Personal Autonomy in Trust-Based Interactions. An Experimental Analysis

The paper experimentally investigates the interactions between restrictions to personal autonomy and reciprocity in a Principal-Agent relationship. Previous experimental contributions have shown that actions aimed at restricting decisional autonomy are likely to reduce reciprocity in trust- based relationships. Results in our experiment, which is a modified version of the Investment Game, differ from previous findings and conform more to standard economic predictions. Principals in our interaction do not support the self-determination of agents. On the other side, agents do not show any positive reciprocity when allowed to freely determine their behavior in the game. (This is an updated version of the CEEL Working Paper 2-05)Principal-Agent relationship, Trust, Reciprocity, Self-Determination, Incentives

Conformism and Social Connections: An Empirical Analysis of Self-Commitment to Food Purchase

Recent years registered a renewed interest in social interactions. However, due to some well-known identification problems, empirical estimation of peer effects remains quite problematic. To overcome problems of this kind, a database providing detailed information on the sequential structure of choices is analyzed. Observations refer to the deposit of money in a personal account devoted to the purchase of food at campus refectories. A clear tendency to conform to directly observed deposits is registered in the data. Furthermore, higher conformism is observed among mutually acquainted individuals.Social interactions; Identification; Conformism; Social Proximity; Food Purchase

Is It Just Legitimacy of Endowments? An Experimental Analysis of Unilateral Giving

Deviations from standard game theoretical predictions have been repeatedly observed in basic Dictator Games. Different interpretations have been provided to these deviations. On the one hand, empirical (among others, Forsythe et al., 1994) and theoretical works (among others, Bolton and Ockenfels, 2000; Fehr and Schmidt, 1999) have adopted the explanation based on other-regarding concerns. On the other hand, potential weaknesses in standard design of the game have been stressed. Evidence collected shows that when controlling for reputation considerations (Hoffman et al., 1996) and for legitimacy of assets (Cherry et al., 2002) behavior observed in the experiments is very close to that predicted by standard game theory. Results from our experiment suggest that the relevance of these two factors in explaining observed behavior may be overestimated by previous contributions. Relevant deviations from selfish equilibrium are registered in a condition of full-anonymity when assets to be shared are earned by the dictators and, simultaneously, recipients are allowed to work without being rewarded for their effort.

Trust and Detection: An Experimental Investigation of Motivational Crowding Out

Several contributions, either in economics and Social Psychology literature, have evidenced the negative impact of controlling practices on intrinsic motivation. The aim of the present paper is to experimentally test some implications of a controlling strategy in a simple game, called Big Brother, where an Agent and a Principal face some decisional tasks involving trust and trustworthiness. The game has been based on the well-known Investment Game introduced by Berg et al.. What has been registered in the data is that those who have to decide whether to introduce or not the monitoring strategy, the Principals, do not consider the possibility of reciprocity in the behavior of those who are monitored, the Agents. On the other side the Agents do not reciprocate positively to the decision of non-monitoring their activity. Even more surprisingly Agents who are detected in their intentions tend to "overshoot" in the effort exerted following the introduction of the costly monitoring strategy made by their Principal.

Does procedural fairness crowd out other-regarding concerns? A bidding experiment

Bidding rules that guarantee procedural fairness may induce more equilibrium bidding and moderate other-regarding concerns. In our experiment, we assume commonly known true values and only two bidders to implement a best-case scenario for other-regarding concerns. The two-by-two factorial design varies ownership of the single indivisible commodity (an outside seller versus collective ownership) and the price rule (first versus second price). Our results indicate more equilibrium behavior under the procedurally fair price rule, what, however, does not completely crowd out equality and efficiency seekinAuctions, Fair Division Games, Procedural fairness

The hidden costs of control: an unsuccessful replication study

This note reports a replication study of Falk and Kosfelds (2006) medium control treatment. In the experimental game, an agent has an endowment of 120 experimental currency units and decides how much to transfer to a principal. For every unit that the agent gives up, the principal receives two units. Before the agent decides how much to transfer voluntarily, the principal decides whether or not to control the agent by imposing a compulsory transfer of 10 units. Like the original study, we observe that control entails hidden costs. Unlike the original study, we do not observe that the hidden costs of control outweigh the benefits and we observe that most of the principals decide to control the agent

Are cooperators efficiency- or fair-minded?: evidence from a public goods experiment

We use a two-person public goods experiment to distinguish between effciency and fairness as possible motivations for cooperative behavior. Asymmetric marginal per capita returns allow only the high-productivity player to increase group payoffs when contributing positive amounts. Asymmetric contributions, however, yield unequal individual payoffs. To assess a priori cooperative preferences, we measure individual `value-orientations' by means of the decomposed game technique. Overall, our results indicate that fairness (or inequality aversion) is more in°uential than efficiency in driving behavior

Hidden Costs of Control: Three Repetitions and an Extension

We report three repetitions of Falk and Kosfeld's (2006) low and medium control treatments with 364 subjects. Each repetition employs a sample drawn from a standard subject pool of students and demographics vary across samples. Our results largely conflict with those of the original study. We mainly observe hidden costs of control of low magnitude that lead to low-trust principal-agent relationships. Our subjects were asked, at the end of the experimental session, to complete a questionnaire in which they had to state their work motivation in hypothetical scenarios. Our questionnaires are identical to the ones administered in Falk and Kosfeld's (2006) questionnaire study. In contrast to the game play data, our questionnaire data are similar to those of the original questionnaire study. In an attempt to solve this puzzle, we report an extension with 228 subjects where performance-contingent earnings are absent i.e. both principals and agents are paid according to a flat participation fee. We observe that hidden costs outweigh benefits of control which shows that control aversion is more prevalent under hypothetical than under real incentives. Still, in the low control treatment, we observe much weaker negative responses to control in our extension than in the original study. This observation, the fact that the original study uses real incentives, and preliminary findings on the relationship between demographics and the degree of control aversion lead us to conclude that Falk and Kosfeld's (2006) experimental regularities originate from the characteristics of their subjects.Control, Demographics, Experimental Economics, Incentives, Intrinsic Motivation

Buying and selling risk: An experiment investigating evaluation asymmetries

Experimental studies of the WTP-WTA gap avoid social trading by implementing an incentive compatible mechanism for each individual trader. We compare a traditional random price mechanism and a novel elicitation mechanism preserving social trading, without sacrificing mutual incentive compatibility. Furthermore, we focus on risky goods - binary monetary lotteries - for which asymmetries in evaluations are more robust with respect to experimental procedures. For both elicitation mechanisms, the usual asymmetry in evaluation by sellers and buyers is observed. An econometric estimation sheds new light on its causes: potential buyers are over-pessimistic and systematically underweight the probability of a good outcome

Buying and Selling Risk - An Experiment Investigating Evaluation Asymmetries

Experimental studies of the WTP-WTA gap avoid social trading by implementing an incentive compatible mechanism for each individual trader. We compare a traditional random price mechanism and a novel elicitation mechanism preserving social trading, without sacrificing mutual incentive compatibility. Furthermore, we focus on risky goods - binary monetary lotteries - for which asymmetries in evaluations are more robust with respect to experimental procedures. For both elicitation mechanisms, the usual asymmetry in evaluation by sellers and buyers is observed. An econometric estimation sheds new light on its causes: potential buyers are over-pessimistic and systematically underweight the probability of a good outcome