IDEAS home Printed from https://ideas.repec.org/p/ags/gewi14/187432.html
   My bibliography  Save this paper

Reward, punishment and probabilities in policy measurements: An extra laboratory experiment about effectiveness and efficiency of incentives in palm oil production

Author

Listed:
  • Moser, Stefan
  • Mußhoff, Oliver

Abstract

Palm oil production creates negative externalities, e.g. through intensive fertiliser application. If policy wants to determine externalities an effective and efficient measurement seems desirable. Embedded in an extra laboratory field experiment on Sumatra, a business simulation game tests several incentives for reducing the use of fertiliser. These incentives are differently designed, i.e., either reward or punishment, varying in their magnitude and probability of occurrence but constant in the effect on expected income. Results show that participants react significantly different depending on the incentive design. A high reward with a low probability to occur was found to be the most effective and sustainable incentive design. For efficiency, a low and certain reward is indicated to be the best design.

Suggested Citation

  • Moser, Stefan & Mußhoff, Oliver, 2014. "Reward, punishment and probabilities in policy measurements: An extra laboratory experiment about effectiveness and efficiency of incentives in palm oil production," 54th Annual Conference, Goettingen, Germany, September 17-19, 2014 187432, German Association of Agricultural Economists (GEWISOLA).
    • Handle: RePEc:ags:gewi14:187432
    DOI: 10.22004/ag.econ.187432
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/187432/files/Reward%20punishment%20and%20probabilities%20in%20policy%20measurements-%20An%20extra%20laboratory%20experiment%20about%20effectiveness%20and%20efficiency%20of%20incentives%20in%20palm%20oil%20production.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.187432?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Colin Camerer & Linda Babcock & George Loewenstein & Richard Thaler, 1997. "Labor Supply of New York City Cabdrivers: One Day at a Time," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 407-441.
    2. Torben Tiedemann & Uwe Latacz-Lohmann, 2013. "Production Risk and Technical Efficiency in Organic and Conventional Agriculture – The Case of Arable Farms in Germany," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(1), pages 73-96, February.
    3. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
    4. Matthias Sutter & Stefan Haigner & Martin G. Kocher, 2010. "Choosing the Carrot or the Stick? Endogenous Institutional Choice in Social Dilemma Situations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 77(4), pages 1540-1566.
    5. Martin Sefton & Robert Shupp & James M. Walker, 2007. "The Effect Of Rewards And Sanctions In Provision Of Public Goods," Economic Inquiry, Western Economic Association International, vol. 45(4), pages 671-690, October.
    6. Gary S. Becker & William M. Landes, 1974. "Essays in the Economics of Crime and Punishment," NBER Books, National Bureau of Economic Research, Inc, number beck74-1, February.
    7. Mußhoff, O. & Hirschauer, N., 2013. "Planspiele als experimentelle Methode der Politikfolgenabschätzung: Das Beispiel der Stickstoffextensivierung," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 48, March.
    8. Ernst Fehr & Lorenz Goette, 2007. "Do Workers Work More if Wages Are High? Evidence from a Randomized Field Experiment," American Economic Review, American Economic Association, vol. 97(1), pages 298-317, March.
    9. Block, Michael K & Gerety, Vernon E, 1995. "Some Experimental Evidence on Differences between Student and Prisoner Reactions to Monetary Penalties and Risk," The Journal of Legal Studies, University of Chicago Press, vol. 24(1), pages 123-138, January.
    10. Charness, Gary & Gneezy, Uri & Kuhn, Michael A., 2013. "Experimental methods: Extra-laboratory experiments-extending the reach of experimental economics," Journal of Economic Behavior & Organization, Elsevier, vol. 91(C), pages 93-100.
    11. Geoffrey Poitras, 1998. "Spread options, exchange options, and arithmetic Brownian motion," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 18(5), pages 487-517, August.
    12. Anderson, Lisa R & Stafford, Sarah L, 2003. "Punishment in a Regulatory Setting: Experimental Evidence from the VCM," Journal of Regulatory Economics, Springer, vol. 24(1), pages 91-110, July.
    13. Devin G. Pope & Maurice E. Schweitzer, 2011. "Is Tiger Woods Loss Averse? Persistent Bias in the Face of Experience, Competition, and High Stakes," American Economic Review, American Economic Association, vol. 101(1), pages 129-157, February.
    14. Brian E. Roe & David R. Just, 2009. "Internal and External Validity in Economics Research: Tradeoffs between Experiments, Field Experiments, Natural Experiments, and Field Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1266-1271.
    15. Latacz-Lohmann, Uwe & Schilizzi, Steven & Breustedt, Gunnar, 2011. "Auctioning Outcome-Based Conservation Contracts," 51st Annual Conference, Halle, Germany, September 28-30, 2011 114523, German Association of Agricultural Economists (GEWISOLA).
