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evidence from u.s. agriculture
The Samaritan's dilemma posits a downside to charity: recipients may rely on free aid instead of their own efforts. Anecdotally, the expectation of free assistance is thought to be important for decisions about insurance and risky behavior in numerous settings, but reliable empirical evidence is scarce. We estimate whether the Samaritan's dilemma exists in U.S. agriculture, where both private crop insurance and frequent federal disaster assistance are present. We find that bailout expectations are qualitatively and quantitatively important for the insurance decision. Furthermore, aid expectations reduce both the amount of farm inputs and subsequent crop revenue.
Evidence from the Mexican Gasoline Market
Using station-level inspection verification data from the Mexican gasoline market, this paper examines whether gas stations react to peers’ performance to adjust their own compliance decisions. The information disclosure policy assigned each inspected gas station with green, yellow, or red colors to indicate the status of compliance, minor violation, and severe violation, respectively. We find strong evidence of peer influence triggered by information spillover. The probability of being in compliance increases as the number of green peers increases. We use both municipalities and postal codes as geographic boundaries to define potential peers, and find similar results. Our findings also suggest that the magnitude of peer effects varies across municipalities: the effects appear to be greater in richer, more educated communities.
An Experimental Auction Approach
We investigate consumers’ willingness to pay for novel bioplastic plant containers that are bio-based and biodegradable. To determine consumers’ willingness to pay, we conduct experimental auctions in a market environment in which people are likely to purchase plants in traditional plastic pots. We find consumers are willing to pay a premium of $0.67–$1.14 for a bioplastic plant container. Consumers exhibit higher willingness to pay for containers that biodegrade quickly in the ground and have a fertilizer effect. We find that older consumers and consumers who practice environmentally friendly behavior have a higher willingness to pay. These results suggest that consumers will pay a substantial premium.
Work In Progress