Wednesday, January 30, 2013
Catherine Ambler Economics Talk
The Economics Department invites the college community to attend a talk by Economics search candidate Catherine Ambler of the University of Michigan. Her talk is entitled "Don't Tell on Me: Experimental Evidence of Asymmetric Information in Transnational Households."
- Location: Fowler 210
- Time: 8:30 AM - 9:30 AM
- Sponsor: Economics
Although most theoretical models of household decision making assume perfect information, empirical studies suggest that information asymmetries can have large impacts on resource allocation. In this study, I demonstrate the importance of these asymmetries in transnational households, where physical distance between family members can make information barriers especially acute. I implement an experiment among 1,300 Salvadoran migrants in Washington, DC and their family members in El Salvador that examines how (1) changing the ability of participants to observe each other and (2) revealing migrant preferences can affect the sending and spending of remittances. Migrants make an incentivized decision over how much of a cash windfall to keep and how much to send home, and recipients decide how to allocate the spending of a remittance. Migrants remit significantly more when their choice is observed by recipients, and this effect is concentrated among pairs where recipient ability to punish migrants is plausibly high. The results support a model of remittance sending where migrants react strategically to being monitored, but only when recipients can enforce remittance agreements. Recipients make spending choices closer to the migrants’ preferences when they are revealed, suggesting that recipients’ choices may be inadvertently affected by imperfect information on migrant preferences. Together, these results indicate that information imperfections in families are varied and can affect resource allocation in both strategic and inadvertent ways.