Alistair Munro | National Graduate Institute for Policy Studies (GRIPS) (original) (raw)
Books by Alistair Munro
This comprehensive text breaks the mould of traditional Public Sector Economics texts. It provid... more This comprehensive text breaks the mould of traditional Public Sector Economics texts. It provides the student with a solid grounding in theory and focuses on how this theory can be applied to a broad range of contemporary issues such as health and education, the monopoly regulation and privatisation, as well as taxes and incentives. This approach teaches the student to understand how the public sector interacts with the rest of the economy, why governments act in the way they do, enabling them to evaluate policies and their alternatives.
The economist’s advice to society rests largely on a picture of citizens as infinitely rational b... more The economist’s advice to society rests largely on a picture of citizens as infinitely rational beings, shrewd, calculating and above all consistent in their behaviour. But as the last thirty years of economic experiments and field work has revealed, humans are far from perfectly consistent. On the contrary, choices and preferences often seem highly sensitive to context. Systematic deviations from rationality – “anomalies” are widespread and they have been well-documented in the laboratory and the field. What then can the economist say about desirable public policies? Bounded Rationality and Public Policy brings together the work of experimental economists and applies it to public economics. Experimental evidence on anomalies such as the endowment effect, anchoring and mental accounts is presented and critically appraised. The implications of bounded rationality for the efficient boundaries of the state are considered. The author argues that in general bounded rationality does not imply a larger optimal role for the state and indeed the converse may be true. New kinds of policies based on the framing and labeling of choices are discussed and their impact is analysed. The author also considers optimal tax and benefit policy and the best role for stated preference and other methods widely employed in non-market valuation.
Papers by Alistair Munro
SSRN Electronic Journal, 2000
We devise and execute three experiments to test key features of models of household decision-maki... more We devise and execute three experiments to test key features of models of household decision-making. Using established couples (married and unmarried) we test income pooling, unanimity and Pareto efficiency. Subjects make choices individually and jointly and are asked to make predictions about their partner's choices. Unanimity is rejected. Income pooling is not rejected in joint choice but has less explanatory power in individual choice. In direct tests both sexes do not pool income completely, but in econometric tests across all tasks, women place an equal weight on payoffs but men discount their partner's payoffs by between 15 and 20%. We find that transparency has little impact on deviations from income pooling or indeed on behaviour generally. Many joint choices deviate from the Pareto principle in a systematic manner suggesting that choices made as a couple are more risk averse than individual decisions. JEL Codes: C920, D130, D80.
Journal of Economic Behavior & Organization, 2005
If you experience problems downloading a file, check if you have the proper application to view i... more If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large. ... As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it. ... Article provided by Elsevier in its journal Journal of Economic Behavior & Organization. ... No references listed on IDEAS You can help ...
Bounded Rationality and Public Policy, 2009
We have touched on issues surrounding tax in several of the previous chapters. In Chapter 7, for ... more We have touched on issues surrounding tax in several of the previous chapters. In Chapter 7, for instance, several of the standard merit wants models were analysed. The basic theme of this chapter is that even with an incomplete welfare ranking it is possible to make some claims about the nature of desirable tax policies. I support this argument in two ways
Bounded Rationality and Public Policy, 2009
The central propositions of welfare economics rest on the twin assumptions that each individual m... more The central propositions of welfare economics rest on the twin assumptions that each individual makes choices so as to maximize his or her own welfare and that social welfare is an increasing function of individual welfare alone. This approach, denoted standard welfare economics in Chapter 1, most starkly set out in microeconomic theory texts (eg Varian, 1978; Mas Colell et al., 1995) and in books on welfare economics, has attracted a long list of critics. Much of the work for which Amartya Sen won the Nobel prize for economics, for ...
Bounded Rationality and Public Policy, 2009
In economics, the term 'anomaly'usually refers to behaviour which does not conform to t... more In economics, the term 'anomaly'usually refers to behaviour which does not conform to the predictions of rational choice models. The argument of the introductory chapter was that anomalies are sufficiently common within economic behaviour and that there is sufficient predictability in decision-making biases to provide useful guidance for policy makers. The purpose of this chapter is to provide instances. Now, the gap between the predictions of economic theory and actual behaviour has been extensively documented elsewhere. ...
