Conference Agenda

Motivating oneself requires optimism about the future, but large-scale crises—such as climate change, war, or civil unrest—threaten this outlook. We investigate whether individuals downplay or deny such risks to sustain belief in the rewards of hard work.

We develop a theoretical model linking meritocracy beliefs to risk denial and provide causal empirical evidence supporting this relationship. Using survey data, we show that individuals who strongly believe in meritocracy are significantly more likely to downplay future risks. To establish causality, we employ the epidemiological approach, comparing second-generation immigrants who share the same environment but differ in inherited meritocracy beliefs. A one-standard-deviation increase in ancestral meritocracy beliefs significantly reduces belief in climate change and concerns about war. Our lab experiment is made to clearly pin down this novel mechanism: risk denial to sustain motivation.

Often, the consequences of environmental decision-making tend to be highly uncertain. This uncertainty may affect not only decision-makers themselves but also, potentially, bystanders. In this paper, we disentangle how risks to oneself, imposing risky externalities on others, and other-regarding preferences affect individual decision-making through a lab experiment. We find that players are more tolerant towards taking decisions that involve a loss for oneself (a risk to oneself) compared to taking decisions that involve a possible loss for someone else (a risky externality). Further, we find that the combined effect of taking risks and imposing risky externalities dampens an individual's willingness to maximize their profits, suggesting that combining risk and externalities lead prosocial and cautious behavior. Gender-specific analysis reveals that aversion to imposing risky externalities on others is primarily driven by men while the interaction between risk and risky externalities dampens risk-taking primarily among women. We also find men to be more likely to take risks and impose risky externalities on others if others can impose risky externalities on them as well. These findings provide nuanced insights into the behavioral dynamics of risk-aversion and prosociality under complex strategic settings.

Dissimilar to the increase in organic good consumption, the transition from conventional farming to organic was slowdown recently despite transparent benefits of organic farming to farmers. To solve this dilemma, understanding the roles of farmer individual preferences on their willingness to convert to organic farming is necessary. We conducted a lab-in-the-field experiment to elicit farmer's risk, ambiguity, time preferences along with a survey to obtain their social and other control factors and retrieved 611 completed respondents in Vietnam. We introduce a theoretical framework to propose two propositions on effects of risk and ambiguity attitudes on farmer's profit optimization. Our study employ an endogenous fractional model to reveal the impact farmer's risk and ambiguity preferences on their willingness to convert to organic farming. Specifically, the results indicate farmer's insurance and political affiliation good instruments to measure the endogenous effect of farmer's risk and ambiguity preference on their intended land conversion. Regarding control variables, farmers who are future bias and has low discount rate willing to adopt organic farming. Social trust and social norm stimulate the land conversion percentage of farmers to organic farming. To promote land conversion to organic farming, policymakers should design adjustable support schemes to decrease farmer's risk/ambiguity aversion such as Common Agricultural Policy (CAP) enacted in the EU. Timely support for early organic adopters is also substantial because organic farming is a long-term investment business.

Inspired by fertilizer use, we investigate behavior in settings where externalities arise from individual activities crossing an uncertain individual threshold. We show within an analytic model that only threshold uncertainty causes individual and social interests to diverge with individuals accepting a larger probability of crossing the threshold than is socially optimal. We then theoretically investigate the impact of information on thresholds as well as taxing the caused externalities for fertilizer use.

We test our predictions within an experiment with farmers as well as with students.

We find that, even without any regulation in place, farmers invest significantly less than their payoff maximizing level, but on average close to the social optimum. The probability of exceeding the individual threshold and the resulting damages significantly decrease when subjects are provided free informative signals or have to pay for caused damages. In contrast, taxing inputs (fertilizer use) does not decrease the risk of causing external effects.