When video streaming services like Netflix, Hulu, and Amazon Prime offer a one month free subscription, they are offering potential users an opportunity to experience the benefits of having access to a wide range of entertainment options, weigh the benefits against the monthly subscription cost, and hopefully, promote adoption in the long run. Essentially, Netflix is providing us a short-run subsidy to promote long-run adoption. So, what can we learn from Netflix’s marketing strategy about promoting technology adoption in the field of development economics? We know that some technologies are experience goods and a one-time subsidy may promote experiential learning, leading to higher adoption in the long run. However, policymakers and practitioners often worry that providing large initial subsidies may set a wrong precedence, distort the expected price of a new technology and make people less likely to adopt and continue to use a technology once the subsidy is discontinued. What they are referring to is called reference dependence in prospect theory.
This is the fifth in our series of posts by Ph.D. students on the job market this year
Something dramatic happened in Brazilian agriculture between 2007 and 2013: the previously-steady labor intensity of a major crop, sugarcane, fell by 70 percent (see Figure). This drop was the result of the rapid, widespread adoption of mechanical harvesting. My job market paper, “Why Did Sugarcane Growers Suddenly Adopt Existing Technology,” studies how mechanization was achieved.