    16. Rand, David Gertler & Dreber, Anna & Fudenberg, Drew & Ellingson, Tore & Nowak, Martin A., 2009. "Positive Interactions Promote Public Cooperation," Scholarly Articles 3804483, Harvard University Department of Economics.
    17. Ibanez, Marcela & Martinsson, Peter, 2008. "Can we do policy recommendations from a framed field experiment? The case of coca cultivation in Colombia," Working Papers in Economics 306, University of Gothenburg, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Moser, S. & Mußhoff, O., 2015. "Reward, Punishment and Probabilities in Policy Measurements: An Extra Laboratory Experiment about Effectiveness and Efficiency of Incentives in Palm Oil Production," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 50, March.
    2. Moser, Stefan & Mußhoff, Oliver, 2014. "A framed field experiment about policy measures: Testing the effectiveness of rewards or punishments with different probabilities as incentives in palm oil production," EFForTS Discussion Paper Series 5, University of Goettingen, Collaborative Research Centre 990 "EFForTS, Ecological and Socioeconomic Functions of Tropical Lowland Rainforest Transformation Systems (Sumatra, Indonesia)".
    3. Stefan Moser & Oliver Mußhoff, 2016. "Ex-ante Evaluation of Policy Measures: Effects of Reward and Punishment for Fertiliser Reduction in Palm Oil Production," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(1), pages 84-104, February.
    4. Dickinson, David L. & Masclet, David & Villeval, Marie Claire, 2015. "Norm enforcement in social dilemmas: An experiment with police commissioners," Journal of Public Economics, Elsevier, vol. 126(C), pages 74-85.
    5. Olivier Armantier & Amadou Boly, 2015. "Framing Of Incentives And Effort Provision," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56(3), pages 917-938, August.
    6. Sascha Behnk & Iván Barreda-Tarrazona & Aurora García-Gallego, 2018. "Punishing liars—How monitoring affects honesty and trust," PLOS ONE, Public Library of Science, vol. 13(10), pages 1-30, October.
    7. Doran, Kirk, 2014. "Are long-term wage elasticities of labor supply more negative than short-term ones?," Economics Letters, Elsevier, vol. 122(2), pages 208-210.
    8. Lisa R. Anderson & Sarah L. Stafford, 2006. "Does Crime Pay? A Classroom Demonstration of Monitoring and Enforcement," Southern Economic Journal, John Wiley & Sons, vol. 72(4), pages 1016-1025, April.
    9. Murphy, James J. & Stranlund, John K., 2007. "A laboratory investigation of compliance behavior under tradable emissions rights: Implications for targeted enforcement," Journal of Environmental Economics and Management, Elsevier, vol. 53(2), pages 196-212, March.
    10. David Card & Gordon B. Dahl, 2011. "Family Violence and Football: The Effect of Unexpected Emotional Cues on Violent Behavior," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(1), pages 103-143.
    11. Chang, Tom & Gross, Tal, 2014. "How many pears would a pear packer pack if a pear packer could pack pears at quasi-exogenously varying piece rates?," Journal of Economic Behavior & Organization, Elsevier, vol. 99(C), pages 1-17.
    12. Daniele Nosenzo & Martin Sefton, 2012. "Promoting Cooperation: the Distribution of Reward and Punishment Power," Discussion Papers 2012-08, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    13. Eil, David & Lien, Jaimie W., 2014. "Staying ahead and getting even: Risk attitudes of experienced poker players," Games and Economic Behavior, Elsevier, vol. 87(C), pages 50-69.
    14. Nikos Nikiforakis & Helen Mitchell, 2014. "Mixing the carrots with the sticks: third party punishment and reward," Experimental Economics, Springer;Economic Science Association, vol. 17(1), pages 1-23, March.
    15. Harding, Matthew & Hsiaw, Alice, 2014. "Goal setting and energy conservation," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 209-227.
    16. Choi, Jung-Kyoo & Ahn, T.K., 2013. "Strategic reward and altruistic punishment support cooperation in a public goods game experiment," Journal of Economic Psychology, Elsevier, vol. 35(C), pages 17-30.
    17. Gangadharan, Lata & Nikiforakis, Nikos & Villeval, Marie Claire, 2017. "Normative conflict and the limits of self-governance in heterogeneous populations," European Economic Review, Elsevier, vol. 100(C), pages 143-156.
    18. Karakostas, Alexandros & Kocher, Martin G. & Matzat, Dominik & Rau, Holger A. & Riewe, Gerhard, 2023. "The team allocator game: Allocation power in public goods games," Games and Economic Behavior, Elsevier, vol. 140(C), pages 73-87.
    19. Stoop, Jan & van Soest, Daan & Vyrastekova, Jana, 2011. "Carrots without Bite: On the Ineffectiveness of 'Rewards' in sustaining Cooperation in Social Dilemmas," MPRA Paper 30538, University Library of Munich, Germany.
    20. Chugunova, Marina & Luhan, Wolfgang J. & Nicklisch, Andreas, 2020. "When to leave carrots for sticks: On the evolution of sanctioning institutions in open communities," Economics Letters, Elsevier, vol. 191(C).

    More about this item

    Keywords

    Agricultural and Food Policy; Research Methods/ Statistical Methods;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:gewi14:187432. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/gewisea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.