Steven R. Elliott

Are Hypothetical Referenda Incentive Compatible

Hypothetical referenda have been proposed as an incentive‐compatible mechanism that can be used to obtain social valuations of environmental resources. We employ experimental methods to test the hypothesis that such referenda are indeed incentive compatible. Our results lead us to reject that hypothesis.

Evaluating technology innovation programs: the use of comparison groups to identify impacts

Abstract This paper discusses the pros and cons of alternative comparison groups for evaluating technology innovation programs, and focuses specifically on the selection of a comparison group for the evaluation of the U.S. Department of Energys (DOE) Energy-Related Inventions Program (ERIP). The pros and cons of five alternative comparison group options are discussed, including: inventor societies, innovation and incubator centers, patent holders, near-participants, and program referrals. Program referrals are selected as a suitable comparison group for evaluating the Energy-Related Inventions Program. Data collected on ERIP participants and referrals provide strong evidence that ERIP-supported technologies achieved their considerable commercial success, at least in part because of the support provided by the DOE. There are large differences between the program referrals and the ERIP participants in terms of several indicators of commercial success. For example, average dollar sales by ERIP participants are an order of magnitude greater than the program referral group. This paper illustrates that the simultaneous tracking of program participants and a matched comparison group can enhance the evaluation of technology innovation programs by helping to isolate the effects of the government program from the host of other factors that influence the commercialization of inventions.

An experimental examination of vertical control and cost predation

Abstract In recent years there has been renewed interest in, and concern about, firms’ use of vertical control as a way to exert market power. Such behavior could be used to gain a competitive advantage over rivals in input and/or output markets. This paper uses laboratory experimental methods to examine three questions: (i) Is anti-competitive behavior by a dominant firm in input markets an observable behavior? (ii) Is cost predation an observable laboratory phenomenon? and (iii) If such behaviors are observed, what are the efficiency consequences? Results of this dominant firm experiment indicate that all three questions can be answered in the affirmative, and the negative efficiency consequences can be profound.

Experiments in decision-making under risk and uncertainty: thinking outside the box

This paper surveys a selection of recent research results which use laboratory methods to contribute to our understanding of risk and uncertainty in environments which are of particular interest to managerial decision-making. The first set of experimental results addresses issues related to insuring against risky outcomes and the roles of the degree of risk and the complexity of risk. Laboratory results related to models of job search are then reviewed, followed by applications of laboratory methods to evaluating models of investment decisions. Finally, issues related to markets for inputs (petroleum, water, electricity) are presented. The necessarily interactive role of theory development, laboratory experimentation and field observation is discussed.

Risk Perceptions and Risk Taking in the Presence of Multiple Risks

Individuals often confront situations in which they are exposed to several (uncorrelated) risks at the same time. Examples can be provided in the areas of consumer product risks, and occupational safety risks. Neoclassical economic theory predicts that an individuals decision to bear a particular risk will be unaffected by the presence of familiar risks. Yet, the evidence from individual behavior is mixed [Smith and Desvousges, 1987; Gerking et al., 1988] and it is also apparent that policy makers are not immune to the phenomenon of focussing on pre-existing risks [Mendeloff, 1989]. There is a need for a better understanding of decision making in the presence of multiple risks. In this paper we begin such a process.

Rationing supply capacity shocks: A laboratory comparison of second best mechanisms

This chapter compares four methods of rationing an input that is subject to supply capacity shocks. We describe the application of the mechanisms in terms of electricity. The mechanisms we test are random interruption, priority service, proportional service%all option and proportional service/put option. None of the mechanisms, as implemented, are first-best but can be ranked by their theoretical allocative efficiency. According to the theory, both versions of proportional service should produce the highest allocative efficiency whereas random interruption ranks lowest. In the laboratory, the two proportional mechanisms have radically different behavioral properties. The proportional/put option mechanism performed as predicted by theory. In spite of its theoretical superiority to random interruption and priority service, the proportional/call option mechanism performed no better than random interruption in the laboratory.

Replication and efficiency in experiments for marketable emissions permits

The Energy Information Administration (EIA) funded the universities of Colorado and Arizona to define an experimental institution that captures the salient features of the sulfur dioxide allowance market created by the Clean Air Act Amendments of 1990 (CAAA); to develop and document a transportable software that implements the experimental institutions; and to replicate experiments. Subsequently, EIA, in conjunction with the Oak Ridge National Laboratory (ORNL) funded the universities of Mississippi and Southern California to test the replicability of these experiments using statistically sound experimental design and the standardized software developed by the University of Arizona. The present experiment is designed to identify any differences in the results of the two laboratory sites. It is designed to determine whether market outcomes are reproducible across different laboratories and experimenters and to determine if any behavior patterns exist across a large set of independent experimental sessions.