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

Incomplete Punishment Networks in Public Goods Games: Experimental Evidence

Abundant evidence suggests that high levels of contributions to public goods can be sustained through self-governed monitoring and sanctioning. This experimental study investigates the effectiveness of decentralized sanctioning institutions in alternative punishment networks. Our results show that the structure of punishment network significantly affects allocations to the public good. In addition, we observe that network configurations are more important than punishment capacities for the levels of public good provision, imposed sanctions and economic efficiency. Lastly, we show that targeted revenge is a major driver of anti-social punishment

Social preferences, accountability, and wage bargaining

We assess the extent of preferences for employment in a collective wage bargaining situation with heterogeneous workers. We vary the size of the union and introduce a treatment mechanism transforming the voting game into an individual allocation task. Our results show that highly productive workers do not take employment of low productive workers into account when making wage proposals, regardless of whether insiders determine the wage or all workers. The level of pro-social preferences is small in the voting game, while it increases as the game is transformed into an individual allocation task. We interpret this as an accountability effect

Benevolent characteristics promote cooperative behaviour among humans

Cooperation is fundamental to the evolution of human society. We regularly observe cooperative behaviour in everyday life and in controlled experiments with anonymous people, even though standard economic models predict that they should deviate from the collective interest and act so as to maximise their own individual payoff. However, there is typically heterogeneity across subjects: some may cooperate, while others may not. Since individual factors promoting cooperation could be used by institutions to indirectly prime cooperation, this heterogeneity raises the important question of who these cooperators are. We have conducted a series of experiments to study whether benevolence, defined as a unilateral act of paying a cost to increase the welfare of someone else beyond one's own, is related to cooperation in a subsequent one-shot anonymous Prisoner's dilemma. Contrary to the predictions of the widely used inequity aversion models, we find that benevolence does exist and a large majority of people behave this way. We also find benevolence to be correlated with cooperative behaviour. Finally, we show a causal link between benevolence and cooperation: priming people to think positively about benevolent behaviour makes them significantly more cooperative than priming them to think malevolently. Thus benevolent people exist and cooperate more

What happens if you single out? An experiment

We present an experiment investigating the effects of singling out an individual on trust and trustworthiness. We find that (a) trustworthiness falls if there is a singled out subject; (b) non-singled out subjects discriminate against the singled out subject when they are not responsible of the distinct status of this person; (c) under a negative frame, the singled out subject returns significantly less; (d) under a positive frame, the singled out subject behaves bimodally, either selecting very low or very high return rates. Overall, singling out induces a negligible effect on trust but is potentially disruptive for trustworthiness

The UN in the lab

We consider two alternatives to inaction for governments combating terrorism, which we term Defense and Prevention. Defense consists of investing in resources that reduce the impact of an attack, and generates a negative externality to other governments, making their countries a more attractive objective for terrorists. In contrast, Prevention, which consists of investing in resources that reduce the ability of the terrorist organization to mount an attack, creates a positive externality by reducing the overall threat of terrorism for all. This interaction is captured using a simple 3×3 “Nested Prisoner’s Dilemma” game, with a single Nash equilibrium where both countries choose Defense. Due to the structure of this interaction, countries can benefit from coordination of policy choices, and international institutions (such as the UN) can be utilized to facilitate coordination by implementing agreements to share the burden of Prevention. We introduce an institution that implements a burden-sharing policy for Prevention, and investigate experimentally whether subjects coordinate on a cooperative strategy more frequently under different levels of cost sharing. In all treatments, burden sharing leaves the Prisoner’s Dilemma structure and Nash equilibrium of the game unchanged. We compare three levels of burden sharing to a baseline in a between-subjects design, and find that burden sharing generates a non-linear effect on the choice of the efficient Prevention strategy and overall performance. Only an institution supporting a high level of mandatory burden sharing generates a significant improvement in the use of the Prevention strategy

Pay What You Want as a Marketing Strategy in Monopolistic and Competitive Markets

Pay What You Want (PWYW) can be an attractive marketing strategy to price discriminate between fair-minded and selfish customers, to fully penetrate a market without giving away the product for free, and to undercut competitors that use posted prices. We report on laboratory experiments that identify causal factors determining the willingness of buyers to pay voluntarily under PWYW. Furthermore, to see how competition affects the viability of PWYW, we implement markets in which a PWYW seller competes with a traditional seller. Finally, we endogenize the market structure and let sellers choose their pricing strategy. The experimental results show that outcome-based social preferences and strategic considerations to keep the seller in the market can explain why and how much buyers pay voluntarily to a PWYW seller. We find that PWYW can be viable in isolation, but it is less successful as a competitive strategy because it does not drive traditional posted-price sellers out of the market. Instead, the existence of a posted-price competitor reduces buyers’ payments and prevents the PWYW seller from fully penetrating the market. If given the choice, the majority of sellers opt for setting a posted price rather than a PWYW pricing. We discuss the implications of these results for the use of PWYW as a marketing strategy

Behavioral aspects of communication in organizations

International audienc

Expert chess memory: Revisiting the chunking hypothesis

After reviewing the relevant theory on chess expertise, this paper re-examines experimentally the finding of Chase and Simon (1973a) that the differences in ability of chess players at different skill levels to copy and to recall positions are attributable to the experts' storage of thousands of chunks (patterned clusters of pieces) in long-term memory. Despite important differences in the experimental apparatus, the data of the present experiments regarding latencies and chess relations between successively placed pieces are highly correlated with those of Chase and Simon. We conclude that the 2-second inter-chunk interval used to define chunk boundaries is robust, and that chunks have psychological reality. We discuss the possible reasons why Masters in our new study used substantially larger chunks than the Master of the 1973 study, and extend the chunking theory to take account of the evidence for large retrieval structures (templates) in long-term memory