The impact of financial histories on individuals and societies: A replication of and extension of Berg el al. (1995)

We replicate and extend the social history treatment of the Berg, Dickhaut, and McCabe (1995) investment game, to further document how the reporting of financial history influences how laboratory societies organize themselves over time. We replicate Berg et al. (1995) by conducting a No History and a Financial History session to determine whether a report summarizing the financial transactions of a previous experimental session will significantly reduce entropy in the amounts sent by Investors and returned by Stewards in the investment game, as Berg et al. (1995) found. We extend Berg et al. (1995) in two ways. First, we conduct a total of five sessions (one No History and four Financial History sessions). Second, we introduce Shannon's (1948) measure of entropy from information theory to assess whether the introduction of financial transaction history reduces the amount of dispersion in the amounts invested and returned across generations of players. Results across sessions indicate that entropy declined in both the amounts sent by Investors and the percentage returned by Stewards, but these patterns are weaker and mixed compared to those in the Berg et al. (1995) study. Additional research is needed to test how initial conditions, path dependencies, actors' strategic reasoning about others' behavior, multiple sessions, and communication may mediate the impact of financial history. The study's multiple successive Financial History sessions and entropy measure are new to the investment game literature

The Impact of Financial Histories on Individuals and Societies: A Laboratory Study

This paper studies how successive generations of laboratory societies organize themselves when given reports of financial transactions from previous generations. We define an increase in societal organization as a reduction in the entropy of the distribution of amounts sent and returned by successive generations of players in the Investment Game. Our entropy analysis of data from Berg, J., Dickhaut, J., and McCabe, K. (1995. Trust, Reciprocity, and Social History. Games and Economic Behavior, 10, 122-142) indicate that the provision of a financial history reduced the entropy of the amounts sent by Investors, amounts returned by Stewards, and the amounts in the joint Investor/Steward distribution. We then gathered new data over five societal generations to test the predictive power of our hypothesis that financial histories provide a basis for developing societal order. Participants in Session I (the first generation) received no financial history, whereas participants in the subsequent Sessions II-V received a report that summarized the financial history of the immediately preceding session. The amounts sent by Investors and returned by Stewards increased over the five sessions and produced greater overall societal wealth, but entropy declined significantly only in the amounts sent by Investors. The concluding section discusses the implications of our results and identifies opportunities for future research

The Impact of Third-Party Information on Trust: Valence, Source, and Reliability

Economic exchange between strangers happens extremely frequently due to the growing number of internet transactions. In trust situations like online transactions, a trustor usually does not know whether she encounters a trustworthy trustee. However, the trustor might form beliefs about the trustee's trustworthiness by relying on third-party information. Different kinds of third-party information can vary dramatically in their importance to the trustor. We ran a factorial design to study how the different characteristics of third-party information affect the trustor's decision to trust. We systematically varied unregulated third-party information regarding the source (friend or a stranger), the reliability (gossip or experiences), and the valence (positive or negative) of the information. The results show that negative information is more salient for withholding trust than positive information is for placing trust. If third-party information is positive, experience of a friend has the strongest effect on trusting followed by friend's gossip. Positive information from a stranger does not matter to the trustor. With respect to negative information, the data show that even the slightest hint of an untrustworthy trustee leads to significantly less placed trust irrespective of the source or the reliability of the information

The Failure Factors of Collective Action in Promoting the Recognition of Customary Forest: Case of Kenegerian Rumbio Customary Forest in Riau Province

One of the five schemes in social forestry program in Indonesia is customary forest recognition. Kenegerian Rumbio Customary Forest, a customary forest in Riau Province, is failed in the recognition process. The objectives of this study are to analyze the failure factors of collective action and to formulate strategies to encourage the success of collective action on recognition of Kenegerian Rumbio Customary Forest. This research was built by using both quantitative and qualitative approach where the data were collected by using survey and in-depth interviews. The research results found that improper facilitation caused by communication issues between involved parties, the absence of the symbolic power, the failure in forming the common knowledge are the factors leading to the failure of collective action. To reconstruct the collective action, this study offered four strategies: (1) to frequently communicate with personal approach to the two highest indigenous leaders with whom facilitators have difficulty communicating well, (2) to mediate the two conflicted indigenous leaders for generating their motivation to propose their forest, (3) to conduct socialization to all indigenous leaders (40 jini) and community representatives to increase an understanding regarding the purpose and importance of recognition of customary forest, and (4) to conduct a participatory mapping to reduce area border issues among two sub-tribes

