of human choices 1979 p 623 this paper offers a simple alternative explanation of documented preference reversals an explanation that does not require the abandonment of the transitivity assumption

why farmers sometimes love risks evidence from india abstractusing a unique data set collected among farmers in india s semiarid tropics we document the surprising prevalence of risk taking behavior in the face of realistically framed high stakes gambles we hypothesize that this apparently anomalous behavior is due to a combination of credit constraints and nonconvexities in production in particular the high stakes nature of the gambles creates the potential for a farmer to undertake a productive investment that would normally be unaffordable and thereby move to a permanently higher level of income we show that the degree to which farmers are willing to accept risk in return for this opportunity appears to relate in an intuitive way to their current agricultural production technology as well as the demographic composition of their household

economic theory of choice and the preference reversal phenomenon a reexamination in a recent issue of this review david grether and charles plott 1979 hereinafter referred to as g p presented a series of experiments that show that individual decisions are made in a manner inconsistent with standard preference theory this inconsistency can be illustrated by the following example individuals under suitable laboratory conditions first have a choice between a lottery with a high probability of winning a small sum of money the p bet probability bet and a lottery with a high stake but low probability of winning the m bet money bet after indicating a preference for one of the lotteries in the pair the same subjects are then asked to place a monetary value on each of the individual lotteries grether and plott found that a large number of participants stated a preference for the p bet in the first round but placed a higher value on the other lottery the m bet in the second round this behavior a preference reversal is inconsistent with the traditional statements of preference theory

the diffusion and production of numerically controlled machine tools with special reference to argentina abstract despite the low wages for skilled labor prevailing in developing countries user firms are willing to adopt ncmts for reasons more linked to changes in the product mix to be machined rather than to substitute capital for labor however user firms are only able to amortize the higher investment if they have a substantial aggregate volume of production in addition to firms in taiwan south korea and brazil that have managed to enter into the production of ncmts argentine firms have been taking advantage of a more conducive environment in the domestic market and the export possibilities open in brazil and in other markets to increase the production volume of ncmts to strengthen their design teams and to plan new investments to consolidate their entry into this dynamic segment of the machine tool industry

the short run and long run effects of behavioral interventions experimental evidence from energy conservation we document three remarkable features of the opower program in which social comparison based home energy reports are repeatedly mailed to more than six million households nationwide first initial reports cause high frequency action and backsliding but these cycles attenuate over time second if reports are discontinued after two years effects are relatively persistent decaying at 10 20 percent per year third consumers are slow to habituate they continue to respond to repeated treatment even after two years we show that the previous conservative assumptions about post intervention persistence had dramatically understated cost effectiveness and illustrate how empirical estimates can optimize program design jel d12 d83 l94 q41

contingent valuation a practical alternative when prices aren t available a person may be willing to make an economic tradeoff to assure that a wilderness area or scenic resource is protected even if neither that person nor perhaps anyone else will actually visit this area this tradeoff is commonly labeled passive use value contingent valuation studies ask questions that help to reveal the monetary tradeoff each person would make concerning the value of goods or services such surveys are a practical alternative approach for eliciting the value of public goods including those with passive use considerations first i discuss the exxon valdez oil spill of march 1989 focusing on why it is important to measure monetary tradeoffs for goods where passive use considerations loom large although discussions of contingent valuation often focus on whether the method is sufficiently reliable for use in assessing natural resource damages in lawsuits it is important to remember that most estimates from contingent valuation studies are used in benefit cost assessments not natural resource damage assessments those working on benefit cost analysis have long recognized that goods and impacts that cannot be quantified are valued implicitly by giving them a limitless value when government regulations preclude certain activities or giving them a value of zero by leaving certain consequences out of the analysis contingent valuation offers a practical alternative for reducing the use of either of these extreme choices i put forward an affirmative case for contingent valuation and address a number of the concerns that have arisen

an endowment effect for risk experimental tests of stochastic reference points recent models of reference dependent preferences indicate that expectations may play a prominent role in the presence of behavioral anomalies a subset of such expectations based models predicts an endowment effect for risk that risk attitudes differ when reference points change from certain to stochastic in two purposefully simple risk preference experiments eliminating often discussed confounds i demonstrate both between and within subjects such an endowment effect for risk these results provide needed separation between expectations based reference dependent models allow for evaluation of recent theoretical extensions and may help to close a long standing debate in decision science on inconsistency between utility elicitation methodologies

