11/13/25 | 4:15pm | E51-145
Yuan Shi
Winner of 2025 ORC Best Student Paper Competition
MIT
Abstract: Theoretical studies of sustainability incentives often assume rational decision-making, yet smallholder farmers exhibit behavioral regularities that impact their decisions. Large-scale field experiments in this domain face measurement difficulties, high costs, and long time horizons, thus limiting iterative testing of incentive structures. We address this challenge by using laboratory-in-the-field experiments with Indonesian oil palm farmers, simulating real-world decision-making while maintaining experimental control. Results from our first experiment reveal key deviations from rational models: production-linked price premium incentives that are nearly optimal under the rational model do not outperform simple fixed payments due to behavioral factors, including bounded rationality, cost aversion, and pro-environmental preference. To address this, we develop a behavioral incentive design framework, refining incentive structures and experimental design to account for these observed behavioral factors. In the redesigned second experiment, behaviorally-calibrated price premium incentive significantly increased consistent adoption of sustainable practices as compared to fixed payments, at no extra cost. Our findings highlight the need for empirically grounded, behaviorally informed incentive design to practically enhance sustainability in supply chains and offer actionable insights to policymakers and practitioners.
Link to paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5384620
Bio: Yuan Shi is a final-year PhD student at the MIT Operations Research Center, advised by Prof. Karen Zheng. Her research combines optimization, game theory, and field experimentation to design practical solutions for social good, with applications in sustainability and social-sector operations. Her recent work addresses (i) incentive design for sustainable farming in smallholder supply chains, and (ii) data-driven decision-making to improve the effectiveness of nonprofit services. Prior to MIT, she worked as a financial derivative structurer at Morgan Stanley in London. She holds a B.A. in Natural Sciences (Physics) from the University of Cambridge and an M.S. in Management Science and Engineering from Stanford University.