Economics Seminar（2016-20）

Topic: Haze and decision making: A natural laboratory experiment

Speaker: CHEW Soo Hong, National University of Singapore

Time: Tuesday, December 13, 14:00-15:30

Place: Room 217, Guanghua Building 2

Abstract:

The adverse impact of haze on health and related economic outcomes has been extensively documented in the literature. This paper represents a first attempt at investigating the effect of haze directly on decision making in a natural laboratory experiment in Beijing over consecutive days with varying levels of PM2.5 before this measure became more commonly known during 2013 in China. We find that an increase in the level of haze yields an increase in the degree of risk aversion when facing gain-oriented risks with moderate probabilities, the degree of risk tolerance when facing a loss oriented even-chance risk, and the degree of ambiguity aversion, but a decrease in the degree of fanning out in terms of Allais behaviour. In terms of time preference, subjects are more impatient when discounting over a remote time horizon, but not over tradeoffs in the near term. For other-regarding preference, an increase in haze leads to a greater degree of selfishness in the Andreoni-Miller dictator game when the price of giving is low, a greater degree of inequity aversion in the ultimatum game, and a greater degree of non-cooperativeness in the sequential prisoner’s dilemma. In strategic thinking, haze leads to greater deviations from bidding one’s private value in a second-price sealed bid auction and higher levels of guesses in the p-Beauty game. These results are robust with respect to varying the time window over which we average the level of haze. In establishing a causal link between haze and decision making, our paper contributes to the nascent and rapidly growing literature on the impact of haze upon various facets of life, including education outcome, crime rate, and financial market.

Introduction:

CHEW Soo Hong is a Professor at the National University of Singapore.His research specialties are decision theory, behavioral and biological economics, experimental economics. His research papers have been published in, among others, Proceedings of the National Academy of Sciences, Neuroimage, Behavior Frontiers in Behavioral Neuroscience, Proceedings of the Royal Society B: Biological Sciences, Psychoneuroendocrinology.

//www.fas.nus.edu.sg/ecs/people/profile/ecscsh.html

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