Ruhr Economic Papers

Ruhr Economic Papers #895

Learning from Unincentivized and Incentivized Communication: A Randomized Controlled Trial in India

by Yonas Alem and Eugenie Dugoua

RWI, 02/2021, 101 S./p., 12 Euro, ISBN 978-3-96973-035-5 DOI: 10.4419/96973035

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Abstract

Interactions among peers of the same social network play significant roles in facilitating the adoption and diffusion of modern technologies in poor communities. We conduct a large-scale randomized controlled trial in rural India to identify the impact of information from friends on willingness to pay (WTP) for high-quality and multi-purpose solar lanterns. We offered solar lanterns to seed households from 200 non-electrified villages and randomly assigned three of their friends to two communication treatments (unincentivized and incentivized) that led to different exposure to their seed friend. We also introduce a second treatment to investigate whether the seed’s gender impacts the magnitude of peer effects. We show that unincentivized communication increases WTP for solar lanterns by 90% and incentivized communication by 145%, but gender doesn’t seem to matter. We also show that learning from others is the mechanism that drives the increase in WTP. Our findings have significant implications for policies that aim at promoting the diffusion of new technologies in developing countries.

JEL-Classification: O33, D83, Q21, Q42

Keywords: Technology adoption; peer effects; information flow; solar lantern

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