how will energy demand develop in the developing world most of the medium run growth in energy demand is forecast to come from the developing world which consumed more total units of energy than the developed world in 2007 we argue that the main driver of the growth is likely to be increased incomes among the poor and near poor we document that as households come out of poverty and join the middle class they acquire appliances such as refrigerators and vehicles for the first time these new goods require energy to use and energy to manufacture the current forecasts for energy demand in the developing world may be understated because they do not accurately capture the dramatic increase in demand associated with poverty reduction

long term building energy demand for india disaggregating end use energy services in an integrated assessment modeling framework with increasing population income and urbanization meeting the energy service demands for the building sector will be a huge challenge for indian energy policy although there is broad consensus that the indian building sector will grow and evolve over the coming century there is little understanding of the potential nature of this evolution over the longer term the present study uses a technologically detailed service based building energy model nested in the long term global integrated assessment framework gcam to produce scenarios of the evolution of the indian buildings sector up through the end of the century the results support the idea that as india evolves toward developed country per capita income levels its building sector will largely evolve to resemble those of the currently developed countries heavy reliance on electricity both for increasing cooling loads and a range of emerging appliance and other plug loads albeit with unique characteristics based on its climate conditions cooling dominating heating and even more so with climate change on fuel preferences that may linger from the present for example a preference for gas for cooking and vestiges of its development path including remnants of rural poor that use substantial quantities of traditional biomass

information as regulation the effect of community right to know laws on toxic emissions abstract there is growing academic and policy level interest in the use of information as quasi regulatory mechanisms such as toxic release inventory tri and green labels mandatory disclosure requirements have been touted as market based incentives that may affect firm behavior we provide new evidence on the effectiveness of disclosure requirements by examining firm behavior in response to disclosures of tri emissions we find that firms with the largest stock price decline on the day this information became public subsequently reduced emissions more than their industry peers this is consistent with the view that financial markets may provide strong incentives for firms to change their environmental behavior

bioenergy and global land use change this is the first article that econometrically estimates the global land use change impact of bioenergy applying time series analytical mechanisms to fuel biofuel and agricultural commodity prices and production we estimate the long run relationship between energy prices bioenergy production and the global land use change our results suggest that rising energy prices and bioenergy production significantly contribute to the global land use change both through the direct and indirect land use change impact globally the total agricultural area yearly increases by 35 578 1 thousand ha due to increasing oil price and by 12 125 1 thousand ha due to increasing biofuel production which corresponds to 0 73 and 0 25 of the total worldwide agricultural area respectively soya land use change and wheat land use change have the highest elasticities with respect to both oil price and biofuel production in contrast nonbiomass crops grassland and rice have negative land use change elasticities region spe

state led technological development a case of china s nanotechnology development summary we analyze nanotechnology patent applications filed in china from 1998 to 2008 and find that the extraordinary pace of nanotechnology development achieved over that period has been promoted primarily by the public sector rather than being driven by industry and market forces this finding implies that developing countries such as china with public research capacity and commitment to technological development can make rapid progress in basic research in emerging technologies but it remains uncertain whether and when local industry can benefit from public r d investment enough to enable active development of indigenous innovation

tests of market outcomes with asymmetric valuations of gains and losses smaller gains fewer trades and less value abstract the pervasive finding that individuals value losses more than gains suggests that actual gains from trade and numbers of market exchanges may well be much smaller than would be the case if people s buying and selling prices were equivalent as normally assumed the results of two sets of costless market simulations using actual gain and loss valuations show that the actual gains from exchange and trade volumes are less than half of those expected with conventional assumptions and that completion of all pareto efficient exchanges fail by wide margins to shift entitlements to those willing to pay the most for them these findings suggest the valuation disparity has significant welfare implications and may be a major cause of market stickiness

expected utility violations implications for agricultural and natural resource economics nomic toolkit they compare the dogged defense of eu by economists to that of a monty python character playing the role of a petstore owner disputing the state of an obviously dead parrot the shop owner goes through incredible machinations to avoid replacing the bird let us consider another analogy the behavior of a caged parrot can likely tell us very little about the behavior of parrots in the wild a biologist may want to incorporate the behavior of caged parrots into the study of wild birds but would undoubtedly need to be extremely careful about understanding the underlying differences in the opportunities and constraints faced by caged versus wild birds before inferring much about wild parrot behavior to some extent experimental violations of eu present us with the same problem as the hypothetical parrot biologist subjects in these risk experiments are in a setting and are completing tasks very different from the setting and tasks they face in their everyday economic and social context what is missing relates to the power of the rationality assumption discussed in friedman that relies not only on the person s skill but also on the feedback they receive from the market friedman s expert billiards players are selected by a market because of their skill in billiards and th se are the players who fit friedman s as if description 1 risk researchers should not ignore experimental data however before we eliminate eu we should more fully understand the underlying reasons for the experimental behavior that violates eu agricultural and natural resource economists are well suited to assess

