Economic reform,growth and the poor: Evidence from rural Ethiopia

A new decomposition of poverty changes is developed to analyse the determinants of poverty changes during a period of economic reform (1989–1995) in villages in Ethiopia. Poverty fell substantially, but with diverse experiences across villages. Shocks mattered, but the main factors driving consumption changes were relative prices changes, resulting in changes in the returns to land, labour, human capital and location. The experience of the poor is mixed: one group of the poor in 1989, with relatively good land and location, outperformed all other households, while another group with much poorer endowments and location experienced virtually unchanged and persistent poverty.     

Punishment strategies in repeated games: Evidence from experimental markets

An experiment is designed to provide a snapshot of the strategies used by players in a repeated price competition game with a random continuation rule. One hundred pairs of subjects played the game over the Internet, with subjects having a few days to make their decisions in each round. Occasionally subjects are asked to enter one-period-ahead pricing strategies instead of prices. According to the elicited strategies, between 90% and 95% of subjects punish less harshly (in their initial response to a deviation) than implied by the grim trigger strategy, and do so in a way that depends on the size of the other subjectʼs deviation. Future earnings are highest for subjects adopting the tit-for-tat strategy, even after controlling for a subjectʼs past earnings. Punishment strategies are generally softer and more graduated than implied by a grim trigger strategy, and do better as a result.     

Trust, trustworthiness, and risk in rural Paraguay

This dissertation looks at the relationship between trust, trustworthiness, and risk aversion in a rural Paraguayan setting. The first chapter of this dissertation looks at theft between farmers. Rural areas of developing countries often lack effective legal enforcement. However, villagers who know each other well and interact repeatedly may use implicit contracts to minimize crime. I construct a dynamic limited-commitment model in which a thief cannot credibly commit to forego stealing from his fellow villagers but may be induced to limit his stealing by the promise of future gifts from his potential victim. Using a unique survey from rural Paraguay which combines traditional data on production with information on theft, gifts, and trust, as well as with experiments measuring trust and trustworthiness, I test whether the data is consistent with predictions from the dynamic model. The results provide evidence that, in contrast with predictions from a one-period model with an anonymous thief, farmers do implicitly contract with one another to limit theft. Farmers who have more close family members in their village give fewer gifts, and farmers with plots which are more difficult to steal from give fewer gifts, experience less theft, and trust more. Gift-giving increases when trust is lower and the threat of theft is greater, turning the social capital literature on its head. The second chapter of this dissertation looks at a different linkage between trust, trustworthiness, and risk. Trusting behavior in general and play in the traditional trust experiment specifically depend both on trust beliefs and on levels of risk aversion. I ran two experiments with a diverse set of subjects in fifteen villages of rural Paraguay, the traditional trust experiment and a new experiment measuring only risk aversion. I find that risk attitudes are highly predictive of play in the trust game. In addition, omitting risk aversion as a regressor in trust regressions significantly changes the coefficients of important explanatory variables such as gender and wealth. The chair of this dissertation committee was Ethan Ligon and the other committee members were George Akerlof and Elisabeth Sadoulet.     

Remittances and rural credit markets: Evidence from Senegal

This study investigates the relationship between remittances and credit markets in Senegal, focusing on rural areas where financial constraints are more challenging. Using a household fixed effects model, the findings show that remittances and credit markets are complements; namely, the receipt of remittances is positively associated with the likelihood of having a loan in a household. This means that migrants can increase the reliability of their family members and close relatives back home through their remittances, insuring them vis‐à‐vis lenders for their credit contracts. They are the collateral or the “element of trust” in the credit contract between the borrower and the lender, representing a potential alternative in case of non‐repayment. This result is robust to alternative models and various robustness tests mitigating the potential endogeneity of remittances. A detailed analysis also shows that the relationship between remittances and credit markets is mainly driven by loans taken for consumption and food, in particular, as well as loans provided by informal institutions.     

