Essays on Private Information in Village Economies
General Material Designation
[Thesis]
First Statement of Responsibility
Nishimura, Naoki
Subsequent Statement of Responsibility
Schechter, Laura
.PUBLICATION, DISTRIBUTION, ETC
Name of Publisher, Distributor, etc.
The University of Wisconsin - Madison
Date of Publication, Distribution, etc.
2019
PHYSICAL DESCRIPTION
Specific Material Designation and Extent of Item
170
DISSERTATION (THESIS) NOTE
Dissertation or thesis details and type of degree
Ph.D.
Body granting the degree
The University of Wisconsin - Madison
Text preceding or following the note
2019
SUMMARY OR ABSTRACT
Text of Note
This dissertation aims to improve our understanding of information asymmetries in village economies. The first chapter of this dissertation looks at how local communities assess the economic conditions of villagers in rural Bangladesh. There is a gap between income measured in household surveys and economic conditions as perceived by villagers. I discuss possible sources of this gap, including elite capture, measurement error, transitory income shocks, information asymmetries, and the possibility that villagers think factors other than income are important. I find that villagers put different weights on each variable than those estimated by income regression. For example, even after controlling for income, households with more land ownership and migrant household members are considered to be richer. The second chapter of this dissertation looks at microfinance (MF) and income-hiding. Wealthier households have been less likely to take MF due to its high cost. Thus, MF loans may be an appropriate tool for borrowers to signal that they are poor, thereby decreasing their expected contribution to public goods. I construct a costly falsification model, and I test the model's predictions using data from rural Bangladesh. I find that MF borrowers are judged to be poorer by local leaders, and they disproportionally increase their private consumption. The third chapter of this dissertation looks at informal risk-sharing within villages. Although villagers generally know their neighbors well, even very close relatives do not know the household's exact income. I construct a two-sided dynamic private information model in which income is private information. I then show that the dynamic programming problem can be written in a recursive and numerically solvable form. Using household data from rural India, I test which of the alternative model's predictions best fit the survey data: autarky, perfect risk-sharing, static and dynamic limited commitment, and the private information model. I find that the dynamic limited commitment model performs the best, while the private information model cannot solely explain the observed features of the consumption path. I also show the different welfare effects of a counterfactual policy intervention across different regimes, which illustrates the importance of understanding the frictions within villages.