Law and Behaviours in Social Dilemmas: Testing the Effect of Obligations on Cooperation

Laws consist of two components: the ‘obligations’ they express and the ‘incentives’ designed to enforce them. In this paper we run a public good experiment to test whether or not obligations have any independent effect on cooperation in social dilemmas. The results show that, for given marginal incentives, different levels of minimum contribution required by obligation determine significantly different levels of average contributions. Moreover, unexpected changes in the minimum contribution set up by obligation have asymmetric dynamic effects on the levels of cooperation: a reduction does not alter the descending trend of cooperation, whereas an increase induces a temporary re-start in the average level of cooperation. Nonetheless, obligations per se cannot sustain cooperation over time.Obligation, Incentives, Public Good Game, Experiments.

The Hidden Effect of Rules: Behavioural consequences of Obligations

How formal institutions (e.g. laws and public policies) affect human behaviour represents a crucial issue in economic analysis. Formal rules are defined as obligations backed by incentives. The economic literature has largely studied the role of material incentives in shaping individual behaviour. Yet, the role of obligations, i.e. what formal rules ask people to do or not to do, remains a black box. In this paper we run a public good game to analyze the behavioural effects of obligations. We find experimental evidence that obligations can affect cooperative behaviour both by coordinating conditional co-operators’ beliefs on others’ behaviour and by directly affecting social preferences. Our results shed a new light on the behavioural channels through which formal rules can affect individual behaviour and suggest the opportunity to broaden the scope of analysis in order to better understand the effects of institutions on economic outcomes.Beliefs, Human Behaviour, Incentives, Obligations, Preferences, Public Good Game.

Prison Conditions and Recidivism

We use a unique data set on post-release behavior of former Italian inmates to estimate the effect of prison conditions on recidivism. By combining different sources of data we exploit variation in prison conditions measured by: 1) the extent of overcrowding at the prison level, 2) the number of deaths in the facility of detention during an inmate’s stay and 3) the distance of the prison from the chief town of the province where the prison is located. By considering inmates who served their sentence in a jurisdiction different from the hometown in which they live after release, we can include province of residence fixed effects and account for the main source of unobserved heterogeneity correlated to prison conditions. We find that a harsher prison treatment does not reduce former inmates’ criminal activity. The extent of overcrowding and the number of deaths do not decrease the probability to be re-arrested. Instead, we find evidence that the degree of isolation measured by distance from the prison of detention to the chief town of the province where the prison is located increases recidivism.crime, prison, deterrence

How laws affect behavior : Obligations, incentives and cooperative behavior

Laws and other formal rules are ‘obligations backed by incentives’. In this paper we explore how formal rules affect cooperative behavior. Our analysis is based on a series of experimental public good games designed to isolate the impact of exogenously requested minimum contributions (obligations) from those of the marginal incentives backing them. We find that obligations have a sizeable effect on cooperative behavior even in the absence of incentives. When non-binding incentives are introduced, requested contributions strongly sustain cooperation. Therefore, in contrast with cases in which incentives crowd-out cooperative behavior, in our experiments obligations and incentives are complementary, jointly supporting high levels of contributions. Moreover, we find that variations in obligations affect behavior even when incentives are held constant. Finally, we explore the behavioral channels of the previous results, finding that people's beliefs about others’ contributions and the willingness to cooperate are both called into play

Public Investment and Economic Performance in Highly Indebted Poor Countries: An Empirical Assessment

Abstract Understanding how public investment affects economic performance in highly indebted low‐income countries is crucial in order to implement effective fiscal policies for adjustment with growth. In this paper we provide an empirical analysis to investigate the relationship between public investment, private investment and output. A dynamic econometric procedure is implemented on a selected group of Highly Indebted Poor Countries (HIPCs). Our results provide empirical support for the crowding‐in hypothesis and a positive relation between public investment and output.Crowding‐in, crowding‐out, economic growth, fiscal adjustment, highly indebted countries, public investment, H54, H63, O11, O23,

Behavioural Effects of Obligations

How formal rules affect human behaviour is a crucial issue in economics. Formal rules are defined as obligations backed by incentives. The economic literature has largely focused on the role of incentives in shaping individual behaviour. Yet, the role of obligations, i.e. what formal rules ask people to do or not to do, has been largely ignored. In this paper we run a public good game experiment to analyze the behavioural effects of obligations. We find evidence that obligations can affect cooperative behaviour both by coordinating conditional co-operators’ beliefs about others’ behaviour and by directly affecting preferences for cooperation. Our results shed a new light on the behavioural channels through which formal rules can affect individual behaviour. These findings suggest the opportunity to broaden the scope of analysis in order to gain a better understanding of the effects of institutions on economic outcomes

Horizontal Equity

The principle of horizontal equity (HE) is considered as a basic principle to follow in order to design and evaluate a redistributive policy. However, the theoretical debate has not yet clarified what exactly horizontal equity is. In this paper we aim to clarify the meaning of the principle of HE and its normative content. In particular, we establish the true status of the two fundaments of the principle of HE, defining what is meant by ‘equals’ and then treating these ‘equals’ ‘equally’. Our analysis brings forth a new and more appropriate definition of the principle of HE

Obligations and cooperative behaviour in public good games

Laws express rules of conduct ('obligations') enforced by the means of penalties and rewards ('incentives'). The role of incentives in shaping individual behaviour has been largely analysed in the traditional economic literature. On the contrary, very little is known about the specific role of obligations. In this paper we test whether or not obligations have any independent effect on cooperation in a public good game. The results show that, for given marginal incentives, different levels of minimum contribution required by obligation determine significantly different levels of average contributions. Moreover, obligations per se cannot sustain cooperation over time, even if they affect the rate of decline of average contributions. Finally, unexpected changes in the minimum contribution have asymmetric dynamic effects on the levels of cooperation: a reduction does not alter the descending trend of cooperation, whereas an increase induces a temporary re-start in average contributions.Cooperation Incentives Obligations Laws Public good games