How Inequality Affects Trust in Institutions: Evidence from Indonesia

Trust is an important ingredient to improve economic performance and people's welfare by alleviating market failures caused by imperfect information, costly enforcement, or coordination failures. Using the World Values Survey 2018, we estimate the impact of village and district levels inequality on trust in institutions in Indonesia. We find that higher village level inequality has a negative effect only on trust in strangers, while higher district level inequality reduces trust in television, the press, the central government, the courts, and the police. The implication points to the importance of keeping inequality at the aggregate level in check to maintain people's trust in social, political and state institutions.     

Lineage networks,urban migration and income inequality: Evidence from rural China

This work focuses on the role that Chinese lineage networks can play in alleviating income inequality in rural villages through their effect on migration from rural to urban areas. Unique panel data from rural China identifies lineage networks (ancestral hall and genealogy) and provides detailed information on income and migration experiences. Our key finding is that lineage networks increase migration for all social groups by lowering costs, and this pattern is more salient for the poor. Consequently, this population accumulates greater wealth, which decreases income inequality in origin villages. The estimation results remain robust to both the inclusion of exogenous subsamples and an instrumental variables strategy using the effect of historical natural disasters on current lineage ancestral hall or genealogy. The analysis in this paper, coupled with an emerging empirical literature on networks and migration, provides a new perspective on how income inequality in a fast-growing economy varies with access to social networks.     

Political trust as rational belief: Evidence from Chinese village elections

Democratic governance is believed to improve government responsiveness to citizens’ demand for public goods. In China, villagers’ committee elections represent a major progress in China’s development toward good governance. We develop a rational model to explain villagers’ participation. Utilizing a national survey of rural residents in 2005, this paper tests the insights of the model. Two findings are of interest to the students of voting and elections. First, there is disagreement over the causal relationship between political trust and voting. This paper offers a rational interpretation of political trust by emphasizing the informational aspect of the concept. Second, voting is generally theorized as a process of overcoming various costs. The prospect of benefits figures more prominently in Chinese village elections. Our findings highlight the pivotal role of township governments in China’s rural politics and reveal the inner dilemma of democratization in China.     

Consumption,habit formation,and savings: Evidence from a rural household panel survey

Protecting consumption from the effects of uninsured risk is vital for rural farming households, who tend to be poor and live close to subsistence level. Income uncertainty and habit formation play important roles in the consumption and savings. Variability in weather conditions has a strong linkage with variability in agricultural income in developing countries. This study analyzes consumption and saving decisions of rural farm households in India. Using household panel data for 4 years, we estimated consumption equation accounting for habit formation under income uncertainty. Our findings suggest an evidence for habit formation among rural households. Additionally, we found that both annual and seasonal weather risks significantly influence savings among rural households. Findings from this study also suggest a robust and vibrant farm economy and that the nonfarm economy could contribute to the economic well‐being of rural farming households.     

Smartphone use,off-farm employment,and women's decision-making power: Evidence from rural China

Empowering women is an important goal of the United Nations' Sustainable Development Goals, and studies have proposed various strategies to achieve this goal. However, few have examined the role of smartphone use in empowering women in decision-making and its mechanism. Therefore, this study analyzes how smartphone use affects women's decision-making power and explores whether this influence is due to women's off-farm employment mechanisms. For this purpose, the study uses the survey data of 1110 households in rural China and the endogenous treatment regression model for analysis. The control function approach addresses the selection bias of off-farm employment. The results show that smartphone use significantly increases women's decision-making power, partially channeled through increasing women's off-farm employment. The mechanism effect is robust to using both binary and intensive measurements of off-farm employment. Therefore, a policy to improve access to internet facilities and smartphone use could improve women's decision-making power through employment in the off-farm sector.     