international competitiveness technical change and the state the machine tool industry in taiwan and japan abstract it is widely accepted that the growth performance of japan and the asian newly industrialized countries hong kong singapore south korea and taiwan is partly the result of the international competitiveness they have achieved in a number of export industries it remains however to explain how this competitiveness was achieved in the first part of the paper an attempt at such an explanation based on the theory of comparative advantage is critically examined it is argued that while this explanation does have some explanatory power it does not deal adequately with a the role of technical and productivity change b the causal mechanisms underlying economic growth and c the role of the state the rest of the paper examines the case of machine tools in taiwan and japan showing the importance of these three factors as well as a number of others as determinants of international competitiveness the paper ends with a discussion of policy dilemmas relating to international competitiveness in the taiwanese machine toot industry

monetary rewards and decision cost in experimental economics a survey of thirty one experimental studies which report data on the comparative effects of monetary rewards and opportunity cost shows 1 several studies in which increased rewards shift the central tendency of the data toward the predictions of rational models 2 in virtually all cases rewards reduce the variance of the data around the predicted outcome this is consistent with a model in which rewards are balanced against decision cost in agent behavior and explicates the argument that when rational models fail it can be attributed to low opportunity cost of deviations from the rational prediction

assessing farmers risk preferences and their determinants in a marginal upland area of vietnam a comparison of multiple elicitation techniques we examine the consistency of risk preference measures based on eight hypothetical elicitation methods and a lottery game applied to smallholder farmers in a marginal upland environment in vietnam using these measures we identify influencing factors of risk aversion via regression analysis whereby unlike previous studies we include several proxies of social capital such as social networks and norms data were collected from household heads and spouses separately in a random sample of 300 households although correlations between most of the various risk preference measures are all statistically highly significant most are weak on average respondents have a high degree of risk aversion and specific characteristics gender age idiosyncratic shocks education social norms network reliance with extended family and connections to local authorities are significant determinants of risk preferences across most elicitation methods whereas others the household s dependency ratio wealth and covariate shocks are significant in a few methods only the explanatory power of the models is limited indicating that other factors are likely to be of greater importance in determining risk preferences the results can help target safety nets encourage investments and lead to the development of more applicable methods for assessing risk preferences of smallholders in developing countries

towards understanding the role of price in residential electricity choices evidence from a natural experiment abstract we examine a choice setting in which residential electricity consumers may respond to non financial incentives in addition to prices using data from a natural field experiment that exposed some households to a change in their electricity rates we find that households reduced electricity usage in response to a contemporaneous decrease in electricity prices this provides clear evidence that other factors potentially encompassing non monetary and dynamic considerations can influence consumer choice and even dominate the static price response in some cases a comprehensive understanding of household behavior in energy markets is essential for the effective implementation of market based energy and environmental policies the documentation of our result and others like it is a necessary step in achieving such an understanding

knowledge is less power experimental evidence from residential energy use abstract imperfect information about product attributes inhibits efficiency in many choice settings but can be overcome by providing simple low cost information we use a randomized control trial to test the effect of high frequency information about residential electricity usage on the price elasticity of demand informed households are three standard deviations more responsive to temporary price increases an effect that is not attributable to price salience conservation extends beyond pricing events in the short and medium run providing evidence of habit formation and implying that the intervention leads to greenhouse gas abatement survey evidence suggests that information facilitates learning jel d12 d83 l11 l94 q41 q54

does urbanization lead to less energy use and lower co2 emissions a cross country analysis despite the relationship between urbanization energy use and co2 emissions has been extensively studied in recent years little attention has been paid to differences in development stages or income levels most previous studies have implicitly assumed that the impact of urbanization is homogenous for all countries this assumption can be questionable as there are many characteristic differences among countries of different levels of affluence this paper investigates empirically the effects of urbanization on energy use and co2 emissions with consideration of the different development stages using the stochastic impacts by regression on population affluence and technology stirpat model and a balanced panel dataset of 99 countries over the period 1975 2005 the findings suggest that the impact of urbanization on energy use and emissions varies across the stages of development surprisingly urbanization decreases energy use in the low income group while it increases energy use in the middle and high income groups the impact of urbanization on emissions is positive for all the income groups but it is more pronounced in the middle income group than in the other income groups these novel findings not only help advance the existing literature but also can be of special interest to policy makers and urban planners

