Social Learning About Environmental Innovations: Experimental Analysis of Adoption Timing

37 Pages Posted: 26 Jan 2017

See all articles by Julian C. Jamison

Julian C. Jamison

University of Exeter Business School - Department of Economics; World Bank eMBeD (Mind, Behavior, and Development); Massachusetts Institute of Technology (MIT) - Abdul Latif Jameel Poverty Action Lab (J-PAL); Innovations for Poverty Action

David M. Owens

Haverford College

Glenn Woroch

University of California, Berkeley; Compass Lexecon; Georgetown Center for Business & Public Policy

Date Written: January 25, 2017

Abstract

Laboratory experiments were conducted to investigate how private and public information affect the selection of an innovation and the timing of adoption. The results shed light on the behavioral anomaly called the "energy-efficiency gap" in which consumers and firms delay adoption of cost-effective energy and environmental innovations. The subjects chose between competing innovations with freedom to select the timing of their adoption, relying on private signals and possibly observation of their peers. When deciding whether to make an irreversible choice between safe and risky technologies, roughly half the subjects delayed adoption beyond the time indicated by equilibrium behavior -- confirming the behavioral anomaly found for environmental innovations. When they did adopt, the subjects gave proportionately more weight to their private signals than to the actions of their peers, implying they do not "herd" on the latter. Nevertheless, when the subjects observed their peers' decisions, they did accelerate the timing of their adoption despite not necessarily imitating their peers. This result occurred even when the payoffs were statistically independent, as if observing prior adoptions exerted 'peer pressure' on the subjects to act. The experimental results suggest that rapid dissemination of information about peer actions can speed up the diffusion of environmental innovations and improve selection among competing technologies.

Keywords: Science Education, Global Environment, Science Mathematics and Technology, Scientific Information & Communications Technologies, Innovation, Science Policies, Biotechnology, General Technology

Suggested Citation

Jamison, Julian C. and Owens, David M. and Woroch, Glenn, Social Learning About Environmental Innovations: Experimental Analysis of Adoption Timing (January 25, 2017). World Bank Policy Research Working Paper No. 7955. Available at SSRN: https://ssrn.com/abstract=2906106

Julian C. Jamison (Contact Author)

University of Exeter Business School - Department of Economics ( email )

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Exeter, EX4 4RJ
United Kingdom

World Bank eMBeD (Mind, Behavior, and Development) ( email )

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Massachusetts Institute of Technology (MIT) - Abdul Latif Jameel Poverty Action Lab (J-PAL) ( email )

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Innovations for Poverty Action ( email )

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David M. Owens

Haverford College ( email )

Haverford, PA 19041
United States
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Glenn Woroch

University of California, Berkeley ( email )

Department of Economics
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Berkeley, CA 94720-3880
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HOME PAGE: http://elsa.berkeley.edu/~woroch/

Compass Lexecon ( email )

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HOME PAGE: http://www.compasslexecon.com/professionals/bio?id=141

Georgetown Center for Business & Public Policy ( email )

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HOME PAGE: http://cbpp.georgetown.edu/

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