RESEARCH TOPIC AND PAPERS

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  DEVELOPMENT OF SOCIAL PREFERENCES FOR INFORMAL RISK SHARING: AN EXPERIMENTAL APPROACH WITH COLOMBIAN CHILDREN
  
  
  
  
  
  
  
  

  
  
  
  Pooja Balasubramanian, Daniel Celis and Marcela Ibanez
  
  

  We trace the development of risk-sharing norms among school-age children in Colombia using panel data. We find a substantial degree of solidarity, measured as the proportion of children who transfer income to members of the group affected by an idiosyncratic negative income shock. Altruism is an essential risk-sharing motivation and develops early in life to remain relatively stable afterward. Image concerns have a relatively minor role in explaining risk sharing. Generalized reciprocity is not apparent for very young children and is evident only after 10, while strategic motives are observed only for children older than 15. Children do not display deservingness norms, and on the contrary, older children tend to decrease the value transferred when the other participant’s loss is higher.

  
  
  

  
  
  
  
  
  
  
  






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  RELIGIOUS IDENTITY AND ALTRUISTIC GIVING: A FIELD EXPERIMENT WITH CHILDREN IN INDIA
  
  
  
  
  
  
  
  

  
  
  
  Pooja Balasubramanian, Daniel Celis and Marcela Ibanez
  
  

  This paper reports a field experiment that studies altruistic motivations among children living in Mumbai. The main experimental design and procedure follow Ottoni-Wilhelm et al. (2017). Each subject makes donation decisions given a set of budgets with different endowments to the participant and the recipient, allowing us to and structurally estimate the strength of warm-glow and pure altruism in participants' motivation for giving. In addition, the experiment examines the effect of religious identity by varying the identity of beneficiaries and donors (Hindu or Muslim pupils). Finally, we elicit the warm-glow and the pure altruistic preference of the parents via survey-based experiments.We find that warm-glow is the most important motivation for giving. Yet, when the beneficiary's identity is salient, pure altruistic preferences gain importance. Around teenage children (14 years old) display distinguishable motivations for giving to in-group and out-groups. Other factors such as religiosity and father's altruistic giving is positively correlated with the relative degree of warm-glow giving.

  
  

  
  
  
  
  
  
  
  






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  FORMAL INSURANCE, RISK SHARING, AND THE DYNAMICS OF OTHER-REGARDING PREFERENCES
  
  
  
  
  
  
  
  

  
  
  
  Hanna Freudenreich, Marcela Ibanez, Stephan Dietrich, Oliver Musshoff
  
  

  In the absence of formal financial markets, many poor households rely on the mutual exchange of transfers within informal risk-sharing networks to protect themselves against adverse events. In this paper, we present a model that explains the impact of formal insurance on the dynamics of other-regarding preferences. We test the model's predictions using a solidarity game with rural households in Mexico. Consistent with the model predictions, we find that when shocks are collective, there is a crowding-out effect on transfers and a decrease in trust on insured participants. However, when shocks are idiosyncratic, we fail to confirm the predictions of the model. Transfers to non-insured members are significantly higher when insurance is available to some network members than in a control treatment when insurance is not available. This unexpected crowding-in effect on transfers leads to an increase In trust among non-insured participants. These findings suggest a need to find optimal insurance designs that minimize the crowding-out effect of formal insurance on informal risk-sharing and other-regarding preferences.

  
  
  

  
  
  
  
  
  
  
  






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  PROCEDURAL PREFERENCES IN COMPETITIVE ENVIRONMENTS: A FIELD EXPERIMENT IN MADAGASCAR
  
  
  
  
  
  
  
  

  
  
  
  Marcela Ibanez, Gerhard Riener, and Viviana Uruena
  
  

  This paper considers preferences for procedural fairness in competitive environments. We test whether individuals exploit their power to unfairly leverage advantage over their competitors and compare the willingness to do so under two forms of power advantage procedures: spying or sabotaging. The results of a field experiment in Madagascar indicate that about 40 percent of participants engage in unfair competition. Yet, they do not always use this to their advantage and instead favor their opponents. We find no significant differences between the two procedures, indicating that the moral cost of exploitation is similar. Exposure to higher criminal environments increases the likelihood of deceptive behavior. When advantageous interactions are allowed in a known network, altruism decreases but trust and trustworthiness do not change. This finding suggests that individuals internalize pre-existing norms and that crime has persistent and long-term effects.

