We evaluate the impact of technology adoption subsidies on in- vestment behavior in an individual choice experiment. In a laboratory setting professional managers are confronted with an intertemporal decision problem in which they have to decide whether or not to search for, and possibly adopt, a new technology. Technologies differ in the per-period benefits they yield, and their purchase price increases with the per-period benefits provided. We introduce a subsidy on the more expensive technologies (that also yield the larger per-period benefits), and find that the subsidy scheme induces agents to search for and adopt these more expensive technologies even though the subsidy itself is too small to render these technologies profitable. We speculate that the result is driven by the positive connotation (affect) that the concept 'subsidy' invokes.

Additional Metadata
Keywords framed field experiment, search model, technology subsidies
JEL Design of Experiments (jel C9), Information, Knowledge, and Uncertainty (jel D8), Taxation, Subsidies, and Revenue (jel H2)
Publisher Tinbergen Institute
Persistent URL hdl.handle.net/1765/10750
Series Tinbergen Institute Discussion Paper Series
Journal Discussion paper / Tinbergen Institute
van der Heijden, E.C.M, Potters, J.J.M, van Soest, D.P, Vollebergh, H.R.J, & Aalbers, R.F.T. (2007). Technology Adoption Subsidies: An Experiment with Managers (No. TI 2007-082/3). Discussion paper / Tinbergen Institute. Tinbergen Institute. Retrieved from http://hdl.handle.net/1765/10750