Separating the Hawks from the Doves: Evidence from continuous time laboratory games

Human players in our laboratory experiment received flow payoffs over 120 seconds each period from a standard Hawk–Dove bimatrix game played in continuous time. Play converged closely to the symmetric mixed Nash equilibrium under a one-population matching protocol. When the same players were matched in a two-population protocol with the same bimatrix, they showed clear movement towards an asymmetric (and very inequitable) pure Nash equilibrium of the game. These findings support distinctive predictions of evolutionary game theory.     

Internet use and consumption diversity: Evidence from rural China

The Internet is integral to modern living. While the Internet is ubiquitous in China's urban areas, its uptake is still lagging in the country's rural regions—the development potential of the Internet remains untapped, and despite China's steep economic growth during the 21st century, the living standards in its rural regions remain low. The Internet can accelerate rural development in China. This study is focused on analyzing whether and to what extent Internet use affects consumption diversity, an indicator of the quality of life, in rural China. To this end, we employ the instrumental-variable-based two-stage endogenous treatment regression model to analyze the 2018 China Family Panel Studies survey data. The modeling approach allows us to account for the endogeneity of Internet use. The results show that consumption diversity is positively associated with Internet use. Furthermore, it rises with household income, household size, and wealth. Whether the Internet is accessed via smartphones or computers has no bearing on household consumption diversity. We also find that education, household income, and wealth increase one's predicted probability of using the Internet. The results also point to regional differences in consumption diversity and the likelihood of using the Internet.     

Vertical and Horizontal Trust Networks in Bureaucracies: Evidence from the Third Reich

In a seminal contribution to the literature on bureaucracy, Breton and Wintrobe (The Logic of Bureaucratic Conduct: An Economic Analysis of Competition, Exchange, and Efficiency in Private and Public Organization. New York, NY: Cambridge University Press, 1982) develop a model wherein subordinates and superiors in a bureaucratic structure trade with each other to advance the objectives of the superiors. The success of such an organizational arrangement (for superiors) is based upon the development of vertical trust networks in a way that facilitates the promise of informal payments by superiors in return for informal services provided by their subordinates. Breton and Wintrobe [Journal of Political Economy 94 (1986) 905] also provide a theoretical application of their model by describing the Nazi bureaucracy as a conglomeration of competing agencies that zealously carried out the Final Solution to the Jewish question. As an extension, this note develops two compelling empirical examples of vertical and horizontal trust networks within the Nazi regime: Einsatzgruppen As (Special Action Detachments) attempt to liquidate all Lithuanian Jews after the German invasion of the U.S.S.R. in 1941 and the 20 July 1944 attempt to assassinate Adolf Hitler.JEL Classification: D23, D73.     

Trust and trustworthiness in games: An experimental study of intergenerational advice

This paper investigates the development of conventions of trust in what we call intergenerational games, i.e., games played by a sequence of non-overplapping agents, who pass on advice on how to play the game across adjacent generations of players. Using the trust game of Berg et al. (1995) as our experimental decision problem, advice seems to decrease the amount of trustthat evolves when this game in played in an inter-generational manner in that it decreases the amount of money sent from Senders to Returners. Ironically, advice increases trustworthinessin that Returners tend to send more back. Further, subjects appear to follows conventions of reciprocity in that they tend to Send more if they think the Returners acted in a “kind” manner, where kind means the Sender sent more money than the receiver expected. Finally, while we find a causal relationship running from trustworthiness to trust, the opposite can not be established. We note that many of our results can only be achieved using the tools offered by inter-generational games. The inter-generational advice offered provides information not available when games are played in their static form. Combining that information with elicited beliefs of the Senders and Returners adds even more information that can be used to investigate the motives that subjects have for doing what they do. Electronic supplementary material Electronic supplementary material is available for this article at and accessible for authorised users. JEL Classification C91 · C72 Resources for this research were provided by National Science Foundation grants SBR-9709962 and SBR-9709079 and by both the Center for Experimental Social Science and the C.V. Starr Center for Applied Economics at New York University. We would like to thank Shachar Kariv for both his comments and research assistance. We also thank Mikhael Shor and Judy Goldberg for research assistance, and Yevgeniy Tovshteyn for computer programming.     

