How Do Managers’ Beliefs about New Technologies Evolve? Informational Interventions and the Adoption of Energy-efficient Stitching Motors in Bangladesh

This project will conduct a randomized control trial on the determinants of adoption of an energy-efficient technology in the Bangladeshi manufacturing sector. The technology is a new motor for stitching machines, called a “servo” motor, which uses about 75% less electricity than traditional “clutch” motors. We will provide information about the servo motors in varying intensities to managers of small and medium-sized enterprises (SMEs) in the leather goods and footwear industry. In one arm, we will install a servo motor on one machine and electricity meters on that machine, and a machine with a clutch motor. In another arm, we will provide detailed information about the servo motor but install neither the motor nor the meters. A third group will serve as a control. In all three groups, we will track the evolution of managers’ beliefs about cost savings from the servo motors and their willingness to pay for them. Our results will shed light on how managers learn about new energy-efficient technologies and to what extent their reluctance to adopt new technologies is due to mistakes in information-processing versus a rational process of updating, given prior beliefs and noisy signals about the value of the new technologies.