Pollution for sale: emissions trading and joint implementation, 1999
A fundamental result in environmental economics is that efficiency in pollution control requires ... more A fundamental result in environmental economics is that efficiency in pollution control requires allocating pollution abatement among sources so as to equalize marginal abatement costs. The welfare-theoretic foundation of this rule, modified appropriately when abatement by one source is not a perfect substitute for abatement by another due to locational differences, is well established for situations in which ambient concentrations are nonstochastic (Baumol and Oates, 1988). In situations where ambient concentrations are ...
The economist's advice to society rests largely on a picture of citizens as infinitely ratio... more The economist's advice to society rests largely on a picture of citizens as infinitely rational beings, shrewd, calculating and above all consistent in their behaviour. But as the last thirty years of economic experiments and field work has revealed, humans are far from perfectly consistent. On the contrary, choices and preferences often seem highly sensitive to context. Systematic deviations from rationality–“anomalies” are widespread and they have been well-documented in the laboratory and the field. What then can the economist say about ...
… quarterly journal of …, Jan 1, 1997
In many countries, spouses routinely hide income, consumption and assets from one another. In thi... more In many countries, spouses routinely hide income, consumption and assets from one another. In this paper, I provide a theoretical model in which hiding is costly and only some expenditure can be hidden. I characterise the set of ex ante Pareto efficient allocations and show by means of extended examples that in some cases it can be efficient for one or both partners to lie about their income. Examples also show that efficient hiding may not be a marker of power or weakness in the household decision-making process. As such, it may not be possible to make meaningful inference about the nature of the household simply by observing whether assets or income are hidden.
Based on a survey conducted with evacuees from the Fukushima radiation-affected region of Japan ... more Based on a survey conducted with evacuees from the Fukushima radiation-affected
region of Japan we examine intentions to return, eventually to the family homes. Many
respondents do not intend to return, particularly those with children, but higher income
households and those who evacuated to the same town are more likely to go back. Intentions are only weakly responsive to changes in radiation, suggesting that the ongoing policy of active decontamination may have only a limited impact on eventual resettlement
The Economic Journal, Jan 1, 2005
Environmental Science & Policy
Quarterly Journal of Economics, Jan 1, 1997
Using samples of polygamous and non-polygamous households from villages in rural areas south of K... more Using samples of polygamous and non-polygamous households from villages in rural areas south of Kano, Northern Nigeria we test basic theories of household behaviour. Husbands and wives play two variants of a voluntary contributions game in which endowments are private knowledge, but contributions are public. In one variant, the common pool is split equally. In the other treatment the husband allocates the pool (and wives are forewarned of this). Most partners keep back at least half of their endowment from the common pool, but we find no evidence that polygynous households are less efficient than their monogamous counterparts. We also reject a strong form of Bergstrom’s model of polygyny in which all wives receive an equal allocation. In our case, senior wives often receive more from their husbands, no matter what their contribution. Thus the return to contributions is higher for senior wives compared to their junior counterparts. When they control the allocation, polygynous men receive a higher payoff than their monogamous counterparts. We speculate on the implications of this pattern of investment and reward for the sustainability of polygynous institutions.
Journal of Public Economics, Jan 1, 2005
This paper reports an ‘adversarial collaboration’—a project carried out by two individuals or res... more This paper reports an ‘adversarial collaboration’—a project carried out by two individuals or research groups who, having proposed conflicting hypotheses, seek to resolve their dispute. It describes an experiment which investigates whether, when individuals consider giving up money in exchange for goods, they construe money outlays as losses or as foregone gains. This issue bears on the explanation of the widely observed disparity between willingness-to-pay (WTP) and willingness-to-accept (WTA) valuations of costs and benefits, which has proved problematic for contingent valuation studies. The results of the experiment are broadly consistent with the hypothesis that money outlays are perceived as losses.
We examine the feasibility of using a massively multiplayer online role-playing game (MMORPG) to ... more We examine the feasibility of using a massively multiplayer online role-playing game (MMORPG) to test economic theories. As a test vehicle we use the well-known endowment effect. Even though our goods are entirely virtual, our results confirm earlier results that individuals with more trading experience are less likely to exhibit status quo behaviour in trade. However, we also find evidence that highly experienced individuals are more likely to swap the item rather than keep it – i.e. there appears to be a propensity to ‘truck, barter and exchange’. A further experiment suggests that this feature is robust and is unlikely to be due to subject misperception or experimenter demand effects. However we are unable to eliminate selection effects as the source of our correlation between experience and propensity to trade. We conclude that virtual economies may be useful venues for field experiments.
