03 April 2013

Water managers* are selfish like us

That's the title of the first publication from my dissertation, which was accepted five years ago and just published in the Handbook on Experimental Economics and the Environment.

Abstract: Managers of public water companies present themselves and are seen as public servants maximizing public welfare. Because water is rarely allocated through market mechanisms, this maximization requires that managers cooperate in a bureaucratic version of a social dilemma. Members of the Metropolitan Water District of Southern California (MET, a consumer cooperative) face just such a dilemma: MET's member agencies make policies as members (setting prices, for example) that they obey as consumers. This chapter reports the results of experiments that quantified cooperation among MET's member agency managers (MAMs) using public goods games. The results indicate that MAMs are neither relatively nor absolutely cooperative in comparison to, respectively, groups of students and a threshold efficiency consistent with maximizing social welfare. Additional results on type indicate that MAMs have a larger share of cooperators and free-riders than students, but MAMs are twice as likely to be free-riders as cooperators. MAM also appear to engage in cheap talk: Their responses to trust questions (stated preference) have no correlation with their experimental behavior (revealed preference); student preferences are correlated.

You can read the chapter (revised and improved since I originally wrote it) here [PDF].
* You might want to call them service providers or water stewards, but those titles are not appropriate if you take these results seriously.

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