Does impartial reasoning matter in economic decisions? An experimental result about distributive (un)fairness in a production context

The Rawlsian social contract presents the veil of ignorance as a thought experiment that should induce agents to behave more fairly within a distributive context. This study uses a laboratory experiment to test the effect of actual reasoning behind the veil, as a moral cue, in a Dictator Game with taking and production. The main hypothesis claims that reflection from an impartial perspective should lead subjects to put themselves in the shoes of who could be the least benefited. Against our expectations, the impact of the moral cue was null and no attempt to rebalance the unjustified differences was observed

“Economic man” in cross-cultural perspective: Behavioral experiments in 15 small-scale societies

Researchers from across the social sciences have found consistent deviations from the predictions of the canonical model of self-interest in hundreds of experiments from around the world. This research, however, cannot determine whether the uniformity results from universal patterns of human behavior or from the limited cultural variation available among the university students used in virtually all prior experimental work. To address this, we undertook a cross-cultural study of behavior in ultimatum, public goods, and dictator games in a range of small-scale societies exhibiting a wide variety of economic and cultural conditions. We found, first, that the canonical model – based on self-interest – fails in all of the societies studied. Second, our data reveal substantially more behavioral variability across social groups than has been found in previous research. Third, group-level differences in economic organization and the structure of social interactions explain a substantial portion of the behavioral variation across societies: the higher the degree of market integration and the higher the payoffs to cooperation in everyday life, the greater the level of prosociality expressed in experimental games. Fourth, the available individual-level economic and demographic variables do not consistently explain game behavior, either within or across groups. Fifth, in many cases experimental play appears to reflect the common interactional patterns of everyday life

Preferences for Redistribution and Pensions: What Can We Learn from Experiments?

Redistribution is an inevitable feature of collective pension schemes. It is still largely an open question what people‘s preferences are regarding redistribution—both through pensions schemes as well as more generally. It would seem that economists have little to say about this question, as they routinely assume that people are predominantly selfish. Economic experiments have revealed, however, that most people do in fact have redistributional preferences that are not merely inspired by self-interest. This paper reviews this experimental evidence. For that purpose we distinguish between three fundamentally different types of situations. The first deals with distributional preferences behind a veil of ignorance. What type of income distribution do people prefer when they do not know whether they will end up in an advantaged or disadvantaged position? A main result here is that, contrary to what John Rawls suggested, people do not prefer the maximin rule, but rather favor a utilitarian justice concept appended with a safety net for the poorest. Another result is that people are willing to accept income inequalities—as long as these are due to choices for which people can be held accountable. In the second type of situation, individuals make choices in front of the veil of ignorance and know their position. Experiments show that preferences for redistribution are strongly dependent on a person‘s own position. People in a relatively disadvantaged position want more redistribution than those in a relatively advantaged position, which shows that preferences for redistribution are clearly affected by self-interest. Still, even many of those in an advantaged position display a preference forredistribution. This holds, in particular, if inequality is due to chance rather than effort. There are also significant differences in preferences between the genders and between people with different political orientations. Finally, we discuss situations in which income is determined by interdependent rather than individual choices. People are dependent upon the cooperation of others for the achievement of their (income) goals. Experiments show that behavioral factors such as trust and reciprocity play a crucial role, and they also indicate that these factors are strongly affected by the institutional setting. In the closing parts of the paper we discuss whether and how these experimental results speak to the redistribution issues of pensions. For example, do they argue for or against mandatory participation? Should we have less redistribution and more actuarial fairness? How does this depend on the type of redistribution involved?public economics ;

Shifting the Blame: On Delegation and Responsibility

To fully understand the motives for delegating a decision right, it is important to study responsibility attributions for outcomes of delegated decisions. We conducted an experiment in which subjects were able to delegate the choice between a fair or unfair allocation, and used a punishment option to elicit responsibility attributions. Our results show that, first, responsibility attribution can be effectively shifted and, second, this constitutes a powerful motive for the delegation of a decision right. Furthermore, we propose a formal measure of responsibility and show that this measure outperforms measures based on outcome or intention in predicting punishment behavior.delegation, decision rights, moral responsibility, blame shifting

The impact of relative position and returns on sacrifice and reciprocity: an experimental study using individual decisions

We present a comprehensive experimental design that makes it possible to characterize other-regarding preferences and their relationship to the decision maker’s relative position. Participants are faced with a large number of decisions involving variations in the trade-offs between own and other’s payoffs, as well as in other potentially important factors like the decision maker’s relative position. We find that: (1) choices are responsive to the cost of helping and hurting others; (2) The weight a decision maker places on others’ monetary payoffs depends on whether the decision maker is in an advantageous or disadvantageous relative position; and (3) We find no evidence of reciprocity of the type linked to menu-dependence. The results of a mixture-model estimation show considerable heterogeneity in subjects’ motivations and confirm the absence of reciprocal motives. Pure selfish behavior is the most frequently observed behavior. Among the subjects exhibiting social preferences, social-welfare maximization is the most frequent, followed by inequality-aversion and by competitiveness

Preferences for Redistribution and Pensions. What can we Learn from Experiments?