This comprehensive text breaks the mould of traditional Public Sector Economics texts. It provid... more This comprehensive text breaks the mould of traditional Public Sector Economics texts. It provides the student with a solid grounding in theory and focuses on how this theory can be applied to a broad range of contemporary issues such as health and education, the monopoly regulation and privatisation, as well as taxes and incentives. This approach teaches the student to understand how the public sector interacts with the rest of the economy, why governments act in the way they do, enabling them to evaluate policies and their alternatives.
The economist’s advice to society rests largely on a picture of citizens as infinitely rational b... more The economist’s advice to society rests largely on a picture of citizens as infinitely rational beings, shrewd, calculating and above all consistent in their behaviour. But as the last thirty years of economic experiments and field work has revealed, humans are far from perfectly consistent. On the contrary, choices and preferences often seem highly sensitive to context. Systematic deviations from rationality – “anomalies” are widespread and they have been well-documented in the laboratory and the field. What then can the economist say about desirable public policies? Bounded Rationality and Public Policy brings together the work of experimental economists and applies it to public economics. Experimental evidence on anomalies such as the endowment effect, anchoring and mental accounts is presented and critically appraised. The implications of bounded rationality for the efficient boundaries of the state are considered. The author argues that in general bounded rationality does not imply a larger optimal role for the state and indeed the converse may be true. New kinds of policies based on the framing and labeling of choices are discussed and their impact is analysed. The author also considers optimal tax and benefit policy and the best role for stated preference and other methods widely employed in non-market valuation.
SSRN Electronic Journal, 2000
We devise and execute three experiments to test key features of models of household decision-maki... more We devise and execute three experiments to test key features of models of household decision-making. Using established couples (married and unmarried) we test income pooling, unanimity and Pareto efficiency. Subjects make choices individually and jointly and are asked to make predictions about their partner's choices. Unanimity is rejected. Income pooling is not rejected in joint choice but has less explanatory power in individual choice. In direct tests both sexes do not pool income completely, but in econometric tests across all tasks, women place an equal weight on payoffs but men discount their partner's payoffs by between 15 and 20%. We find that transparency has little impact on deviations from income pooling or indeed on behaviour generally. Many joint choices deviate from the Pareto principle in a systematic manner suggesting that choices made as a couple are more risk averse than individual decisions. JEL Codes: C920, D130, D80.
Journal of Economic Behavior & Organization, 2005
If you experience problems downloading a file, check if you have the proper application to view i... more If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large. ... As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it. ... Article provided by Elsevier in its journal Journal of Economic Behavior & Organization. ... No references listed on IDEAS You can help ...
Bounded Rationality and Public Policy, 2009
We have touched on issues surrounding tax in several of the previous chapters. In Chapter 7, for ... more We have touched on issues surrounding tax in several of the previous chapters. In Chapter 7, for instance, several of the standard merit wants models were analysed. The basic theme of this chapter is that even with an incomplete welfare ranking it is possible to make some claims about the nature of desirable tax policies. I support this argument in two ways
Bounded Rationality and Public Policy, 2009
The central propositions of welfare economics rest on the twin assumptions that each individual m... more The central propositions of welfare economics rest on the twin assumptions that each individual makes choices so as to maximize his or her own welfare and that social welfare is an increasing function of individual welfare alone. This approach, denoted standard welfare economics in Chapter 1, most starkly set out in microeconomic theory texts (eg Varian, 1978; Mas Colell et al., 1995) and in books on welfare economics, has attracted a long list of critics. Much of the work for which Amartya Sen won the Nobel prize for economics, for ...
Bounded Rationality and Public Policy, 2009
In economics, the term 'anomaly'usually refers to behaviour which does not conform to t... more In economics, the term 'anomaly'usually refers to behaviour which does not conform to the predictions of rational choice models. The argument of the introductory chapter was that anomalies are sufficiently common within economic behaviour and that there is sufficient predictability in decision-making biases to provide useful guidance for policy makers. The purpose of this chapter is to provide instances. Now, the gap between the predictions of economic theory and actual behaviour has been extensively documented elsewhere. ...
Pollution for sale: emissions trading and joint implementation, 1999
A fundamental result in environmental economics is that efficiency in pollution control requires ... more A fundamental result in environmental economics is that efficiency in pollution control requires allocating pollution abatement among sources so as to equalize marginal abatement costs. The welfare-theoretic foundation of this rule, modified appropriately when abatement by one source is not a perfect substitute for abatement by another due to locational differences, is well established for situations in which ambient concentrations are nonstochastic (Baumol and Oates, 1988). In situations where ambient concentrations are ...
