Alleviation and Sanctions in Social Dilemma Games

This paper reports an experiment which compares behaviour in two punishment regimes: (i) a standard public goods game with punishment in which subjects are given the opportunity to punish other group members (democratic punishment regime) and (ii) a public goods game environment where all group members exogenously experience an automatic reduction of their income (irrespective of their behaviour) and are given the opportunity to alleviate the automatic penalty (undemocratic punishment regime). We employ a within-subjects design where subjects experience both environments and control for order effects by alternating their sequence. Our findings indicate that average contributions and earnings in the undemocratic punishment environment are significantly lower relative to the standard public goods game with punishment. We also observe that in the undemocratic environment average contributions decay over time only when subjects have experienced the standard public goods game with punishment. As a result, alleviation is significantly less when subjects have experienced the standard public goods game with punishment compared to when they do not have such experience. However, the assignment of punishment is robust irrespective of the order in which the games are played

An investment game with third-party intervention

This paper explores the effect of the possibility of third-party intervention on behavior in a variant of the Berg, Dickhaut, and McCabe (1995) “Investment Game”. A third-party’s material payoff is not affected by the decisions made by the other participants, but this person may choose to punish a responder who has been overly selfish. The concern over this possibility may serve to discipline potentially-selfish responders. We also explore a treatment in which the third party may also choose to reward a sender who has received a low net payoff as a result of the responder’s action. We find a strong and significant effect of third-party punishment, in both punishment regimes, as the amount sent by the first mover is more than 60% higher when there is the possibility of third-party punishment. We also find that responders return a higher proportion of the amount sent to them when there is the possibility of punishment, with this proportion slightly higher when reward is not feasible. Finally, third parties punish less when reward is feasible, but nevertheless spend more on the combination of reward and punishment when these are both permitted than on punishment when this is the only choice for redressing material outcomes.Trust, punishment, third-party intervention, responsibility-alleviation

An investment game with third-party intervention

This paper explores the effect of the possibility of third-party intervention on behavior in a variant of the Berg, Dickhaut, and McCabe (1995) “Investment Game”. A third-party’s material payoff is not affected by the decisions made by the other participants, but this person may choose to punish a responder who has been overly selfish. The concern over this possibility may serve to discipline potentially-selfish responders. We also explore a treatment in which the third party may also choose to reward a sender who has received a low net payoff as a result of the responder’s action. We find a strong and significant effect of third-party punishment, in both punishment regimes, as the amount sent by the first mover is more than 60% higher when there is the possibility of third-party punishment. We also find that responders return a higher proportion of the amount sent to them when there is the possibility of punishment, with this proportion slightly higher when reward is not feasible. Finally, third parties punish less when reward is feasible, but nevertheless spend more on the combination of reward and punishment when these are both permitted than on punishment when this is the only choice for redressing material outcomes.Natalia Jimenez and Ramon Cobo-Reyes are grateful to CEA (SOCH2.05/43) and Generalitat Valenciana (GV06/275) for financial support

The Interaction of Legal and Social Norm Enforcement

Although legal sanctions are often non-deterrent, we frequently observe compliance with ‘mild laws’. A possible explanation is that the incentives to comply are shaped not only by legal, but also by social sanctions. This paper employs a novel experimental approach to study the link between legal and social norm enforcement. We analyze whether the two institutions are complements or substitutes. Our results show that legal sanctions partially crowd out social norm enforcement. The welfare effect from mild laws is positive, however, as a higher level of compliance is achieved at lower enforcement costs.social sanctions, legal sanctions, norm enforcement, mild laws, laboratory experiment, VCM, public goods

SOCIAL CAPITAL AND POVERTY REDUCTION: TOWARD A MATURE PARADIGM

Introduction The purposes of this paper are: (1) to introduce the social capital paradigm; (2) to present evidence that social capital has an important role in poverty reduction; and (3) to suggest several policy prescriptions for building and using social capital to reduce poverty. The social capital paradigm includes social capital, networks, socio-emotional goods, attachment values, institutions, and power. Social capital is a person or group's sympathy for others. Social capital resides in sympathetic relationships that can be described using networks. One reason to value social capital is because it can produce economic benefits and if neglected, economic disadvantages. Another reason to value social capital is because it can be used to produce socio-emotional goods. Sometimes socio-emotional goods become embedded in objects. When this occurs, the meaning and value of the object change. The change in the value of an object produced by embedded socio-emotional goods is the object's attachment value. Individuals exchange both physical and socio-emotional goods. Institutions are the rules that order and give meaning to exchanges. Institutions with high attachment values are more likely to be observed than those whose compliance depends on economic incentives or threats. Finally, power, the ability to influence others, depends on one's resources, including one's social capital. In most personalized transactions, persons exchange both socio-emotional goods and physical goods and services. Moreover, the relative amounts of socio-emotional goods and physical goods and services exchanged will alter the levels and terms of trade when measured in physical units. Since one's ability to include socio-emotional goods in exchanges for physical goods and services depends on one's social capital, the terms and levels of exchange of physical goods and services will be influenced by the transacting party's social capital. Those with high levels of social capital will have advantages over those who lack social capital because they can exchange both socio-emotional goods and physical goods and services. Furthermore, since social capital alters the terms and levels of trade and the terms and levels of trade influence the distribution of incomes derived from trades, then social capital also has an important influence on the distribution of household income and poverty. Some evidence suggests that the distribution of social capital in networks and the distribution of household incomes are connected.Food Security and Poverty, Institutional and Behavioral Economics,

Essays on framing, free riding, and punishment

This thesis presents an experimental investigation of free riding behaviour and, more particularly, individual responses to it using, as a workhorse, the so called public goods game. This game starkly isolates the conflict between private and collective interest, providing us with a simple measure of the extent of free riding behaviour. The unifying theme of the thesis is elicitation and analysis of different indicators for how subjects perceive free riding under a number of treatment manipulations. Chapter 2 explores how people judge the morality of free riding in a public goods game by eliciting people's moral evaluations in hypothetical scenarios. The scenarios differed with respect to the framing of the game, the order of moves, and the behaviour of the non-judged player. Our findings suggest that free riding is perceived as morally reprehensible, except when the free rider moves second after observing that the other player free rode as well. We also find that moral judgments depend on others' behaviour, on framing and on the order of moves. Chapter 3 analyses the effect of framing on social preferences, as measured by self- reported emotions and punishment. Our findings are that, for a given pattern of contributions, neither punishment nor emotion depends on our framing manipulation. Chapter 4 assesses the behavioural consequences of unfair punishment. In this experiment, we generate an unfair environment by assigning punishment to all group members, irrespective of their first stage behaviour, We find that, although unfair punishment causes a different time profile of contributions, contributions are, on average, little different from in the standard punishment game; and the assignment of punishment in the latter is unaffected by experience of an environment with unfair punishment. However, a history of unfair punishment causes different reactions to helping behaviour and punishment received, respectively

Barriers to Resolving Transboundary Pollution

Senior Project submitted to The Division of Social Studies of Bard College