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Title: Incentives, reputation and learning
Author: Davies, Elwyn
Awarding Body: University of Oxford
Current Institution: University of Oxford
Date of Award: 2016
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Many economic interactions are characterized by imperfect information and imperfect enforcement. This thesis analyzes the use and the effectiveness of incentives, reputation and learning and how economic agents use them to mitigate the problems caused by both. Chapter 1 presents experimental evidence on the use of price incentives and reputational incentives from gift-exchange game lab experiments in Ghana and the United Kingdom. While in the United Kingdom, like in other experiments, participants assigned the role of employers reward high effort by increasing wages and punish low effort by decreasing wages, it appears that Ghanaian participants refrain from doing so. This results in lower average effort in Ghana compared to the United Kingdom. Introducing competition for workers or a reputation mechanism does not improve effort. Chapter 2 further examines low worker productivity in Ghana by empirically testing two other incentive mechanisms: the employer giving feedback and the worker making a pledge in advance. While these incentives on average do not affect effort, they do increase conditional reciprocity of the worker's behalf. Workers receiving a high wage are more likely to exert high effort when feedback and promises are possible. Chapter 3 presents a partial-equilibrium model showing how business networks can lead to higher quality firms overall. The presence of such networks leads to a filtering effect, which means that fewer low-quality firms produce, but also to a lock-out effect, implying that networks redistribute demand to their own members and make production outside the network less viable. Chapter 4 presents a model and experimental evidence on learning and strategic experimentation in the context of a repeated ultimatum game. The model predicts that Proposers make low offers in early periods, hoping that learning will benefit them in later periods. However, when Responders also have strategic considerations, the Responders will strategically reject low offers, which will optimally lead to higher offers. A series of online experiments finds evidence that Responders reject low offers, but cannot disentangle this from distributional preferences and reciprocity concerns.
Supervisor: Beggs, Alan ; Fafchamps, Marcel Sponsor: Economic and Social Research Council ; Department for International Development (DfID)
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available