Economics - Research Publications
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ItemInvestment decisions and emissions reductions: results from experiments in emissions trading( 2005-07)Emissions trading is an important regulatory tool in environmental policy making.Unfortunately the effectiveness of these regulations is difficult to measure in the field due to theunavailability of appropriate data. In contrast, experiments in the laboratory can provideguidance to regulators and legislatures about the performance of different market features inemission trading programs. This paper reports on the implementation of three differentinstitutional designs, and presents experimental results investigating important features ofemissions trading regimes: the ability to make investments in emissions abatement, ability tobank allowances and a declining emissions cap, both with and without uncertainty. Thesefeatures are observed in virtually all existing air pollution emissions trading programs currentlyin place and will almost certainly be part of future applications. Like previous experimentalstudies of emissions trading, this paper shows that the efficiency gains expected from economictheory emerge observationally. We also show reduced efficiency when permits are bankable dueto over-banking and when investments in emissions abatement are possible due to overinvesting.These tendencies do not worsen, however, when emissions caps decline.
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ItemDo Attitudes Towards Corruption Differ Across Cultures?Experimental Evidence from Australia, India, Indonesia andSingapore( 2005-07)This paper examines cultural differences in attitudes towards corruption by analysingindividual-decision making in a corrupt experimental environment. Attitudes towards corruptionplay a critical role in the persistence of corruption. Our experiments differentiate between theincentives to engage in corrupt behaviour and the incentives to punish corrupt behaviour andallow us to explore whether, in environments characterized by lower levels of corruption, there isboth a lower propensity to engage in corrupt behaviour and a higher propensity to punish corruptbehaviour. Based on experiments run in Australia (Melbourne), India (Delhi), Indonesia (Jakarta)and Singapore, we find that there is more variation in the propensities to punish corruptbehaviour than in the propensities to engage in corrupt behaviour across cultures. The resultsreveal that the subjects in India exhibit a higher tolerance towards corruption than the subjects inAustralia while the subjects in Indonesia behave similarly to those in Australia. The subjects inSingapore have a higher propensity to engage in corruption than the subjects in Australia. Wealso vary our experimental design to examine the impact of a more effective punishment systemand the effect of the perceived cost of bribery.
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ItemImpact of risk and uncertainty in the provision of local and global environmental goods: an experimental analysis( 2005-11)Uncertainties and risks in the decision making process are abundant in the area ofenvironmental economics, irrespective of whether the problems being discussed are local orglobal. This paper uses laboratory evidence from public goods games to examine how inpayoff equivalent situations, decision makers contribute towards local or globalenvironmental goods, in the presence of risk and uncertainties in the provision of these goods.We use a within subject design that allows for comparisons across seven different treatmentsin which subjects are exposed to internal (strategic) and external (environmental) risk anduncertainty. Our results show that the location of the risk and uncertainty matters, withsubjects moving away from the external uncertainty in favor of internal uncertainty, whenthat uncertainty is associated with the local environmental good. When the uncertainty relatesto the global environmental good, subjects face both external and internal uncertainty on thesame good leading to a significant drop in contributions. We find that in the presence of riskand uncertainty subjects use feedback from other members of their group when decidingabout future contributions. The reward for research and development and innovation iscaptured in the experimental design by the increased probability of obtaining the desiredoutcome in the endogenous probability treatment. Subjects seem to understand this incentiveand contribute more towards global goods in this treatment.