Microequity for Microenterprises: Evidence from an Artefactual Field Experiment

Last registered on December 31, 2019

Pre-Trial

Trial Information

General Information

Title
Microequity for Microenterprises: Evidence from an Artefactual Field Experiment
RCT ID
AEARCTR-0002224
Initial registration date
August 04, 2017

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
August 04, 2017, 5:03 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Last updated
December 31, 2019, 5:25 AM EST

Last updated is the most recent time when changes to the trial's registration were published.

Locations

Region

Primary Investigator

Affiliation
University of Oxford

Other Primary Investigator(s)

Additional Trial Information

Status
On going
Start date
2016-12-20
End date
2021-12-31
Secondary IDs
Abstract
Initially, it was believed that microcredit would be an effective tool for encouraging growth of microenterprises. Several recent studies, however, suggest that microloans have not had dramatic benefits for most entrepreneurs and that microcredit-funded businesses rarely grow beyond a subsistence level of entrepreneurship. Other recent evidence shows that small changes to contract structure can have a long-term effect on investment and profits. In this project, I conduct investment games in a lab-in-field setting to test the effect of an 'equity-based' contract structure on the investment decisions of microenterprise owners.
External Link(s)

Registration Citation

Citation
Meki, Muhammad. 2019. "Microequity for Microenterprises: Evidence from an Artefactual Field Experiment." AEA RCT Registry. December 31. https://doi.org/10.1257/rct.2224-1.1
Former Citation
Meki, Muhammad. 2019. "Microequity for Microenterprises: Evidence from an Artefactual Field Experiment." AEA RCT Registry. December 31. https://www.socialscienceregistry.org/trials/2224/history/59810
Experimental Details

Interventions

Intervention(s)
Intervention Start Date
2016-12-20
Intervention End Date
2017-12-31

Primary Outcomes

Primary Outcomes (end points)
Expected return of chosen investment option chosen.
Primary Outcomes (explanation)
Expected return of investment option chosen, which is calculated as: (0.5 * good payoff for option chosen) + (0.5 * bad payoff for option chosen) - (cost of option chosen).

See Analysis Plan PDF for full details.

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The investment game is played by each participant a total of four times, under each of the four different treatment arms (as such, I implement a within-subject design).

See Analysis Plan PDF for full details.
Experimental Design Details
The investment game is played by each participant a total of four times, under each of the four different treatment arms (as such, I implement a within-subject design):

(i) Control Treatment (CT): In the Control Treatment, the participant begins with initial capital of 200.

(ii) Debt Treatment (DT): In the Debt Treatment (DT), the participant begins with the same initial capital 200 as in the Control Treatment, but they also get an additional amount of 500 in the form of a zero-interest loan, to be repaid in full at the end of the game.

(iii) Equity Treatment; 50-50 Sharing (ET1): In the first Equity Treatment (ET1), the participant also begins with 200 and an additional amount of 500. However, the additional 500 is now given in the form of equity. The equity capital does not have a fixed repayment obligation at the end of the game. Instead, there is a requirement to share all wealth that is left at the end of the game in a 50-50 ratio (the participant keeps 50% of wealth remaining at the end of the game, and shares 50%; this includes the initial wealth 200 that they are given as starting capital).

(iv) Equity Treatment; 75-25 Sharing (ET1): The second Equity Treatment (ET2) is identical to ET1, except that the sharing ratio at the end of the game is 75-25 (the agent keeps 75% at the end and shares 25%).

I will also explore heterogeneity of the treatment effect by: risk preferences (measured using both survey-based questions, as well as an incentivised measure), loss aversion (measured using an incentivised game), cognitive ability, management practices, trust.

See Analysis Plan PDF for full details.
Randomization Method
The order in which the debt and equity treatments appear to individuals is randomised at the individual level, using code that is pre-programmed into the tablet computers that the enumerators use to conduct the games with participants.
Randomization Unit
I use a within-subject design, with all participants playing the investment game under each of the four treatment arms (with the order randomised).
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
I expect the final sample size to be between 600 and 900 microenterprise owners, depending on the final sample size for a larger field experiment, from which participants are drawn.
Sample size: planned number of observations
I expect the final sample size to be between 600 and 900 microenterprise owners, depending on the final sample size for a larger field experiment, from which participants are drawn.
Sample size (or number of clusters) by treatment arms
Each one of the microenterprise owners plays the investment game under each of the 4 treatments (within-design).
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
Department Research Ethics Committee, Department of Economics, University of Oxford
IRB Approval Date
2016-07-12
IRB Approval Number
R37860/RE001
Analysis Plan

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Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials