Self-selected intervals in psycho-physic experiments and the measurement of willingness-to-pay
Journal of Behavioural and Experimental Economics, Volume 98, June 2022, 101839
Self-selected intervals in psycho-physic experiments and the measurement of willingness-to-pay
Journal of Behavioural and Experimental Economics, Volume 98, June 2022, 101839
Abstract:
Standard elicitation approaches used to obtain quantitative information typically assumes that individuals can provide a precise value. For unfamiliar (as as well as familiar) goods, this is a strong assumption. We suggest they use of self-selected intervals, in which the shortest possible interval is a point, i.e. the standard case. To explore this idea we use a state-of-the-art psychophysics lab experiment (N=60), in which five ”focal” sound environments were randomly inserted into a set of 30 pairwise comparisons to elicit the subjective value of reducing ambient noise.
We found that valuation uncertainty, measured as the length of a self-selected interval, is independent of the psychophysical conditions. The length of the interval is determined mainly by the subjective value of improving the environment, independent of the level of noise. These results, according to our review of the literature, are new. Interval elicitation enables individuals to provide reasonably consistent rankings of environmental improvements, even if individuals find it difficult to pin down a precise value. Thus, self-selected interval elicitation seems to have merit.
Present Bias in Renewable Resources Management Reduces Agent’s Welfare
Forthcoming in Journal of Interdisciplinary Economics, Volume 34 Issue 2, July 2022
Abstract:
This paper analyses the effects of myopic and present-biased preferences on the welfare of a naive agent when she is engaged in an intertemporal harvesting activity from a stock of renewable resources. The analysis is conducted by taking into account also the nature of present-biased behaviors as phenomena that are derived from a dual system of discounting and of response to short and long-term stimuli.
In the task of harvesting from a stock of renewable resources, the present biased preferences of a naive agent create a conflict between the long run benefit of the agent and the short run desire. Thus, this paper demonstrates and argues that in the decision-making, which involves intertemporal choices in renewable resources management, the prevalence of naive behavior, strongly influenced by the emotional-affective system, can lead to a reduction in the overall utility enjoyed by the individual due to the present bias.
Cascading Defections from Cooperation Triggered by Present-Biased Behaviours in the Commons
CERE Working Paper, 2021:8
Abstract:
This work shows that defective behaviors from the cooperative equilibrium in the management of common resources can be fueled and triggered by the presence of agents with myopic behaviors. The behavior implemented by naïve agents, even if performed with cooperative intent, can activate a dynamic of cascading defections from the cooperative strategy within the harvesters’ group.
This paper demonstrates and discusses that the apparent and detectable decay of the cooperative choices in the dilemmas of common resources is not an exclusive and indisputable signal of an escalation in free- riding intentions but also an outcome of the present-biased preferences and myopic behaviors of the cooperative agents. Notably, within the context populated by conditional cooperators with a heterogeneous myopic discount factor, in the absence of information on agents’ intentions, the present- biased preferences can trigger a strategy that directs the community to excessively increase its harvesting level, even in presence of the other-regarding motives. Therefore, lowering cooperative behaviors can also be the effect of the absence of coordination instruments in response to the cognitive bias that influences human behaviors.
Other-Regarding Preferences and Social Norms in the Intergenerational Transfer of Renewable Resources when the Agent has Present-biased Preferences
CERE Working Paper, 2021:6
Abstract:
The paper analyzes the effects of present-biased preferences on the transfer of resources to future generations in the framework of renewable resource harvesting. The paper assumes that the current generation has other- regarding motivations for future generations, expressed through the adherence to spontaneous other-regarding preferences or social norms.
Because the short-sighted behavior imposed by the “dictatorship of the present” can cause a reduction in the well-being of future generations, despite the existence of social preferences, the model presented in this study demonstrates that if the social preferences are also expressed through social norms that prescribe no reevaluation of the harvesting decisions, a mitigation of the effect of present bias on intergenerational equity can occur.
In this paper, the model presented shows the properties that a social norm should have to avoid the intergenerational inequality that can be derived from present-biased preferences in intergenerational renewable resource management. Additionally, the model defines the necessary and sufficient conditions such that the implementation of the social norm can neutralize the effect of present-biased preferences, guaranteeing the optimal harvesting path defined at the beginning.
The Bioeconomy, Circularity, and Sustainability - How the Concepts Are Conceptualized in the Forestry Sector
CERE Working Paper, 2022:03
Abstract:
This report describes the concepts of bioeconomy, sustainability, and circularity, as well as how they relate to each other. Using forests and forestry sectors as illustration, this report also discusses how a sustainable circular bioeconomy may be conceptualized. Bioeconomy is a concept permanently evolving due to its major role in political and economic debates, in particular in the EU. In recent times, the bioeconomy concept has been connected to circularity to further enhance sustainability and promote development of a bio-based economy. Forests have a key role in the development of the bioeconomy as they provide biomass that can replace fossil fuel–based materials. However, a forest-based bioeconomy is dependent on a balance between biomass production and sustainable ecosystem management. Thus implementation of a forest-based bioeconomy should take into account the environmental limits of new biotechnologies and value chains that require massive amounts of bioresources, and it must follow a sustainable development path that recognizes the innovative processes that can drive the bioeconomy forward.