Title: Short-run subsidies and long-run adoption of new health products
Description: "Short-run subsidies for health products are common in poor countries.  How do they affect long-run adoption? We present a model of technology adoption in which people learn about a technology's effectiveness by using it (or observing others using it) for some time, but people quit using it too early if they face higher-than-expected usage costs (e.g., side effects).  The extent to which one-off subsidies increase experimentation, and thereby affect learning and long-run adoption, then depends on people's priors on these usage costs.  One-off subsidies can also affect long-run adoption through reference-dependence: People might anchor around the subsidized price and be unwilling to pay more for the product later.  We estimate these effects in a two-stage randomized field experiment in Kenya.  We find that, for a new technology with a lower usage cost than the technology it replaces, short-run subsidies increase long-run adoption through experience and social learning effects.  We find no evidence that people anchor around subsidized prices"--National Bureau of Economic Research web site.