The cost of fair divisions: An experimental investigation of Ultimatum Games with groups

I investigated the effect of the presence of a group of non-active subjects upon the behavior of active players in a Ultimatum bargaining game. In the experiment a subject with the role of P has to offer a share r of a sum S to a subject with the role of AR who belongs to a group and decides on behalf of his group’s members (players R). If AR rejects the P’s offer, both active and non-active players get zero, if AR accepts the offer then P gets S - r while r is equally divided between AR and the members of his group. Every subject assumes all the three roles (P, AR and R) and the group size is manipulated keeping constant the share S/N (with N=number of subjects, either active or non active, involved in the game) Data suggest that active players tend to behave as they were playing a standard two-person Ultima- tum game. A clear insensitivity to changes in group size by subjects playing as P, emerging in the main experiment, is compatible with the hyphotesis that at the basis of their behavior there is a willingness to gain a payoff which satisfies an ex-ante fixed aspiration level, that for most of them corresponds to about half of S. The interpretation of the decisions taken by subjects under the AR role is more complicated as, although most of them show a behavior which is compatible with the one observed in the standard Ultimatum Game, a non-negligible share of players fix very low acceptance thresholds that could be explainained in terms of a shift from the willingness to punish unfair behaviors to the responsibility for others’ wellbeing.

Compliance by believing: an experimental exploration on social norms and impartial agreements

The main contribution of this paper is twofold. First of all, it focuses on the decisional process that leads to the creation of a social norm. Secondly, it analyses the mechanisms through which subjects conform their behaviour to the norm. In particular, our aim is to study the role and the nature of Normative and Empirical Expectations and their influence on people’s decisions. The tool is the Exclusion Game, a sort of ‘triple mini-dictator game’. It represents a situation where 3 subjects – players A - have to decide how to allocate a sum S among themselves and a fourth subject - player B - who has no decisional power. The experiment consists of three treatments. In the Baseline Treatment participants are randomly distributed in groups of four players and play the Exclusion Game. In the Agreement Treatment in each group participants are invited to vote for a specific non-binding allocation rule before playing the Exclusion Game. In the Outsider Treatment, after the voting procedure and before playing the Exclusion Game, a player A for each group (the outsider) is reassigned to a different group and instructed about the rule chosen by the new group. In all the treatments, at the end of the game and before players are informed about the decisions taken during the Exclusion Game by the other co-players, first order and second order expectations (both normative and empirical) are elicited through a brief questionnaire. The first result we obtained is that subjects’ choices are in line with their empirical (not normative) expectations. The second result is that even a non-binding agreement induces convergence of empirical expectations – and, consequently, of choices. The third results is that expectation of conformity is higher in the partner protocol. This implies that a single outsider breaks the ‘trust and cooperation’ equilibrium.fairness, social norms, beliefs, psychological games, experimental games

Modeling Routines and Organizational Learning. A Discussion of the State-of-the-Art

This paper presents a critical overview of some recent attempts at building formal models of organizations as information-processing and problem-solving entities. We distinguish between two classes of models according to the different objects of analysis. The first class includes models mainly addressing information processing and learning and analyzes the relations between the structure of information flows, learning patterns, and organizational performances. The second class focuses on the relationship between the division of cognitive labor and search processes in some problem-solving space, addressing more directly the notion of organizations as repositories of problem-solving knowledge. Here the objects of analysis are the problem-solving procedures which the organization embodies. The results begin to highlight important comparative properties regarding the impact on problem-solving efficiency and learning of different forms of hierarchical governance, the dangers of lock-in associated with specific forms of adaptive learning, the relative role of “online” vs. “offline” learning, the impact of the “cognitive maps” which organizations embody, the possible trade-offs between accuracy and speed of convergence associated with different “decomposition schemes”. We argue that these are important formal tools towards the development of a comparative institutional analysis addressing the distinct properties of different forms of organization and accumulation of knowledge.Division of labor, Mental models, Problem-solving, Problem decomposition.

