Covert, Thomas R. “
Experiential and Social Learning in Firms: The Case of Hydraulic Fracturing in the Bakken Shale.” Cambridge, Massachusetts, {USA}: Harvard Environmental Economics Program, 2014.
AbstractLearning how to utilize new technologies is a key step in innovation, yet little is known about how firms actually learn. This paper examines firms' learning behavior using data on their operational choices, profits, and information sets. I study companies using hydraulic fracturing in North Dakota's Bakken Shale formation, where firms must learn the relationship between fracking input use and oil production. Using a new dataset that covers every well since the introduction of fracking to this forma- tion, I find that firms made more profitable input choices over time, but did so slowly and incompletely, only capturing 67% of possible profits from fracking at the end of 2011. To understand what factors may have limited learning, I estimate a model of fracking input use in the presence of technology un- certainty. Firms are more likely to make fracking input choices with higher expected profits and lower standard deviation of profits, consistent with passive learning but not active experimentation. Most firms over-weight their own information relative to observable information generated by others. These results suggest the existence of economically important frictions in the learning process.
dp53_covert.pdf dp53_covert_two-page-summary.pdf Allcott, Hunt, and Richard Sweeney. “
Information Disclosure through Agents: Evidence from a Field Experiment.” Cambridge, Massachusetts, {USA}: Harvard Environmental Economics Program, 2014.
AbstractWith a large nationwide retailer, we run a natural field experiment to measure the effects of energy use information disclosure, rebates, and sales agent incentives on demand for energy efficient durable goods. Sales incentives and rebates are complementary, but information and sales incentives alone have statistically and economically insignificant effects. Sales agents comply only partially with the experiment, targeting information at the most interested consumers but not discussing energy efficiency with the disinterested majority. In follow-up surveys, most consumers are aware of the energy efficient model and may even overestimate its benefits, suggesting that imperfect information is not a major barrier to adoption in this context.
dp52_allcott-sweeney.pdf dp52_allcott-sweeney_two-page-summary.pdf