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on Cognitive and Behavioural Economics |
| By: | Petrie, Ragan (Interdisciplinary Center for Economic Science (ICES), George Mason University, 4400 University Drive, MSN 1B2); Jacobson, Sarah (Department of Economics, Williams College, 24 Hopkins Hall Dr., Williamstown, MA 01267, USA) |
| Abstract: | Favor trading is common. We do something nice for someone and they do something nice in return. Several motives might underlie such behavior, including altruism, strategic motives, and direct or indirect positive reciprocity. It is not yet well-understood how these fit together to affect behavior, how they interact in various institutional structures, and how they play out over time. We use a laboratory experiment to study the elements and dynamics of favor trading in a particular setting: the private provision of a public good. In our experiment, giving subjects the ability to practice targeted reciprocity by making a simple, low-cost change in information provision increases contributions to the public good by 14%. Subjects reward group members who have previously been generous to them and withhold rewards from ungenerous group members. Strategic concerns cannot explain all of this behavior, and it must be at least partly due to direct reciprocity. When someone cannot directly benefit from favor trading, he gives much less to the public good. People thus excluded from the “circle of reciprocity” provide a clean and strict test of indirect reciprocity. Contrary to previous studies in the literature, we do not observe indirect reciprocity. |
| Keywords: | public goods, direct and indirect reciprocity, experiment, peer-to-peer fundraising |
| JEL: | C92 H41 D01 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:wil:wileco:2013-03&r=cbe |
| By: | Guillermo Baquero (ESMT European School of Management and Technology); Willem Smit (SMU, IMD); Luc Wathieu (Georgetown University, McDonough School of Business) |
| Abstract: | We explore the interaction between fairness attitudes and reference dependence both theoretically and experimentally. Our theory of fairness behavior under reference-dependent preferences in the context of ultimatum games, defines fairness in the utility domain and not in the domain of dollar payments. We test our model predictions using a within-subject design with ultimatum and dictator games involving gains and losses of varying amounts. Proposers indicated their offer in gain- and (neatly comparable) loss- games; responders indicated minimum acceptable gain and maximum acceptable loss. We find a significant “generosity effect” in the loss domain: on average, proposers bear the largest share of losses as if anticipating responders’ call for a smaller share. In contrast, reference dependence hardly affects the outcome of dictator games -where responders have no veto right- though we detect a small but significant “compassion effect”, whereby dictators are on average somewhat more generous sharing losses than sharing gains. |
| Keywords: | Fairness, loss domain, ultimatum game, dictator game, referencedependent preferences, social preferences |
| JEL: | D03 D81 |
| Date: | 2013–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:esm:wpaper:esmt-13-08&r=cbe |
| By: | David L. Dickinson; E. Glenn Dutcher; Cortney S. Rodet |
| Abstract: | Punishment has been shown to be an effective reinforcement mechanism. Intentional or not, punishment will likely generate spillover effects that extend beyond one’s immediate decision environment, and these spillovers are not as well understood. We seek to understand these secondary spillover effects in a controlled lab setting using a standard social dilemma: the voluntary contributions mechanism. We find that spillovers occur when others observe punishment outside their own social dilemma. However, the direction of the spillover effect depends crucially on personal punishment history and whether one is personally exempt from punishment or not. Key Words: Punishment, Punishment Spillovers, Vicarious Punishment, VCM, Social Dilemma, Experiment |
| JEL: | C91 C92 D03 H40 J24 K42 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:13-20&r=cbe |
| By: | Carpenter, Jeffrey P. (Middlebury College); Gong, Erick (Middlebury College) |
| Abstract: | Economic theory predicts that agents will work harder if they believe in the "mission" of the organization. Well-identified estimates of exactly how much harder they will work have been elusive, however, because agents select into jobs. We conduct a real effort experiment with participants who work directly for organizations with clear missions. Weeks before the experiment, we survey potential participants for their organizational preferences. At the experiment, we randomly assign workers to organizations, creating either mission matches or mismatches. We overlay performance incentives to test whether they can make up for the motivational deficit caused by a mismatch. Our estimates suggest that matched workers produce 72% more than mismatched workers and that performance pay can increase output by 35% compared to workers who only receive a base wage. Considering matches and mismatches separately, we find that performance pay has only a modest effect on matched workers (a 13% increase) while it has a large effect (a 86% increase) on mismatches, an effect that erodes much of the performance gap caused by the poor match. Our results have broad implications both for those organizations already with well-defined missions (i.e., compensation and screening policies) as well as for those organizations strategizing about strengthening or clarifying their missions. |
