How Prosocial Motives Shape Market Exchange: Experimental Evidence from Street Vending*  

Documents:  Draft,  Ethics Appendix          

Coverage: Ideas for India,  IGC,  Marginal Revolution

*Previously circulated as Entrepreneurs of Emotions: Evidence from Street Vending in India    

Markets are often seen as impersonal mechanisms of exchange, yet many real-world transactions are deeply social. This paper examines how prosocial motives interact with economic exchange and how this affects market outcomes. I study these questions in the context of street vending—a ubiquitous informal market in developing countries—combining multiple experiments with detailed observational data and surveys. Partnering with vendors in a field experiment, I show that buyers are twice as likely to purchase from children as from adults selling identical goods. Sellers, including children, anticipate these preferences, adjusting prices and whom they target. I develop and test a simple model that rationalizes these behaviors: buyers derive utility not only from consumption but also from altruism toward sellers and from avoiding the discomfort of refusal when solicited to buy. Experimental evidence supports both mechanisms and shows that sellers strategically leverage this to extract rents, creating an advantage for children in this market. More broadly, the findings show how social preferences influence market exchange, granting socioeconomically vulnerable sellers a form of market power in competitive environments.

We study the impact of mobile internet expansion on student outcomes by exploiting the staggered global rollout of 3G between 2000 and 2018. We link geospatial data on 3G coverage to 2.5 million test scores from 82 countries and find that access to 3G substantially increased smartphone ownership and internet use among adolescents, yet reduced test scores in math, reading, and science by the equivalent of one-quarter of a year of learning. Negative effects are driven by exposure during adolescence and are concentrated among lower-achieving students. Mechanisms include increased passive online activities, reduced study efficiency, and weaker social connectedness.

Can pessimistic beliefs about social norms create “silent” networks, where individuals rarely seek support despite benefits? A field experiment with informal workers shows that belief correction increases demand for social support by reducing perceived reputational costs. We use a network model to explain how misperceptions can arise and trap communities in a low-interaction equilibrium. Structural estimation predicts that the induced shift is too small to escape this equilibrium. Accordingly, two years later, those exposed to the treatment hold more optimistic beliefs, but below the true level conveyed. Counterfactuals show that stronger policies are required for persistence, though belief correction can increase the demand and funding to support them 

Do high teacher expectations improve student performance? Theoretically, expectations can motivate students by raising aspirations or discourage them if perceived as unrealistic or evoking unfavorable peer comparisons. To causally identify their effects and unpack mechanisms, we randomize whether students receive expectations framed as attainable or ambitious, are additionally paired with a classmate for encouragement, or only receive information about past performance. Communicating expectations increases math scores by 0.21s, particularly for students receiving ambitious goals or predicted to perform poorly. Information about past performance has comparable effects (0.18s), as students interpret it as attention and encouragement from the teacher. Pairing only helps when students are similar, indicating that interpersonal comparisons negatively affect motivation. Although students with large gaps between expectations and baseline performance show sustained gains 12–18 months later, the effects of expectations and information remain statistically indistinguishable. Overall, our findings highlight that signals of personalized teacher attention—through communicating expectations or performance—are a low-cost, effective input in the education production function.