Improving Spatial Coordination Rates under the Agglomeration Bonus Scheme: A Laboratory Experiment with a Pecuniary and a Non-Pecuniary Mechanism (NUDGE)

The Agglomeration Bonus is a Payment for Ecosystem Services scheme that focuses on achieving spatially-coordinated land use across neighboring, privately-owned agricultural properties. In this article, I use a laboratory experiment to examine the role of two mechanisms in incentivizing spatially coo...

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Bibliographic Details
Published inAmerican journal of agricultural economics Vol. 100; no. 1; pp. 172 - 197
Main Author Banerjee, Simanti
Format Journal Article
LanguageEnglish
Published Malden Oxford University Press 01.01.2018
Blackwell Publishing Ltd
Subjects
Agglomeration
Agricultural economics
Agricultural land
Community
Coordination
Coordination games
Ecosystem services
Ecosystems
Format
game payoffs
information
Laboratories
laboratory experimentation
Land use
landscapes
local network
nudge
Payments
social comparison theory
social norm
social comparison theory
local network
game payoffs
Coordination games
information
social norm
ecosystem services
nudge
Online AccessGet full text
ISSN0002-9092
1467-8276
DOI10.1093/ajae/aax066

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Summary:The Agglomeration Bonus is a Payment for Ecosystem Services scheme that focuses on achieving spatially-coordinated land use across neighboring, privately-owned agricultural properties. In this article, I use a laboratory experiment to examine the role of two mechanisms in incentivizing spatially coordinated land uses under the Agglomeration Bonus scheme on a geographical landscape resembling a local circular network. The first mechanism is pecuniary in format and varies the payoffs associated with coordination, while the second is a non-pecuniary mechanism that varies the amount of information participants have about the land use choices of other participants, specifically of those from another community. The payoff variation is implemented as a within-subject treatment and the information treatment in a between-subject format. The results indicate that the coordination rates are higher if payments associated with coordination are higher. Also, having information about outcomes of the Agglomeration Bonus scheme from another community improves spatial coordination rates in both communities.
Bibliography:This research has been funded by the University of Nebraska‐Lincoln. The author thanks the editor Timothy Beatty, and two anonymous referees whose comments have greatly improved this article. The author also thanks Hernan Bejarano, Timothy N. Cason, Nick Hanley, Lia Nogueira, Leah H. Palm‐Forster, James M. Walker, and Cory Walters, seminar attendees at the University of Delaware, and audiences at the Annual Heartland Environmental & Resource Economics Workshop, Northeastern Agricultural and Resource Economics Association (NAREA), and the Agricultural and Applied Economics Association (AAEA) Meetings for valuable comments and discussions. Finally, the author thanks Nadeeka Weerasekara for valuable research support. Any errors remain those of the author.
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ISSN:0002-9092
1467-8276
DOI:10.1093/ajae/aax066