Journal Article Two Trials to Determine Expectation Models Applicable to Agriculture Get access T. W. Schultz, T. W. Schultz Iowa State College Search for other works by this author on: Oxford Academic Google Scholar O. H. Brownlee O. H. Brownlee Iowa State College Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 56, Issue 3, May 1942, Pages 487–496, https://doi.org/10.2307/1882212 Published: 01 May 1942

Economists now appreciate that resource allocation in less economically developed economies is profoundly influenced by nonfirm economic institutions. However, our theories of nonfirm institutions often suggest different answers to many questions including those of policy. This paper illustrates a method for discriminating between alternative theories using data from German credit cooperatives from nineteenth and early twentieth century Germany. We build a model of credit cooperatives designed to provide monitoring incentives and test this using nineteenth century data.

We present experimental evidence on nonbinding, preplay communication in bilateral coordination games. To evaluate the effect of "cheap talk, " we consider two communication structures (one-way and two-way communication) and two types of coordination games (one with a cooperative strategy and a second in which one strategy is less "risky"). In games with a cooperative strategy, one-way communication increases play of the Pareto-dominant equilibrium relative to the no communication baseline; two-way communication does not always decrease the frequency of coordination failures. In the second type of game, two-way communication always leads to the Pareto-dominant Nash equilibrium, while one-way communication does not.