Gift Contagion in Online Groups: Evidence From WeChat Red Packets

Gifts are important instruments for forming bonds in interpersonal relationships. Our study analyzes the phenomenon of gift contagion in online groups. Gift contagion encourages social bonds of prompting further gifts; it may also promote group interaction and solidarity. Using data on 36 million online red packet gifts on China's social site WeChat, we leverage a natural experimental design to identify the social contagion of gift giving in online groups. Our natural experiment is enabled by the randomization of the gift amount allocation algorithm on WeChat, which addresses the common challenge of causal identifications in observational data. Our study provides evidence of gift contagion: on average, receiving one additional dollar causes a recipient to send 18 cents back to the group within the subsequent 24 hours. Decomposing this effect, we find that it is mainly driven by the extensive margin -- more recipients are triggered to send red packets. Moreover, we find that this effect is stronger for "luckiest draw" recipients, suggesting the presence of a group norm regarding the next red packet sender. Finally, we investigate the moderating effects of group- and individual-level social network characteristics on gift contagion as well as the causal impact of receiving gifts on group network structure. Our study has implications for promoting group dynamics and designing marketing strategies for product adoption.Comment: 33 page

Reputation in an economic game modulates premotor cortex activity during action observation

Our interactions with other people – and our processing of their actions – are shaped by their reputation. Research has identified an Action Observation Network (AON) which is engaged when observing other people's actions. Yet, little is known about how the processing of others’ actions is influenced by another's reputation. Is the response of the AON modulated by the reputation of the actor? We developed a variant of the ultimatum game in which participants watched either the visible or occluded actions of two ‘proposers’. These actions were tied to decisions of how to split a pot of money although the proposers’ decisions on each trial were not known to participants when observing the actions. One proposer made fair offers on the majority of trials, establishing a positive reputation, whereas the other made predominantly, unfair offers resulting in a negative reputation. We found significant activations in two regions of the left dorsal premotor cortex (dPMC). The first of these showed a main effect of reputation with greater activation for the negative reputation proposer than the positive reputation proposer. Furthermore individual differences in trust ratings of the two proposers covaried with activation in the right primary motor cortex (M1). The second showed an interaction between visibility and reputation driven by a greater effect of reputation when participants were observing an occluded action. Our findings show that the processing of others’ actions in the AON is modulated by an actor's reputation, and suggest a predictive role for the PMC during action observation

Farmers’ Trust in Extension Staff and Productivity: An Economic Experiment in Rural Areas of Iran

Publication history: Accepted - 25 June 2022; Published - 4th May 2023.Farmers’ trust in extension staff may improve the performance of agricultural extension services and productivity through transferred knowledge and new farming practices. Using the trust game and trust questionnaire, this study measured farmers’ trust in extension staff. Measures obtained from the two methods were statistically different. We examined the relationship between the measured trust and agricultural productivity to control socio-economic factors. The findings revealed an insignificant relationship between trust and productivity that might be due to inappropriate attributes of extension programs. This emphasizes the need for more participation of farmers in researching and structuring training programs. While age had a negative impact on trust, traditional farmers with high experience showed a high level of trust. This indicates that young farmers who mostly inherited their lands from their parents and have occupations other than farming or practice modern farming, do not trust the extension staff. Farm size positively influences productivity by reducing the number of laborers per hectare. This emphasizes that the traditional way of farming is the cause of low productivity in Iranian agriculture

Repeated Anonymous Behavior

Anonymous behavior in the repeated trust game captures many dynamics of a number of real-world economic contexts. Versions of the repeated games have been studied extensively in the lab, and dynamic experiments of this type have recently been increasingly tested online. There is strong evidence that surveys and single-shot games provide similar results in behavioral labs and on Mechanical Turk. Since dynamic behavior in repeated games is qualitatively different than surveys and single-shot games, equivalence of behavioral factors and cooperative behavior has not been fully answered. This study finds that both lab and MTurk populations have similar behavioral factors with a few differences. An equivalence tests suggests the behaviors between populations are equivalent within an acceptable equivalence region