Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Gothenburg, Department of Economics

No 723: Passive Learning and Incentivized Communication: A Randomized Controlled Trial in India

Yonas Alem () and Eugenie Dugoua
Additional contact information
Yonas Alem: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O. Box 640, SE 40530 GÖTEBORG, Sweden
Eugenie Dugoua: Columbia University, Postal: P.O. Box 640, SE 40530 GÖTEBORG, Sweden

Abstract: In order to understand the extent of the information barrier to adoption of a household technology, we designed a randomized controlled trial on willingness to pay (WTP) for solar lanterns in India. We gave high quality solar lanterns to randomly selected `seed' households in a non-electrified region of the state of Uttar Pradesh. Three friends of the seed household were randomly assigned to one of the following three groups: control, passive learning and incentivized communication. We elicit WTP from the control group when the seed receives the solar lantern. We elicit WTP from the friends in the passive learning and incentivized communication groups thirty days after the seed receives the solar lantern. We show that passive learning increases WTP by 90% and incentivized communication by 145% relative to the control group. We also show that learning from others is the mechanism that drives the observed WTP by peers.

Keywords: Social Networks; Passive Learning; Active Communication; Solar Lantern

JEL-codes: D83; O33; Q21; Q42

48 pages, March 2018

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