Abstract

In theory, individuals should prefer a choice-based lottery such as random serial dictatorship (RSD) to a uniform random lottery (URL) when allocating private goods. However, household surveys, an information intervention, and a lab-in-the-field experiment from Nepal’s post-earthquake land allocation program show that almost half of participants prefer URL despite its weaker match quality. We find no evidence that comprehension, risk aversion, social pressure, or altruism explain this pattern. Instead, ambiguity about others’ choices and concerns about procedural integrity appear more plausible explanations. Our findings suggest that in contexts where state capacity is weak, allocation mechanism design must consider not only efficiency but transparency, neutral oversight, and clear communication about match quality.

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Abstract

I study the intergenerational effects of Nepal’s Old Age Allowance (OAA) on household educational expenditures. Using a fuzzy regression discontinuity design, I find that OAA significantly increases educational spending among Non-Dalit and Non-Karnali female students, particularly on tuition, uniform, and lunch. The effect is equivalent to allowance of one and a half month suggesting that additional income from OAA helps to relax financial constraint and allows households to invest more in education. The study contributes to the discussion on the fiscal sustainability and relevance of programs like OAA in developing countries by providing evidence of broader benefits. Also, it highlights the need for improved administrative data on social assistance and better identification of beneficiaries.

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This paper examines the impact of military expenditures on Foreign Direct Investment (FDI) inflows in low-income and middle-income countries from 1990 to 2018, with a particular focus on how this relationship is influenced by the presence of armed conflict. Using the Arellano-Bond estimator to address dynamic panel bias (Nickell bias) and endogeneity, we find that military expenditures do not significantly affect FDI inflows in non-conflict settings. However, during conflicts, increased military expenditures attract FDI, supporting the “geoeconomic favoritism hypothesis,” which posits that foreign investors perceive higher military spending as a commitment to security. We also find that military expenditures have an immediate positive impact on FDI when a country transitions from peace to conflict, but no significant effect when transitioning from conflict to peace, suggesting that investors react more strongly to the escalation of conflict than to its resolution. Additionally, we identify varying impacts on FDI inflows based on conflict intensity: while military spending during minor conflicts attracts FDI, its effect during major conflicts is less robust and statistically weaker. These findings have policy implications for conflict-affected countries, suggesting that strategic military investments can signal security commitments to potential investors, particularly in lower-intensity conflict situations.

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