Prices vs Standards and Firm Behavior Evidence from a Randomized Environmental Policy Experiment

Conny Wollbrant from the University of Gothenburg is visiting IFRO.

At an open guest lecture during lunch on Thursday the 29th October, he will give a presentation titled Prices vs Standards and Firm Behavior Evidence from a Randomized Environmental Policy Experiment (Magnus Hennlock, Åsa Löfgren, Conny Wollbrant)

In a randomized policy experiment we show that investment decisions of managers and senior advisors are strongly influenced by the type of policy instrument even when instruments are equally stringent in a fixed task environment. 164 managers and senior advisors recruited from industry were asked to maximize a firm’s net revenue by choosing an investment level and randomly assigned to one of three policy treatments: the tax, the subsidy or standards treatment. We find significant differences in behavior between treatments, both in terms of the level of investment and the reported reliance on available information about the firm’s costs. We argue that economic instruments and standard naturally focus attention on different aspects of the information set, leading to differences in the relative success of instruments. Because different policy instrument design requires different types of assessments by private actors, it can cause different attentional and judgmental biases, resulting in unintended inefficiencies not predicted by standard economic theory.

The presentation takes place in the meeting room 'Von Langen' at Rolighedsvej 23, at 12.00-13.00 on Thursday 29.10.2015.

The lecture is open to all and does not require registration.
Be aware: Limited seating.