TY - JOUR

T1 - Are non-fungible payments attractive when they reduce risk exposure? Evidence from Colombia

AU - Cano, Alexander

AU - Cortés, Darwin

AU - Mantilla, César

AU - Prada, Laura

AU - Restrepo, Medardo

N1 - Publisher Copyright:
© 2024 Public Library of Science. All rights reserved.

PY - 2024/1

Y1 - 2024/1

N2 - We conducted a lab-in-the-field experiment in which 214 Colombian rural workers must choose between cash or voucher payment for completing a real effort task. Although the voucher may be perceived as non-fungible, it halves the probability of suffering a negative shock that will reduce the participant’s payment by two-thirds. Participants made four decisions in which we vary the voucher values such that this payment method offers, in expectation, between 88% to 123% of the cash payment (fixed across decisions). We find that uptake rates go from 32% to 56%, from the least to the most generous voucher. These rates are consistently larger compared to a reference sample of undergrad students from the same region (p–values from the χ2 tests for all four decisions fall below 0.035). Our between-subjects variations reveal that presenting the vouchers in descending order yields a higher uptake than the ascending order (p < 0.001 for the corresponding coefficient in a tobit and ordered logit regressions including municipality characteristics, an effect driven by the two decisions with the lowest voucher values, with p–values of 0.008 and 0.072 in the χ2 tests, respectively). We interpret this result as an endowment effect of the voucher’s risk reduction.

AB - We conducted a lab-in-the-field experiment in which 214 Colombian rural workers must choose between cash or voucher payment for completing a real effort task. Although the voucher may be perceived as non-fungible, it halves the probability of suffering a negative shock that will reduce the participant’s payment by two-thirds. Participants made four decisions in which we vary the voucher values such that this payment method offers, in expectation, between 88% to 123% of the cash payment (fixed across decisions). We find that uptake rates go from 32% to 56%, from the least to the most generous voucher. These rates are consistently larger compared to a reference sample of undergrad students from the same region (p–values from the χ2 tests for all four decisions fall below 0.035). Our between-subjects variations reveal that presenting the vouchers in descending order yields a higher uptake than the ascending order (p < 0.001 for the corresponding coefficient in a tobit and ordered logit regressions including municipality characteristics, an effect driven by the two decisions with the lowest voucher values, with p–values of 0.008 and 0.072 in the χ2 tests, respectively). We interpret this result as an endowment effect of the voucher’s risk reduction.

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U2 - 10.1371/journal.pone.0296299

DO - 10.1371/journal.pone.0296299

M3 - Research Article

C2 - 38165862

AN - SCOPUS:85181452206

SN - 1932-6203

VL - 19

JO - PLOS ONE

JF - PLOS ONE

IS - 1 January

M1 - e0296299

ER -