Pushing subjects beyond rationality with more alternatives in experimental auctions

The use of experimental economics in valuation of market and nonmarket goods has grown over the past few years. The ability of experimental auctions (EUs) to reveal consumer preferences and their malleability has been praised in previous literature. Because of the high cost of conducting EUs, researchers usually present multiple products to participants, determining how many products to present has no clear guideline. The results of this study show that subjects do not value products the same way across different number of options offered to them. The main indicator is the increasing variance in responses for a benchmark product when more products are available. With an econometric specification allowing for heteroscedasticity as a function of the number of product offerings, the results indicate that the number of goods available for bidding is not to be taken as a trivial task in experimental design for value elicitation.     

Tracking position premiums in discrete choice experiments

Eye-tracking was used to identify potential location ‘premiums’ in discrete choice experiments for certain positions in the computer screen in terms of increasing the visibility, general interest and attention of respondents. The search dynamics to choose the optimal alternative closely resembled the natural process of reading in a ‘Z’ motion going from left to right and top to bottom. An empirical application of water conservation showed that conservation practices in the production process were not statistically different than zero. On the other hand, respondents are interested in water conservation practices in their landscapes where they benefit directly from the sustainable practice.     

Information congestion

Unsolicited advertising messages vie for scarce attention. “Junk” mail, “spam” e‐mail, and telemarketing calls need both parties to exert effort to generate transactions. Message receivers supply attention according to average message benefit, while the marginal sender determines congestion. Costlier transmission may improve average message benefit so more messages are examined. Too many (too few) messages may be sent, or the wrong ones. A Do‐Not‐Call policy beats a ban, but too many individuals opt out. A monopoly gatekeeper performs better than personal access pricing if nuisance costs to receivers are moderate. The welfare results still hold when messages are presorted (triage).     

A Noncooperative Analysis of Hotelling's Location Game

We study the location equilibrium in Hotelling's model of spatial competition. As d'Aspremontet al.have shown, with quadratic consumer transportation cost the two sellers will seek to move as far away from each other as possible. We show that the location game possesses an infinity of mixed strategy Nash equilibria. In these equilibria coordination failure invalidates the principle of “maximum differentiation” and firms may even locate at the same point.Journal of Economic LiteratureClassification Numbers: C72, D43, L11.     

Integrating environmental and economic performance to assess modern silvoarable agroforestry in Europe

The environmental and economic performance of silvoarable agroforestry in Europe is highly variable. Multi-criteria analysis, using the PROMETHEE outranking approach, was used to evaluate the integrated performance of silvoarable agroforestry on hypothetical farms in nineteen landscape test sites in Spain, France, and The Netherlands. The silvoarable scenarios allocated a proportion of the hypothetical farms (10 or 50%) to silvoarable agroforestry at two different tree densities (50 or 113 trees ha^− 1) on two different qualities of land (best or worst quality land). The status quo (conventional arable farming) was also assessed for comparison. The criteria used in the evaluation (soil erosion, nitrogen leaching, carbon sequestration, landscape biodiversity, and infinite net present value) were assessed at each landscape test site; infinite net present value was assessed under six levels of government support. In France, the analysis showed, assuming equal weighting between environmental and economic performance, that silvoarable agroforestry was preferable to conventional arable farming. The best results were observed when agroforestry was implemented on 50% of the highest quality land on the farm; the effect of tree density (50-113 trees ha^− 1) was small. By contrast, in Spain and The Netherlands, the consistently greater profitability of conventional arable agriculture relative to the agroforestry alternatives made overall performance of agroforestry systems dependent on the proportion of the farm planted, and the tree density and land quality used.     

Downside risk in reservoir management

Downside risk, which refers to deviations below a threshold, is often important in water management decisions, especially in areas with large and skewed variations in precipitation patterns. In this paper, we present a model for a reservoir manager who is downside risk averse and who performs a dynamic allocation of irrigation water, taking into account the negative effects of droughts on farm profits and different environmental constraints. We analyse the water stock, flows and agricultural profits for alternative environmental restrictions and thresholds for irrigation levels and find that stricter environmental constraints increase total water supply and carryover stock, while higher penalty thresholds lead to their overall decrease. Furthermore, increasing penalty thresholds leads to a higher emphasis on avoiding shortages, at the expense of lower average profits.     

How does public service motivation affect teacher self-reported performance in an education system? Evidence from an empirical analysis in Italy

Quality & Quantity - This paper deals with self-reported teacher performance, and the starting point is the relationship between teacher performance and the main determining factor, public...     

The Impact of Information Availability on Destination Choice

Consider a population of agents who choose one among a set of destinations located along a rectilinear road. Each of these destinations has a certain utility, modeled by a random variable. We compare a situation where the agents have to explore the destinations to observe the value of their utilities, to a situation where they know these values beforehand. We show that more information yields a higher welfare to the agents, and also, perhaps counter‐intuitively, higher distance traveled.