| Keywords: | principal-agent, mission, incentive, labor supply, experiment |
| JEL: | C91 J22 J33 M52 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7602&r=cbe |
| By: | Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group); Martin G. Kocher (University of Munich, University of Gothenburg and CESifo Munich) |
| Abstract: | Take-it or leave-it offers are probably as old as mankind. Our objective here is, first, to provide a, probably subjectively-colored, recollection of the initial ultimatum game experiment, its motivation and the immediate responses. Second, we discuss important extensions of the standard ultimatum bargaining game in a unified framework, and, third, we offer a survey of the experimental ultimatum bargaining literature containing papers published since the turn of the century. The paper argues that the ultimatum game is an extremely versatile tool for research in bargaining and on social preferences. Finally, we provide examples for open research questions and directions for future studies. |
| Keywords: | ultimatum bargaining, experiment, social preferences |
| JEL: | C91 |
| Date: | 2013–09–16 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2013-035&r=cbe |
| By: | Gurdal, Mehmet (Department of Economics, Bogazici University); Miller, Joshua B (Department of Decision Sciences and IGIER, Unversita Bocconi); Rustichini, Aldo (Department of Economics, University of Minnesota) |
| Abstract: | We provide experimental evidence that subjects blame others based on events they are not responsible for. In our experiment an agent chooses between a lottery and a safe asset; payment from the chosen option goes to a principal who then decides how much to allocate between the agent and a third party. We observe widespread blame: regardless of their choice, agents are blamed by principals for the outcome of the lottery, an event they are not responsible for. We provide an explanation of this apparently irrational behavior with a delegated-expertise principal-agent model, the subjects’ salient perturbation of the environment. JEL classification: Experiments; Rationality; Fairness JEL codes: C92 ; D63 ; C79 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1022&r=cbe |
| By: | Dusanee Kesavayuth; Robert Rosenman; Vasileios Zikos (School of Economic Sciences, Washington State University) |
| Abstract: | We examine how personality relates to self-reported health satisfaction. With a nation-wide dataset from the United Kingdom, we provide evidence that personality influences how individuals report their satisfaction with their overall health. Using the classification of personality traits according to the Big Five factors, we show that Agreeableness, Conscientiousness and to a lesser extent Openness relate positively to health satisfaction, while Neuroticism relates negatively. Extraversion appears much less closely tied to health satisfaction. Perhaps most interesting, our results provide some evidence that personality traits mitigate the importance of the incidence of illness on health satisfaction. |
| Keywords: | health satisfaction, personality, Big Five factors, illness, subjective well-being |
| JEL: | C25 I10 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:wsu:wpaper:rosenman-16&r=cbe |
| By: | Tamilina, Larysa; Tamilina, Natalya |
| Abstract: | While formal institutions are recognized as having an effect on trust formation, no theoretical or empirical models exist to formalize this relationship. This study introduces a new conceptual framework to explain trust building by individuals and the role that formal rules and laws may play in this process. Drawing on a social-cognitive theory of psychology, we present trust as composed of internal, interpersonal, and external components with the latter encompassing formal institutions. We further demonstrate that there are three mechanisms – sanction, legitimacy, and autonomy – through which formal institutions may affect trust levels either directly or indirectly. These propositions are tested empirically based on the European Social Survey data (2004) by using a variety of statistical techniques. Our empirical analysis demonstrates evidence of heterogeneity in institutional effects on trust, suggesting that the autonomy dimension of the institutional framework is particularly important for trust formation processes. |
| Keywords: | interpersonal trust, formal institutions, social-cognitive psychology, heterogeneity, trust formation process |
| JEL: | K42 Z10 Z13 |
| Date: | 2013–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:49812&r=cbe |