the impact of rising ethanol production on the brazilian market for basic food commodities an econometric assessment the controversial debate on the impacts of rising biofuel production on food commodity markets is of great policy relevance in brazil this paper contributes to the discussion by applying panel data regression models with fixed effects using ols our dataset comprises annual production harvested area data for sugar ethanol and five other staple commodities ranging from 1981 to 2009 for 24 brazilian states our results indicate that rising ethanol production exerts statistically significant positive impacts on sugarcane negative impacts on rice beans and soybeans acreage but no statistically significant effect on the areas for corn and manioc the negative impacts on commodities acreage have implications for the associated prices ceteris paribus rising ethanol production puts some upward pressure on the prices for rice beans and soybeans however the economic implication of these direct land use effects is attenuated due to the moderate scale of any effect

explaining the reductions in us corn ethanol processing costs testing competing hypotheses abstract the processing costs of us corn ethanol have declined by 45 since 1983 as production volumes have increased seventeen fold we investigate the role of various factors that could explain this including economies of scale cumulative experience induced innovation in response to rising input prices an autonomous technological change and trade induced competition from imported ethanol using data on dry mill ethanol processing costs over the 1983 2005 period we find evidence to show that us corn ethanol production exhibited decreasing returns to scale that learning by doing played an important role in reducing these processing costs with a learning rate of 0 25 and that sugarcane ethanol imports contributed to making the corn ethanol industry more competitive other factors such as the rising prices of energy and labor did induce lower processing costs but the effect is not statistically significant the inclusion of these competing explanations for the reduction in processing costs of us corn ethanol lead to a significantly higher learning rate than otherwise and this learning rate is found to be robust across specifications

model projections for household energy use in india energy use in developing countries is heterogeneous across households present day global energy models are mostly too aggregate to account for this heterogeneity here a bottom up model for residential energy use that starts from key dynamic concepts on energy use in developing countries is presented and applied to india energy use and fuel choice is determined for five end use functions cooking water heating space heating lighting and appliances and for five different income quintiles in rural and urban areas the paper specifically explores the consequences of different assumptions for income distribution and rural electrification on residential sector energy use and co2 emissions finding that results are clearly sensitive to variations in these parameters as a result of population and economic growth total indian residential energy use is expected to increase by around 65 75 in 2050 compared to 2005 but residential carbon emissions may increase by up to 9 10 times the 2005 level while a more equal income distribution and rural electrification enhance the transition to commercial fuels and reduce poverty there is a trade off in terms of higher co2 emissions via increased electricity use

an experimental test for risk aversion abstract this paper evaluates an experimental method to measure attitudes to risk in individual subjects the method is applied to study the degree of risk aversion of 46 subjects the results lead us to reject a working hypothesis of risk neutrality for such experimental subjects

land use change impacts of biofuels near var evidence from the us abstract the present paper studies the land use change impacts of fuels and biofuels we test the theoretical hypothesis which says that changes in fuel prices cause changes in land use both directly and indirectly and that because of price inter dependencies biofuels reinforce the land use change impacts we apply time series analytical mechanisms to five major traded agricultural commodities the cultivated area of agricultural land and crude oil price our data consists of yearly observations extending from 1950 to 2007 for the us the empirical findings confirm that markets for crude oil and cultivated agricultural land are interdependent an increase in oil price by 1 dollar barrel increases land use between 54 000 and 68 000 ha we also find that the increase of bioenergy sector accelerates land use change in the us i e food commodities are being substituted for bioenergy crops