  
  

  
  
  
  
  
  
  
  






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  COMMUNITY ASPIRATIONS AND COLLECTIVE ACTION
  
  
  
  
  
  
  
  

  
  
  
  Christina Martini, Marcela Ibanez Diaz and Menusch Khadjavi
  

  We propose that community aspirations defined as the preferences for goals that increase communal well-being are essential for cooperation in collective action problems. This paper conceptualizes community aspirations and investigates whether the proposed measure is associated with cooperation. The second part of the paper presents the results of a randomized controlled trial aimed at lifting community aspirations by giving real-world examples of successful collective action. Survey and experimental data from rural Zambia indicate that individuals hold optimistic community aspirations compared with the current situation. We find some supporting evidence for a positive correlation between community aspirations and cooperation measured using experimental and survey data. Exposure to the examples of collaboration increases cooperation but harms community aspirations. Instead, we find that the mechanism could be through a change in the perceived norm of cooperation.

  
  

  
  
  
  
  
  
  
  








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  COMMUNITY ASPIRATIONS AND COOPERATION: PRESCRIPTIVE VS.DESCRIPTIVE ROLE MODELS
  
  
  
  
  
  
  
  

  
  
  
  Marcela Ibanez Diaz, Menusch Khadjavi and Christina Martini
  

  
  This paper examines the hypothesis that cooperation depends on individuals' aspirations for their community welfare. We test whether videos depicting successful examples of collective action or improved living conditions in rural areas can shape community aspirations and increase cooperation among rural communities in Zambia. The results of a lab in the field experiment indicate that compared with the no video condition, unconditional contributions are higher in the video that presents village life while the collective action video does not affect cooperation. When both contributors watch the village life video, conditional contributions are also higher than the control treatment. This result points to the importance of social norms in the evolution of collective action. We find that individual aspirations are significantly negatively related to the unconditional contribution decision, while community aspirations do not correlate with contribution levels.

  
  

  
  
  
  
  
  
  
  




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  THE NATURAL RESOURCE CURSE? EMPIRICAL EVIDENCE FROM COLOMBIA
  
  
  
  
  
  
  
  

  
  
  
  María Natalia Cantet, Marcela Ibanez, Juan Carlos Muñoz Mora, Tatiana Orozco, Gerhard Riener, Carlos Adrián Saldarriaga Isaza
  

  
  

  
  We investigate the impacts of gold mining on local socio-economic conditions. Taking Antioquia, Colombia, as a case study, our main research question is whether the expansion of gold mining activities is associated with a decrease in poverty and inequality in the region. We study this question from four main perspectives:
  

  
  
  

  
  
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     Land use and tenure security: We examine whether gold mining is associated with changes in land use and tenure security, providing evidence on whether gold mining triggers land grabbing (Hausermann et al. 2018).
     
  
  
  
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     Health impacts: We investigate the effects of the arrival of gold mining on physical and mental health.
     
  
  
  
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     Female empowerment: We analyze the impact of economic opportunities on female empowerment. Building on the existing literature and using an innovative economic experiment, we examine whether women lose influence over household income decisions.
     
  
  
  
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     Environmental preferences: We investigate whether individuals are willing to reduce adverse environmental effects associated with economic development projects. Using a natural experiment, we examine participants’ willingness to sign a petition to halt an infrastructure project in a biodiversity hotspot in Colombia.
     
  
  

  
  

  
  
  
  
  
  
  
  





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  THE COSTS OF BETRAYAL AVERSION: THE CASE OF VANILLA PRODUCTION IN MADAGASCAR
  
  
  
  
  
  
  
  

  
  
  
  Marcela Ibanez, Gerhard Riener and Viviana Urueña
  

  This paper provides field evidence on betrayal aversion among farmers in rural Madagascar. We show that about 30 percent of the farmers avoid risk more when a person rather than nature determines the outcome. However, we also identify a substantial degree of betrayal neutral and betrayal loving behavior. Betrayal aversion is associated with lower investments in vanilla production, particularly in areas with high criminality. Our findings show the importance of implementing initiatives that aim at reducing crime.