• BRITE Seminar Seires.  This semester BRITE will be hosting or co-hosting a couple of outside workshop talks.

  1. Thursday February 21st, from 3:45 - 5:00 in Taylor Hall Room 103, Frank Schilbach from MIT will present "Does Poverty Lower Productivity?" Frank is one of the rising stars of behavioral economics and is doing fascinating work in developing countries related to issues of self-control and poverty. BRITE Lab is helping to host this talk joint with the Development Workshop in Ag and Applied Economics. Please put this on your calendar and think about meeting with Frank while he is here.  
  2. Friday February 15th, from 2:30 - 3:45 at 1280 Grainger Hall, Paola Mallucci (UW Madison, Marketing) will present a paper called "Risk and Fairness" that reports on data partly collected at the BRITE Lab.  

  • Abstract:   In channel negotiation between suppliers and retailers there is often significant uncertainty that is most often unevenly distributed between the two firms. While there is ample evidence in the literature that both risk aversion and fairness would matter in such context, there is a lack of evidence on how subjects’ beliefs and preferences for risk and fairness interact, leaving open the question of what is the fair way of compensating risk aversion. To address the question, we model a pricing decision between a supplier and a retailer who may not be risk neutral and may care for fairness. We then compare the prediction of the theory model with data from two incentive compatible experiments. We find that subject’s behavior is incompatible with preferences for risk and/or fairness in which subjects beliefs about the other players preferences are consistent with their actual preferences. Using a structural approach, we then estimate the behavioral parameters and find that suppliers underestimate the risk aversion of retailers leading to significant dead-weight losses in situations where the retailer (vs. the supplier) carries the risk.