Redistribution is an inevitable feature of collective pension schemes. Nevertheless, it is still an open question what people’s preferences are regarding this form of redistribution. This paper reviews experimental evidence on preferences regarding redistribution and asks what this evidence tells us about preferences for redistribution through pension schemes. We distinguish between three fundamentally different types of situations. The first deals with distributional preferences behind a veil of ignorance. What type of income distribution do people prefer when they do not know whether they will end up in an advantaged or disadvantaged position? The evidence shows that, contrary to John Rawls' suggestion, people do not prefer the maximin rule, but rather favor a utilitarian justice concept appended with a safety net for the poorest. Furthermore, people are willing to accept income inequalities when they are due to choices for which people can be held responsible. In the second type of situation, individuals make choices in front of the veil of ignorance and know their position. Here the evidence shows that preferences for redistribution are strongly dependent on a person’s own position. Disadvantaged people want more redistribution than those who are relatively advantaged, indicating that preferences for redistribution are biased by self-interest. Still, even many of those in an advantaged position display a preference for redistribution. Finally, we discuss situations in which income is determined by interdependent rather than individual choices. Here experiments show that behavioral factors such as trust and reciprocity play a crucial role, and that these factors are strongly affected by the institutional setting. In the closing parts of the paper we discuss whether and how these experimental results speak to the redistribution issues of pensions.redistribution, fairness, pension, insurance, experiment

Moral Hypocrisy, Power and Social Preferences

We show with a laboratory experiment that individuals adjust their moral principles to the situation and to their actions, just as much as they adjust their actions to their principles. We first elicit the individuals' principles regarding the fairness and unfairness of allocations in three different scenarios (a Dictator game, an Ultimatum game, and a Trust game). One week later, the same individuals are invited to play those same games with monetary compensation. Finally in the same session we elicit again their principles regarding the fairness and unfairness of allocations in the same three scenarios. Our results show that individuals adjust abstract norms to fit the game, their role and the choices they made. First, norms that appear abstract and universal take into account the bargaining power of the two sides. The strong side bends the norm in its favor and the weak side agrees : Stated fairness is a compromise with power. Second, in most situations, individuals adjust the range of fair shares after playing the game for real money compared with their initial statement. Third, the discrepancy between hypothetical and real behavior is larger in games where real choices have no strategic consequence (Dictator game and second mover in Trust game) than in those where they do (Ultimatum game). Finally the adjustment of principles to actions is mainly the fact of individuals who behave more selfishly and who have a stronger bargaining power. The moral hypocrisy displayed (measured by the discrepancy between statements and actions chosen followed by an adjustment of principles to actions) appears produced by the attempt, not necessarily conscious, to strike a balance between self-image and immediate convenience

Does indignation lead to generosity? An experimental investigation

We test the effect of emotions on moral behaviour in a one shot gift-exchange game. Using the emotional induction technique, we induce either positive or negative emotions to the subjects before they play the game. We also consider a control treatment, without any affect manipulation. Emotional induction was effective: participants who saw the shocking and appalling movie reported significantly stronger negative emotions and weaker positive emotions than those who saw the funny movie. We find that players’ choices differ significantly across emotional conditions: we observe essentially that second movers who experience positive or neutral emotions do reciprocate whereas subjects overwhelmed with indignation, anger or guilt feelings show a very strong unconditional generous behaviour and do not reciprocate at all. We argue that indignation has a strong proactive force which allows subjects to reveal to themselves their own true values.Emotions; moral values; gift-exchange game

When fair is not equal: compassion and politeness predict allocations of wealth under different norms of equity and need

Growing evidence has highlighted the importance of social norms in promoting prosocial behaviors in economic games. Specifically, individual differences in norm adherence—captured by the politeness aspect of Big Five agreeableness—has been found to predict fair allocations of wealth to one’s partner in the dictator game. Yet most studies have used neutrally-framed paradigms, where players may default to norms of equality in the absence of contextual cues. In this study (N = 707), we examined prosocial personality traits and dictator allocations under salient real-world norms of equity and need. Extending on previous research, we found that—in addition to politeness—the compassion aspect of agreeableness predicted greater allocations of wealth when they were embedded in real-world norms. These results represent an important step in understanding the real-world implications of laboratory-based research, demonstrating the importance of both normative context and prosocial traits

How norms guide behavior in an uncertain world: an experimental law & economics perspective

In four independent Chapters, I examine how norms guide our behavior in an uncertain world. Methodologically, I apply the toolbox of experimental economics to research questions that are on the interface between economics and law (especially Chapter 1 and Chapter 2), sociology (especially Chapter 3), and social psychology (especially Chapter 4). Chapter 1 experimentally explores the effect of a provision from German copyright law – the so-called “Bestseller Paragraph” on market prices, on the number of deals struck and on perceived fairness. The results show that the provision leads to lower prices for copyrights, more copyrights trade, and the buyers express less ex-post discontent. Chapter 2 tests the effect of customary law on cooperation. If it is not backed up by sanctions, customary law is not more effective than mere custom in realigning individual action and social well-being. Yet if the emerging rule is perceived to be grounded in law, sanctions and custom are complements, while they are substitutes otherwise. Chapter 3 proposes a very simple and light-handed mechanism to sustain cooperation and test its performance in a rich laboratory environment. The mechanism moderates cooperation by controlling experiences. Contributions are considerably sensitive to such selective information. In Chapter 4, I test experimentally the robustness of social preferences to (1) information about others’ behavior and (2) self-reflection about the morally right behavior. I find that whereas information has virtually no effect, self-reflection changes social preferences substantially