household portfolio diversification a case for rank dependent preferences the proliferation of novel preference theories in financial economics is hampered by a lack of non experimental evidence and by the theories additional complexity which has not been shown to be critical in applications in this article i present arguments in support of preferences with rank dependency using the survey of consumer finances data i document two widespread patterns inconsistent with expected utility i many households simultaneously invest in well deversified funds and in poorly diversified portfolios of stocks and ii some households with substantial savings do not invest anything in equities i show that portfolio choice models with rank dependent preferences plausibly parameterized and under fully rational assumptions are quantitatively consistent with the observed diversification these results call for further efforts to integrate the models of rank dependent preferences in portfolio theory and asset pricing the decision theoretic literature has long acknowledged the shortcomings of the expected utility theory of von neumann and morgenstern 1944 several generalizations of the theory are inspired by the experimental evidence and aimed at improving its descriptive accuracy however there are few applications of new models of preferences in finance and expected utility continues to dominate the field 1 two principal hurdles slow the proliferation of novel preferences in financial economics first the lack of empirical non experimental or field data confirming that the behavior motivating non expected utilities is widespread outside the laboratory settings second the additional and often significant complexity of the alternative preferences which has not been shown to be critical in applications where the models based on expected utility fall short of reasonable predictions this article presents empirical and theoretical this paper was previously circulated under the title household portfolio diversification the paper has benefited from the comments of shlomo benartzi luca benzoni markus brunnermeier john dickhaut maria perozek raj singh hersh shefrin and workshop participants at minnesota finance bag lunch 2003 wharton conference household financial decision making and portfolio choice and 2003 summer meetings of econometric society i would like to thank cam harvey the editor and an anonymous referee for many helpful comments and suggestions a special thanks to jack kareken for comments and editorial help on an earlier draft i am grateful to donna zerwitz for editorial assistance the views expressed herein are those of the author and not necessarily of the federal reserve bank of minneapolis or the federal reserve system all errors and omissions are the sole responsibility of the author address correspondence to valery polkovnichenko finance 3 122 csom 319 19 th

the dynamics of behavior change evidence from energy conservation abstract little is known about the effect of message framing on conservation behavior over time in a randomized controlled trial with residential households we use advanced metering and information technologies to test how different messages about household energy use impact the dynamics of conservation behavior down to the appliance level our results based on 374 million panel observations of kilowatt hour kwh electricity consumption for 118 households over 9 months show that differences in behavioral responses due to message framing become more significant over time we find that a health based frame in which households consider the human health effects of their marginal electricity use induced persistent energy savings behavior of 8 10 over 100 days whereas a more traditional cost savings frame drove sharp attenuation of treatment effects after 2 weeks with no significant savings versus control after 7 weeks we discuss implications for the design of effective information campaigns to engage households in conservation behavior

information strategies for energy conservation a field experiment in india abstract little is known about the effectiveness of information strategies on energy conservation in developing countries in this study we conduct a field experiment in an apartment complex in india to test how information about electricity usage impacts the electricity consumption of urban middle class households our results based on fifteen minute electricity readings over an academic year show that non monetary messages that framed electricity consumption in terms of environmental and health impacts were more effective than messages emphasizing the monetary savings of reducing electricity consumption households in the environmental health group accessed the online energy monitoring dashboard more frequently and reduced their electricity usage by 18 4 relative to the control group households in the monetary group did not significantly alter their usage these results about revealed preferences are contrasted with stated preferences disclosed in a survey of urban indians who describe money not health as the main motivation for energy conservation our findings have important implications for the development non monetary strategies for energy conservation in developing countries

examining risk preferences under high monetary incentives experimental evidence from the people s republic of china several experimental sessions were conducted to elicit certainty equivalents for a sequence of lotteries involving real monetary outcomes the opportunity to conduct sessions in the people s republic of china afforded the ability to offer very large monetary incentives relative to subjects living costs in the highest payoff condition subjects earned three times their normal monthly revenue in the course of a two hour experiment results indicate a statistically significant impact of the level of monetary incentives on revealed risk preferences however even under extreme monetary incentives subjects demanded amounts well in excess of expected value for low probability gain prospects copyright 1992 by american economic association

how significant are externalities for development if one man starts a new idea it is taken up by others and combined with suggestions of their own and thus it becomes the source of further new ideas and presently subsidiary trades grow up in the neighbourhood supplying it with implements and materials marshall 1920 p 225

more laboratory evidence on the disparity between willingness to pay and compensation demanded abstract recent experimental work showing a disparity between willingness to pay for and compensation demanded to give up lottery tickets is contrary to economists ideas about rationality presented here are the results of experiments in which subjects participate in second price auctions to indicate willingness to pay and compensation demanded for lottery tickets that have fixed odds of winning or losing money when the auction institution used has truthful revelation of preferences as the dominant strategy and that strategy is announced to subjects the difference between the measures of value decreases significantly the within subject comparison design provides a more discriminating measure of behavior than between subject comparison designs used previously