Compliance by Believing: An Experimental Exploration on Social Norms and Impartial Agreements

The main contribution of this paper is twofold. First of all, it focuses on the decisional process that leads to the creation of a social norm. Secondly, it analyses the mechanisms through which subjects conform their behaviour to the norm. In particular, our aim is to study the role and the nature of Normative and Empirical Expectations and their influence on people's decisions. The tool is the Exclusion Game, a sort of 'triple mini-dictator game'. It represents a situation where 3 subjects - players A - have to decide how to allocate a sum S among themselves and a fourth subject - player B - who has no decisional power. The experiment consists of three treatments. In the Baseline Treatment participants are randomly distributed in groups of four players and play the Exclusion Game. In the Agreement Treatment in each group participants are invited to vote for a specific non-binding allocation rule before playing the Exclusion Game. In the Outsider Treatment, after the voting procedure and before playing the Exclusion Game, a player A for each group (the outsider) is reassigned to a different group and instructed about the rule chosen by the new group. In all the treatments, at the end of the game and before players are informed about the decisions taken during the Exclusion Game by the other co-players, first order and second order expectations (both normative and empirical) are elicited through a brief questionnaire. The first result we obtained is that subjects' choices are in line with their empirical (not normative) expectations. The second result is that even a non-binding agreement induces convergence of empirical expectations - and, consequently, of choices. The third results is that expectation of conformity is higher in the partner protocol. This implies that a single outsider breaks the 'trust and cooperation' equilibrium.fairness, social norms, beliefs, psychological games, experimental games

Legitimate Punishment, Feedback, and the Enforcement of Cooperation

In real life, punishment is often implemented only insofar as punishers are entitled to punish and punishees deserve to be punished. We provide an experimental test for this principle of legitimacy in the framework of a public goods game, by comparing it with a classic (unrestricted) punishment institution. A significant advantage of our institution is that it rules out antisocial punishment, a phenomenon which recent studies document to play a key role in undermining the scope for self-governance. Our findings show that, despite the lack of additional monetary incentives to cooperate, the introduction of legitimate punishment leads to substantial efficiency gains, in terms of both cooperation and earnings. Therefore, in businesses and other organizations, this device could successfully deal with the principal-agent problem, with the principal delegating a task to a team of agents. Further, we interestingly find that removing the information over high contributors’ choices only leads to a dramatic decline in cooperation rates and earnings. This result implies that providing feedback over virtuous behavior is necessary to make an institution based on legitimate punishment effective.Experimental Economics, Public Good Games, Costly Punishment, Cooperation, Legitimacy, Immunity

Social Distance, Cooperation and Other Regarding Preferences: A New Approach Based on the Theory of Relational Goods

The paper is divided in six sections. In the second section we provide a short survey of the literature on relational goods. In the third section we describe the experimental design of the two experiments presented in Becchetti et al. (2007) and Becchetti, Degli Antoni and Faillo (2009) (hereafter also B2007 and B2009). In the fourth section we discuss the hypotheses on the effect of relational goods on players’ behaviour in the two experiments. In the fifth section we discuss the main findings. The sixth section concludes.

Shedding Light into Preference Heterogeneity: Why Players of Traveller’s Dilemma Depart from Individual Rationality?

We analyse the experimental outcome of the Traveller's Dilemma under three different treatments - baseline (BT), compulsory ex post players' meeting (CET) and voluntary ex post players' meeting (VET) - to evaluate the effects of removal of anonymity (without preplay communication) in a typical one shot game in which there is a dilemma between individual rationality and aggregate outcome. We show that deviations from the Nash equilibrium outcome are compatible with the joint presence in the sample of individually rational, team-rational, (gift giving), "irrational" and (opportunistic) "one-shot-cooperator" types. The two main factors affecting deviations from the standard individually rational behaviour are male gender and the interaction of generalised trust with the decision of meeting the counterpart in the VET design.Traveller’s Dilemma, Team Preferences, Social Distance, Generalised Trust, Relational Goods

Common reason to believe and framing effect in the team reasoning theory: an experimental approach

The present paper is aimed at empirically verifying the role of the “common reason to believe” (Sugden 2003) and of framing (Bacharach 1999 and 2006) within the theory of team reasoning. The analysis draws on data collected trough a Traveler’s Dilemma experiment. To study the role of the common reason to believe, players’ belief in their counterpart’s choice are elicited and the correlation between the endorsement of team reasoning and beliefs is considered. With respect to the idea of frame proposed by Bacharach, we study the effect of the reduction of social distance on the probability that the “we-frame” comes to players’ mind. Social distance is decreased by introducing a meeting between the two players after the game. It is shown that the common reason to believe appropriately explains the internal logic of team reasoning and that the reduction of social distance makes the “we-frame” more likely.Team Reasoning, Common Reason to Believe, Framing, Traveler’s Dilemma; Social Distance