ICES Brown Bag for April 27

Events, Seminars | April 22, 2017

Join us for an ICES Brown Bag Lecture, featuring Chew Soo Hong.

Prof. Chew, of the National University of Singapore, will discuss his paper Haze and Decision Making: A Natural Laboratory Experiment (Abstract). The talk will take place on Thursday, April 27th, from 11:00am to 12:00pm, in room 5075 of the Metropolitan Building, Arlington campus.

Coffee and dessert will be provided.

Please visit the Brown Bag Schedule to learn more about the Brown Bag series.

Abstract

The adverse impact of haze on health and its association with a range of economic outcomes have received increasing attention in the literature. This paper is a first attempt at investigating the causal effect of haze (proxied by PM2.5) directly on decision making in a natural laboratory experiment. Our experiment was conducted in Beijing over five days in October 2012 with highly varying levels of PM2.5, before this measure became commonly used in China the next year. An increase in the level of PM2.5 yields an increase in risk affinity over losses and in risk aversion and ambiguity aversion over gains. In temporal decision making, subjects are more impatient when discounting in a remote comparison, but not for tradeoffs over the near term. For other-regarding behavior, subjects exhibit greater equity consciousness in altruistic giving and become less prosocial in contributing less in a public good game, exhibiting lower positive reciprocity (greater negative reciprocity) in a sequential prisoner’s dilemma, and demanding greater fairness treatment in the ultimatum game. In strategic thinking, increased haze diminishes the motive to win in the second-price sealed bid auction and increases the departure from equilibrium behavior in the p-Beauty game. These findings provide a preferential foundation to the results in several recent paper linking haze to real-world economic variables including worker productivity, movie attendance, violent crime, and performance of the housing and the stock markets.

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