The economist's advice to society rests largely on a picture of citizens as infinitely ratio... more The economist's advice to society rests largely on a picture of citizens as infinitely rational beings, shrewd, calculating and above all consistent in their behaviour. But as the last thirty years of economic experiments and field work has revealed, humans are far from perfectly consistent. On the contrary, choices and preferences often seem highly sensitive to context. Systematic deviations from rationality–“anomalies” are widespread and they have been well-documented in the laboratory and the field. What then can the economist say about ...
… quarterly journal of …, Jan 1, 1997
In many countries, spouses routinely hide income, consumption and assets from one another. In thi... more In many countries, spouses routinely hide income, consumption and assets from one another. In this paper, I provide a theoretical model in which hiding is costly and only some expenditure can be hidden. I characterise the set of ex ante Pareto efficient allocations and show by means of extended examples that in some cases it can be efficient for one or both partners to lie about their income. Examples also show that efficient hiding may not be a marker of power or weakness in the household decision-making process. As such, it may not be possible to make meaningful inference about the nature of the household simply by observing whether assets or income are hidden.
Based on a survey conducted with evacuees from the Fukushima radiation-affected region of Japan ... more Based on a survey conducted with evacuees from the Fukushima radiation-affected
region of Japan we examine intentions to return, eventually to the family homes. Many
respondents do not intend to return, particularly those with children, but higher income
households and those who evacuated to the same town are more likely to go back. Intentions are only weakly responsive to changes in radiation, suggesting that the ongoing policy of active decontamination may have only a limited impact on eventual resettlement
The Economic Journal, Jan 1, 2005
Environmental Science & Policy
Quarterly Journal of Economics, Jan 1, 1997
Using samples of polygamous and non-polygamous households from villages in rural areas south of K... more Using samples of polygamous and non-polygamous households from villages in rural areas south of Kano, Northern Nigeria we test basic theories of household behaviour. Husbands and wives play two variants of a voluntary contributions game in which endowments are private knowledge, but contributions are public. In one variant, the common pool is split equally. In the other treatment the husband allocates the pool (and wives are forewarned of this). Most partners keep back at least half of their endowment from the common pool, but we find no evidence that polygynous households are less efficient than their monogamous counterparts. We also reject a strong form of Bergstrom’s model of polygyny in which all wives receive an equal allocation. In our case, senior wives often receive more from their husbands, no matter what their contribution. Thus the return to contributions is higher for senior wives compared to their junior counterparts. When they control the allocation, polygynous men receive a higher payoff than their monogamous counterparts. We speculate on the implications of this pattern of investment and reward for the sustainability of polygynous institutions.
Journal of Public Economics, Jan 1, 2005
This paper reports an ‘adversarial collaboration’—a project carried out by two individuals or res... more This paper reports an ‘adversarial collaboration’—a project carried out by two individuals or research groups who, having proposed conflicting hypotheses, seek to resolve their dispute. It describes an experiment which investigates whether, when individuals consider giving up money in exchange for goods, they construe money outlays as losses or as foregone gains. This issue bears on the explanation of the widely observed disparity between willingness-to-pay (WTP) and willingness-to-accept (WTA) valuations of costs and benefits, which has proved problematic for contingent valuation studies. The results of the experiment are broadly consistent with the hypothesis that money outlays are perceived as losses.
We examine the feasibility of using a massively multiplayer online role-playing game (MMORPG) to ... more We examine the feasibility of using a massively multiplayer online role-playing game (MMORPG) to test economic theories. As a test vehicle we use the well-known endowment effect. Even though our goods are entirely virtual, our results confirm earlier results that individuals with more trading experience are less likely to exhibit status quo behaviour in trade. However, we also find evidence that highly experienced individuals are more likely to swap the item rather than keep it – i.e. there appears to be a propensity to ‘truck, barter and exchange’. A further experiment suggests that this feature is robust and is unlikely to be due to subject misperception or experimenter demand effects. However we are unable to eliminate selection effects as the source of our correlation between experience and propensity to trade. We conclude that virtual economies may be useful venues for field experiments.
Land Economics, Jan 1, 2008
Abstract While a dominated choice involves a situation in which one option clearly dominates anot... more Abstract While a dominated choice involves a situation in which one option clearly dominates another on all relevant dimensions, an asymmetrically dominated choice typically arises where at least two options do not dominate each other and one (but not both) of those options does dominate a third option. We demonstrate that the introduction of such an asymmetrically dominated option can have a significant impact upon choices between non-dominated options within the same choice set for non-market goods. Furthermore, we ...