Are Economics and Psychology Operating on Different Margins? Evidence from a Natural Experiment on Household Technology Diffusion

43 Pages Posted: 30 Jul 2022

See all articles by Matilde Giaccherini

Matilde Giaccherini

University of Rome Tor Vergata - Centre for International Studies on Economic Growth (CEIS); CESifo

David Herberich

University of Chicago - Booth School of Business

David Jimenez Gomez

Universidad de Alicante - Department of Economics

John A. List

University of Chicago - Department of Economics

Giovanni Ponti

Universidad de Alicante - Department of Economic Analysis; Luiss Guido Carli University - Department of Economics and Finance

Michael K. Price

University of Alabama - Department of Economics, Finance and Legal Studies

Abstract

This paper uses a field experiment and structural model to estimate the eff ects of prices and social norms on the decision to adopt a new household technology. Reduced form estimates show that while prices aff ect behavior along both the extensive and intensive margins, social norms only impact the extensive margin decision. Structural estimates uncover a negative correlation between behavioral parameters of our model: curiosity and social pressure . This points to important heterogeneity in the welfare eff ects of our intervention: whereas some consumers are “curious” and welcome the opportunity to learn about and purchase the new technology, others have no interest in learning about the technology and are made worse o ↵ by the social pressure of the ask. Policy simulations highlight a complementary relationship between psychological and economic instruments; the subsidy required to achieve any level of adoption is lower when combined with the provision of normative statements.

Keywords: Technology diffusion, field experiments.

Suggested Citation

Giaccherini, Matilde and Herberich, David and Jimenez Gomez, David and List, John A. and Ponti, Giovanni and Price, Michael K., Are Economics and Psychology Operating on Different Margins? Evidence from a Natural Experiment on Household Technology Diffusion. Available at SSRN: https://ssrn.com/abstract=4176888 or http://dx.doi.org/10.2139/ssrn.4176888

Matilde Giaccherini

University of Rome Tor Vergata - Centre for International Studies on Economic Growth (CEIS) ( email )

Via Columbia, 2
Rome, I-00133
Italy

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

David Herberich

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

David Jimenez Gomez

Universidad de Alicante - Department of Economics ( email )

Apartado de Correos 99
Alicante, 03080
Spain

John A. List

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

Giovanni Ponti (Contact Author)

Universidad de Alicante - Department of Economic Analysis ( email )

03080 Alicante
Spain

Luiss Guido Carli University - Department of Economics and Finance ( email )

Viale di Villa Massimo, 57
Rome, 00161
Italy

Michael K. Price

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States

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