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Generating New PES Institutions and Increased Impacts in Mexico: a framed field experiment on coordination and sanctions in Matching Funds sites

Alexander Pfaff, Luz Rodriguez, Elizabeth Shapiro
Draft working paper, Duke University (part of a project supported by The Tinker Foundation).

PDF link icon While states pay landowners in the big payment-for-ecosystem-services (PES) programs, PES can be locally organized. Downstream actors, e.g., may offer incentives to upstream. Even − or especially? − with local organization, though, there may be negative reactions to the increased monitoring and sanctioning of behavior required to increase PES impact. Mexico’s forest agency (CONAFOR) has had limited average impacts per PES contract in its direct state payments but also, since 2008, a novel policy to help create new local PES. The Fondos Concurrentes (Matching Funds) program solicits applications − initiated by varied partners − that must include agreement between upstream and downstream groups. We consider the creation of local PES programs, involving coordination by those groups to establish a new institution, and effects of permitting sanctions on upstream behaviors. We use PES framing (services go downstream, payment up) of the contributions in a new assurance game that, in real time, links the groups − each of which confronts free riding. After our field pilot, we recruited 240 downstream and 240 upstream Fondos participants from Xalapa (Veracruz State), Merida (Yucatan State) or Cancun (Quintana Roo State). Initial trust-game behaviors align with participant perceptions and predict baseline giving in assurance (which is significant, despite a zero equilibrium, perhaps due to our sample). For upstream providers, i.e., those who get sanctioned, the threat and the use of sanctions increase contributions. Any ‘motivation crowding’ is not dominant during these sanctions. Downstream users contribute less when offered the option to sanction − as if that option signals an uncooperative upstream − then contributions rise in line with complementarity.

Behavioral Spillovers from Targeted Incentives: losses from excluded individuals can counter gains from those selected

Francisco Alpizar, Anna Norden, Alexander Pfaff, Juan Robalino
Duke Environmental & Energy Economics Working Paper Series

PDF link iconIncentives conditioned on socially desired acts such as donating blood, departing conflict or mitigating climate change have increased in popularity. Many incentives are targeted, excluding some of the potential participants based upon characteristics or prior actions. We hypothesize that pro-sociality is reduced by exclusion, in of itself (i.e., fixing prices and income), and that the rationale for exclusion influences such ‘behavioral spillovers’. To test this, we use a laboratory experiment to study the effects of a subsidy to donations when participants are fully informed about why they are selected, or not, for the subsidy. We study the effects of introducing different selection rules upon changes in donations. Selecting for the subsidy those who initially acted less pro-social (i.e., gave little to start) increased donations, while random subsidies and rewarding greater pro-sociality did not. Yet a selection rule which targets lower prior pro-sociality also intentionally excludes the people who donated more initially, and only that rule reduced donations by the excluded. This shows a tradeoff between losses from excluded participants and gains from selected.

 

Framed field experiment on resource scarcity & extraction: path-dependent generosity within sequential water appropriation

Alexander Pfaff, Maria Alejandra Vélez, Pablo Andres Ramos, Adriana Molina
Ecological Economics 120 (2015) 416–429

PDF link iconHow one treats others is important within collective action. We ask if resource scarcity in the past, due to its effects upon past behaviors, influences current other-regarding behaviors. Contrasting theories and empirical findings on scarcity motivate our framed field experiment. Participants are rural Colombian farmers who have experienced scarcity of water within irrigation. We randomly assign participants to groups and places on group canals. Places order extraction decisions. Our treatments are sequences of scarcities: ‘from lower to higher resources’ involves four rounds each of 20, 60, then 100 units of water; ‘from higher to lower resources’ reverses the ordering. We find that upstream farmers extract more, but a lower share, when facing higher resources. Further they take a larger share of higher resources when they faced lower resources in earlier rounds (relative to when facing higher resources initially). That is inconsistent with leading models of responses to scarcity which focus upon one’s own gain. It is consistent with lowering one’s weight on others to, for instance, rationalize having left them little. Our results suggest that facing higher scarcity can erode the bases for collective actions. For establishing new institutions, timing relative to scarcity could affect the probability of success.

 

Unequal Information, Unequal Allocation: bargaining field experiments in NE Brazil

Alexander Pfaff, Maria Alejandra Velez, Renzo Taddei, Kenneth Broad
Environmental Science & Policy 26 (2013) 90-101

PDF link iconWe assess how unequal information affects the bargaining within resource allocation, a stakeholder interaction that is critical for climate adaptation within the water sector. Motivated by water allocation among unequal actors in NE Brazil, within Ceara´ State, we employ ‘ultimatum’ field experiments in which one participant lacks information. We find that, despite having veto power, the less informed are vulnerable to inequity. When all are informed, we see a typical resource split (60% initiator–40% responder) that balances an initiator’s advantage with a responder’s willingness to punish greed. When instead responders have only a resource forecast upon which to base decisions, the fully informed initiators get 80% of resources for conditions of resource scarcity. Thus, despite each of the stakeholder types having an unquestioned ‘seat at the table’, information asymmetries make bargaining outcomes more unequal. Our results are widely relevant for adaptation involving the joint use of information, and suggest that equity can rise with dissemination of scientific outputs that are integral in adaptation.

 

Efficiency and equity in negotiated resource transfers: contributions and limitations of trust with limited contracts

Alexander Pfaff, Maria Alejandra Velez
Ecological Economics 74 (2012) 55–63

PDF link iconWe consider a case of water reallocation in Brazil, one which has numerous analogs elsewhere. To permit empirical study of the effects of institutions that can facilitate or restrict  allocations, we conducted field experiments to explore trust’s potential when resource contracts are limited, using a novel asymmetric-productivity ultimatum game with a final surplus-sharing step added. As a form of informal institution, trust could in principle make rights and contracts unnecessary. We observe whether trust in compensation is in fact expected and expressed. We also explore whether trust is exploited, and the effect of communication, within our two bargaining structures: (1) no communication; and (2) with a non-binding message concerning the surplus to be shared. We see that our participants both expect and express trust that some of the surplus will be shared. Trust raises total output and some surplus is indeed shared: those who trust gain a bit on average; and the more trust was shown, the more was shared. However, often the trust was barely repaid. Further, the messages—found to help in other research—had little impact and were often untrue. In sum, trust does matter but both efficiency and equity could well rise with complete contracts.