Laura Schechter

Theft, Gift-Giving, and Trustworthiness: Honesty is its Own Reward in Rural Paraguay

In developing countries lacking legal enforcement, villagers may use implicit contracts to minimize crime. I construct a dynamic limited-commitment model, in which a thief cannot commit to forego stealing, but is induced to steal less by the promise of future gifts. Combining survey data on production, theft, gifts, and trust with experiments measuring trustworthiness, I provide supporting evidence. Farmers living near more relatives or with plots that are difficult to steal from give fewer gifts and trust more, and those living near more relatives also experience less theft. Giving increases when trust is lower and the threat of theft is greater. (JEL D86, K42, O17, Z13)

The roles of risk and ambiguity in technology adoption

We study the impacts of risk and ambiguity aversion on the adoption of new technologies, specifically genetically modified (GM) corn and soy seeds. We conduct experiments measuring risk and ambiguity aversion with Midwestern grain farmers. Risk aversion has only a small impact on the timing of adoption of GM soy, while ambiguity-aversion has a large impact speeding up farmer adoption of GM corn. We hypothesize that this unusual finding is due to the fact that GM corn often contains an insect-resistance trait which reduces the ambiguity of pest damages for adopters. GM soy never contains this insect-resistance trait. This highlights the importance of distinguishing between risk and ambiguity when studying the effects of aversion to uncertainty on adoption of new technologies.

An Empirical Non-Parametric Likelihood Family of Data-Based Benford-Like Distributions

A mathematical expression known as Benfords law provides an example of an unexpected relationship among randomly selected first significant digits (FSD). Newcomb (1881), and later Benford (1938), conjectured that FSDs would exhibit a weakly monotonic distribution and proposed a frequency proportional to the logarithmic rule. Unfortunately, the Benford FSD function does not hold for a wide range of scale-invariant multiplicative data. To confront this problem we use information-theoretic methods to develop a data-based family of Benford-like exponential distributions that provide null hypotheses for testing purposes. Two data sets are used to illustrate the performance of generalized Benford-like distributions.

Reciprocated Versus Unreciprocated Sharing in Social Networks

We recognize that some sharing relationships in social networks are reciprocated (undirected), while others are unreciprocated (directed). We find that in unreciprocated relationships transfers are likely to flow from more to less wealthy households, while reciprocated risk-sharing relationships are more likely between wealthier households. We are also one of the first papers to empirically explore predictions from the theoretical network literature. This literature finds that networks of undirected two-way transfers should exhibit high levels of support while networks with one-way flows of benefits should exhibit star-like characteristics. These two predictions hold for the reciprocated and unreciprocated networks respectively.

Subsidies versus mental accounting nudges: Harnessing mobile payment systems to improve sanitation

The proliferation of mobile money across developing countries has led to an increase in availability of mobile payment systems. This decreases the organizational complexity of allowing more flexible payment terms for customers. We test whether subsidies, deposit requirements, and access to a mobile money savings vehicle increase the propensity of households to purchase an improved but more expensive sanitation service. While high subsidies increase purchases of the improved service, interventions inspired by mental accounting such as deposit requirements and earmarked savings accounts do not. The option to save in earmarked accounts using mobile money caused households to substitute away from purchasing the improved service in the general market and towards purchasing it through our providers, rather than substituting away from the unimproved service. We discuss implications for mental accounting-based policies compared to more traditional subsidies.

Mobile Payment Systems: The Impact of Earmarked Savings on Sanitation Purchases

The proliferation of mobile money across developing countries has led to an increase in availability of mobile payment systems. This decreases the organizational complexity of allowing more flexible payment terms for customers. We test whether subsidies, deposit requirements, and access to a mobile money savings vehicle increase the propensity of households to purchase an improved but more expensive sanitation service. While high subsidies increase purchases of the improved service, interventions inspired by mental accounting such as deposit requirements and earmarked savings accounts do not. The option to save in earmarked accounts using mobile money caused households to substitute away from purchasing the improved service in the general market and towards purchasing it through our providers, rather than substituting away from the unimproved service. We discuss implications for mental accounting-based policies compared to more traditional subsidies.