公共资源与社会信任:以义务教育为例

已有文献表明,社会信任对于一国的经济社会发展具有重要意义。但是,近年来我国居民的社会信任水平一直处于较低水平,引起了学界的广泛关注。与以往解释不同,我们首次尝试从公共资源的匮乏及对其争夺的角度来解释此现象。以义务教育为例,我们使用2003年和2010年中国综合社会调查(CGSS)数据,对此问题进行了详细分析。研究结果表明,公共资源供给不足会导致人们之间的不信任程度加剧,且对于争夺中处于较弱势地位的群体来说这种效应表现得更为明显。这表明,提高公共资源的供给水平,完善公共资源的分配规则以解决教育难等民生问题,是提升我国居民社会信任水平,特别是提升弱势群体的社会信任水平的有效途径。     

Competitive behavior in market games: Evidence and theory

We explore whether competitive outcomes arise in an experimental implementation of a market game, introduced by Shubik (1973) [21]. Market games obtain Pareto inferior (strict) Nash equilibria, in which some or possibly all markets are closed. We find that subjects do not coordinate on autarkic Nash equilibria, but favor more efficient Nash equilibria in which all markets are open. As the number of subjects participating in the market game increases, the Nash equilibrium they achieve approximates the associated competitive equilibrium of the underlying economy. Motivated by these findings, we provide a theoretical argument for why evolutionary forces can lead to competitive outcomes in market games.     

Parental expectations and school enrolment decisions: Evidence from rural Ghana

We use field data to investigate factors that influence parents' decisions to enrol children in schools in rural Ghana. The empirical results identified a host of socio‐economic and household‐level factors including remittances parents expect from investing in education, parents perception of a child's desirable professions, cost of schooling and discount rate as significant determinants of parental school enrolment decision. When gender of the child and remittances are taken into account, we show male parents are more likely to invest in education of boys than girls because they expect significantly higher returns from their investment in boys. Female parents do not show such gender preference. The proportion of children enrolled in school is positively related to average cost of schooling for male parents Gender of parent plays a significant role in school enrolment decision making.     

Gender,productive ability and the perceived returns to education: Evidence from rural India

Recent research has established the importance of perceived (as opposed to actual) returns as a determinant of educational investments. We analyze data from India to highlight gender disparities in the perceived returns to education and the salience of productive characteristics.     

On the behavioral impacts of violence: Evidence from incentivized games in Kenya

Political violence is a major impediment to economic development, damaging social, physical and human capital. By contrast, the manner in which violence influences prosocial behaviors is less clear cut, even though these behaviors likely contribute to post-conflict outcomes at individual and aggregate levels. We propose that the standard routes through which the experience of violence is thought to increase prosocial behaviors offer different theoretical explanations under heterogeneous conflict exposure histories and for different behavioral domains. We test these hypotheses using incentivized behavioral experiments, collected in the context of electoral violence in Kenya. While we provide some evidence that exposure to violence increases prosocial behaviors, results display significant heterogeneities relating both to the dimensions of behavior analyzed and whether or not individuals were personally injured.     

Equilibrium play and best response to (stated) beliefs in normal form games

We report experimental results on a series of ten one-shot two-person 3×3 normal form games with unique equilibrium in pure strategies played by non-economists. In contrast to previous experiments in which game theory predictions fail dramatically, a majority of actions taken coincided with the equilibrium prediction (70.2%) and were best-responses to subjects' stated beliefs (67.2%). In constant-sum games, 78% of actions taken were predicted by the equilibrium model, outperforming simple K-level reasoning models. We discuss how non-trivial game characteristics related to risk aversion, efficiency concerns and social preferences may affect the predictive value of different models in simple normal form games.