Social Learning about Environmental Innovations : Experimental Analysis of Adoption Timing
Laboratory experiments were conducted to investigate how private and public information affect the selection of an innovation and the timing of adoption. The results shed light on the behavioral anomaly called the “energy-efficiency gap” in which c...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/732971485375911214/Social-learning-about-environmental-innovations-experimental-analysis-of-adoption-timing http://hdl.handle.net/10986/25963 |
| Summary: | Laboratory experiments were conducted to
investigate how private and public information affect the
selection of an innovation and the timing of adoption. The
results shed light on the behavioral anomaly called the
“energy-efficiency gap” in which consumers and firms delay
adoption of cost-effective energy and environmental
innovations. The subjects chose between competing
innovations with freedom to select the timing of their
adoption, relying on private signals and possibly
observation of their peers. When deciding whether to make an
irreversible choice between safe and risky technologies,
roughly half the subjects delayed adoption beyond the time
indicated by equilibrium behavior -- confirming the
behavioral anomaly found for environmental innovations. When
they did adopt, the subjects gave proportionately more
weight to their private signals than to the actions of their
peers, implying they do not ‘herd’ on the latter.
Nevertheless, when the subjects observed their peers’
decisions, they did accelerate the timing of their adoption
despite not necessarily imitating their peers. This result
occurred even when the payoffs were statistically
independent, as if observing prior adoptions exerted ‘peer
pressure’ on the subjects to act. The experimental results
suggest that rapid dissemination of information about peer
actions can speed up the diffusion of environmental
innovations and improve selection among competing technologies. |
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