Experimental Economics

This paper studies the effects of social status—a socially recognized ranking of individuals—on prosocial behavior. We use a laboratory experiment and propose a theory to address this issue. In a one-shot game, two players, whose social status is either earned or randomly assigned, jointly make effort contributions to a project. Player 1 first suggests an effort level for each player to player 2 who then determines the actual effort levels. Deviation from the proposal is costly. We find causal evidence that high-status players are less selfish than their low-status counterparts. In particular, high-status players 2 provide relatively more effort, ceteris paribus, than those with low status. The experimental results and theoretical framework suggest that a high social ranking yields more social behavior and that this can be attributed to the sense of responsibility that it gives.

A burgeoning literature in experimental studies of the Voluntary Contribution Mechanism focuses on the ability of institutions that allow the monitoring, sanctioning, and/or rewarding of others to facilitate cooperation. In this paper rewards and sanctions are examined in a one-shot VCM setting that so far has been unexplored in the literature. The study finds that while some subjects are willing to reward and sanction others at a personal cost, the opportunity to reward or sanction is ineffective in facilitating cooperation relative to previous experiments in which a repeated game environment is employed. The study also compares behavior in an environment in which the imposition of rewards and sanctions is certain to an environment in which imposition is uncertain. The expected value of the reward or sanction is kept constant across environments to focus simply on the effect of uncertainty about imposition. Uncertainty does not change behavior in a significant way, either in the level of cooperation or the willingness of individuals to impose rewards or sanctions.

Một lượng lớn nghiên cứu thực nghiệm và lý thuyết về các trò chơi hàng hóa công cộng chỉ ra rằng mối đe dọa bị trừng phạt có thể kiềm chế hành vi miễn cưỡng trong các nhóm người tham gia các doanh nghiệp chung. Tuy nhiên, vì việc trừng phạt thường tốn kém, vấn đề miễn cưỡng bậc hai trở thành một vấn đề quan trọng: thực tế, hệ thống xử phạt chính nó là hàng hóa chung có thể bị lợi dụng. Hầu hết các cuộc nghiên cứu cho đến nay đều xem xét trừng phạt từ đồng loại: các người chơi có thể áp đặt các hình phạt đối với những người đã lợi dụng họ, với một chi phí cho chính mình. Chỉ một thiểu số xem xét cái gọi là trừng phạt từ quỹ. Trong kịch bản này, các người chơi đóng góp vào một quỹ xử phạt trước khi tham gia vào doanh nghiệp chung, mà không biết ai sẽ là những người miễn cưỡng. Các nghiên cứu lý thuyết (Sigmund et al., Nature 466:861–863, 2010) đã chỉ ra rằng trừng phạt từ đồng loại hiệu quả hơn, nhưng trừng phạt từ quỹ thì ổn định hơn. Học hỏi xã hội, tức là việc bắt chước ưu tiên các chiến lược thành công, nên dẫn đến trừng phạt từ quỹ nếu các hình phạt cũng được áp dụng đối với những người miễn cưỡng bậc hai, nhưng dẫn đến trừng phạt từ đồng loại nếu không áp dụng. Tại đây, chúng tôi mô tả một thí nghiệm kinh tế (trò chơi Hỗ trợ Tương hỗ) nhằm kiểm nghiệm dự đoán này. Chúng tôi nhận thấy rằng trừng phạt từ quỹ chỉ xuất hiện nếu những người miễn cưỡng bậc hai bị trừng phạt, nhưng trừng phạt từ đồng loại lại ổn định hơn mong đợi. Cơ bản, thí nghiệm của chúng tôi cho thấy rằng học hỏi xã hội có thể dẫn đến một hợp đồng xã hội tự phát, dựa trên một thể chế xử phạt nhằm vượt qua vấn đề miễn cưỡng.

Is the assumption that people automatically know their own preferences innocuous? We present an experiment studying the limits of preference discovery. If tastes must be learned through experience, preferences for some goods may never be learned because it is costly to try new things, and thus non-learned preferences may cause welfare loss. We conduct an online experiment in which finite-lived participants have an induced utility function over fictitious goods about whose marginal utilities they have initial guesses. Subjects learn most, but not all, of their preferences eventually. Choice reversals occur, but primarily in early rounds. Subjects slow their sampling of new goods over time, supporting our conjecture that incomplete learning can persist. Incomplete learning is more common for goods that are rare, have low initial value guesses, or appear in choice sets alongside goods that appear attractive. It is also more common for people with lower incomes or shorter lifetimes. More noise in initial value guesses has opposite effects for low-value and high-value goods because it affects the perceived likelihood that the good is worth trying. Over time, subjects develop a pessimistic bias in beliefs about goods’ values, since optimistic errors are more likely to be corrected. Overall, our results show that if people need to learn their preferences through consumption experience, that learning process will cause choice reversals, and even when a person has completed sampling the goods she is willing to try, she may continue to lose welfare because of suboptimal choices that arise from non-learned preferences.

Charitable donations provide positive externalities and can potentially be increased with an understanding of donor preferences. We obtain a uniquely comprehensive characterization of donation motives using an experiment that varies treatments between and within subjects. Donations are increasing in peers’ donations and past subjects’ donations. These and other results suggest a model of heterogeneous beliefs about the social norm for giving. Estimation of such a model reveals substantial heterogeneity in subjects’ beliefs about and adherence to the norm. A simple fundraising strategy increases donations by an estimated 30% by exploiting previously unstudied correlations between dimensions of donor preferences.

A marketable permit system (MPS) has been suggested as a solution to environmental problems. Although the properties of MPSs under non-trader settings, in which each player is exclusively either a seller or a buyer, are well documented, little research has explored how MPSs perform under trader settings, in which each player can be both a seller and a buyer. We institute two auctions of trader settings in MPS experiments: a double auction (DA) and a uniform price auction (UPA). We then evaluate and compare their performances both with each other and with those under non-trader settings. The main results are as follows: DAs under trader settings perform much worse than do DAs under non-trader settings, whereas UPAs perform well, regardless of the trader and non-trader settings. UPAs are more efficient and generate more stable prices than do DAs under trader settings, and a considerable proportion of trades in DAs under trader settings consist of “flips” that could be considered speculation or errors. Thus, UPAs are likely to work better than DAs under trader settings.

Members of organizations are often called upon to trust others and to reciprocate trust while at the same time competing for bonuses or promotions. We suggest that competition affects trust not only within dyads including direct competitors, but also between individuals who do not compete against each other. We test this idea in a trust game where trustors and trustees are rewarded based either on their absolute performance or on how well they do relative to players from other dyads. In Experiment 1, we show that competition among trustors significantly increases trust. Competition among trustees decreases trustworthiness, but trustors do not anticipate this effect. In Experiment 2, we additionally show that the increase in trust under competition is caused by a combination of increased risk taking and lower sensitivity to non-financial concerns specific to trust interactions. Our results suggest that tournament incentives might have a “blinding effect” on considerations such as betrayal and inequality aversion.

Coordination games with Pareto-ranked equilibria have attracted major attention over the past two decades. Two early path-breaking sets of experimental studies were widely interpreted as suggesting that coordination failure is a common phenomenon in the laboratory. We identify the major determinants that seem to affect the incidence, and/or emergence, of coordination failure in the lab and review critically the existing experimental studies on coordination games with Pareto-ranked equilibria since that early evidence emerged. We conclude that there are many ways to engineer coordination successes.