Economic Development

Abstract:
Using data from a randomized field experiment in the setting of community groups in rural Pakistan, I investigate whether the visibility of an individual's choice to their peer group affects their willingness to pay for water treatment products. I find evidence in favor of greater conformity with group behavior in public, with randomization into public bidding increasing the odds of individuals bidding closer to their expectations regarding the average group bid. The intersection of preferences for conformity with low expectations regarding the average willingness to pay for the product results in lower bids in public than private. On the other hand, bidders who express no expectations regarding group behavior have higher bids when randomized into public bidding, in line with status seeking in the absence of motives to conform. I find stronger patterns of conformity in environments characterized by high levels of water contamination. However, priming bidders with salience of health externalities and the negative spillovers from poor investment in preventative health weakens conformity trends. When self-selection into bidding environments is permitted, conformity trends decline and more standard status seeking motivations emerge.