saving power to conserve your reputation the effectiveness of private versus public information environmental damage is often an unseen byproduct of other activities disclosing environmental impact privately to consumers can reduce the costs and or increase the moral benefits of conservation behaviors while publicly disclosing such information can provide an additional motivation for conservation cultivating a green reputation in a unique field experiment in the residence halls at the university of california los angeles we test the efficacy of detailed private and public information on electricity conservation private information was given through real time appliance level feedback and social norms over usage and public information was given through a publicly visible conservation rating our analysis is based on 7 120 daily observations about energy use from heating and cooling lights and plug load for 66 rooms collected over an academic year our results suggest that while private information alone was ineffective public information combined with private information motivated a 20 percent reduction in electricity consumption achieved through lower use of heating and cooling public information was particularly effective for above median energy users

can taiwan s second movers upgrade via branding abstract taiwan one of the best performers among latecomers has successfully entered mature high tech from the 1980s but has yet to close the technological gap with the west the paper examines why most of the successful second movers in taiwan do not pursue r d intensive and own brand strategies to catch up and whether they may do so in the future it is argued here that the second mover expands by relying upon accumulated organizational capabilities based on subcontracting manufacturing hence implying likely path dependence in development thus the strategy of choice for most will be upgrading subcontracting cross industry subcontracting and then own brand manufacturing in that order among the structural factors affecting the firm s strategic choice the industrial policy has been a crucial one south korea has produced some successful global brands supported by the state s national champion policy and long term commitment to the chaebol the emerging china has also adopted a highly ambitious national champion strategy the fact that the government in taiwan has never adopted a national champion strategy helps to partly explain the evolutionary path of taiwan s second movers and attests to the importance of industrial policy unless taiwan s policy environment changes significantly the current trend may continue in the foreseeable future

willingness to pay and compensation demanded experimental evidence of an unexpected disparity in measures of value aside from possible income effects measures of the maximum amounts people will pay to avoid a loss and the minimum compensation necessary for them to accept it are generally assumed to be equivalent unexpectedly wide variations between these sums however have been noted in survey responses to hypothetical options this paper reports the results of a series of experiments that confronted people with actual money payments and cash compensations the results indicate that the compensation measure of value seems to exceed significantly the willingness to pay measure which would appear to call into some question various rules of entitlement damage assessments and interpretations of indifference curves

the impacts of energy efficiency policies meta analysis abstract this paper attempts to quantitatively summarize the existing empirical evidence on the effects of energy efficiency policies on energy demand and on the price of associated durable goods as well as to identify the main factors that systematically affect the estimated impacts to this end a meta regression analysis of the effects of energy efficiency policies is carried out on the basis of an extensive review of the existing literature selecting those studies that analyze the impact of energy efficiency policies with respect to a business as usual setting taking into account the econometric problems associated with this type of analysis intra class correlation cross sectional dependence publication bias in pursuit of robust outcomes the results show that the studies analyzing the effects of energy efficiency policies estimate a significant impact of these policies on energy demand 10 5 8 8 and the price of related durable goods 7 9 6 the main factors that influence results are the policy instrument the targeted sector the type of country the analyzed period the consideration of free riders and the type of analysis data and publication energy demand and the sector and analyzed period price of durables

energy efficiency in india assessing the policy regimes and their impacts in the recent years india has emerged as one of the fast growing economies of the world necessitating equally rapid increase in modern energy consumption with an imminent global climate change threat india will have difficulties in continuing with this rising energy use levels towards achieving high economic growth it will have to follow an energy efficient pathway in attaining this goal in this context an attempt is made to present india s achievements on the energy efficiency front by tracing the evolution of policies and their impacts the results indicate that india has made substantial progress in improving energy efficiency which is evident from the reductions achieved in energy intensities of gdp to the tune of 88 during 1980 2007 similar reductions have been observed both with respect to overall indian economy and the major sectors of the economy in terms of energy intensity of gdp india occupies a relatively high position of nine among the top 30 energy consuming countries of the world c 2009 elsevier ltd all rights reserved

non mandatory approaches to environmental protection the approach to environmental protection has been evolving from a regulation driven adversarial government push approach to a more proactive approach involving voluntary and often business led initiatives to self regulate their environmental performance this has been accompanied by increasing provision of environmental information about firms and products to enlist market forces and communities in creating a demand for corporate environmental self regulation by signaling their preferences for environmentally friendly firms this paper provides an overview of the non mandatory approaches being used for environmental protection and surveys the existing theoretical literature analyzing the economic efficiency of such approaches relative to mandatory approaches it also discusses empirical findings on the factors motivating self regulation by firms and its implications for their economic and environmental performance it examines the existing evidence on the extent to which information disclosure is effective in generating pressures from investors and communities on firms to improve their environmental performance