Trust and reciprocity in incentive contracting

Principals can attempt to get agents to perform certain actions preferable to the principal by using ex post punishments or rewards to align incentives. Field data is mixed on whether, and to what extent, such informal incentive contracting (paradoxically) crowds out efficient solutions to the agency problem. This paper explores, via a novel set of laboratory experiments, the impact of ex post incentives on informal contracts between principals and agents in bargaining environments in which there are gains from exchange and when there is an opportunity for the principal to relay a no-cost demand of the division of those gains. Incentive contracting in these environments does not crowd-out off-equilibrium cooperation, and at high incentive levels cooperation is crowded in.incentives; trust; reciprocity; organizations; experimental economics

Accounting for Risk: Conceptualizing a Robust Greenhouse Gas Inventory for Financial Institutions

Outlines objectives, options, and challenges for financial firms and stakeholders in accounting for greenhouse gas emissions from their investments and services as part of climate change risk management. Discusses methods, scope, reporting, and use

Epistemic Conditions and Social Preferences in Trust Games

It is well-known that subjects in bilateral bargaining experiments often exhibit choice behavior suggesting there are strong reciprocators in the population. But it is controversial whether explaining this data requires a social preference model that invokes genuine strong reciprocity or whether some social preference model built on other-regarding preferences as a surrogate can explain it. Since the data precedes theory here, all the social preference models agree on most of it — making direct tests more difficult. We report results from a laboratory experiment using a novel method for testing between the classes of social preference models in the trust game that manipulates the distribution of payoff information in the game. We find evidence supporting the strong reciprocity hypothesis.social preferences, trust game, reciprocity, strong reciprocators

The Role of Expectations and Gender in Altruism

A central question in the study of altruism has been whether there is a systematic gender difference in giving behavior. Most experimental economics research has found that women are more generous than men. Evidence also suggests that gender differences depend upon the price of giving: males are more altruistic when the price of giving is low, while females are more altruistic when the price of giving is high. However, in the modified dictator game, a key variable in one’s decision to give is what one expects to receive. Systematic differences in those expectations may well contribute to systematic differences in altruistic behavior. We show that these expectations drive an important and widely reported result. When these expectations are homegrown, we replicate the finding. When expectations of receiving are uniform rather than homegrown, gender differences in price sensitivity disappear: males and females give equal amounts. This suggests that it is gender differences in expectations about others’ giving — not differences in tastes for fairness — that explains the previous results.altruism, charitable giving, dictator game, gender differences, experiment

Trust and Reciprocity in 2-node and 3-node Networks

In this paper we focus on the interaction between exogenous network structure and bargaining behavior in a laboratory experiment. Our main question is how competition and cooperation interact in bargaining environments based on networked versions of the investment game. We focus on 3-node networked markets and vary the network structure to model competition upstream (multiple sellers paired with a monopsonistic buyer) and competition downstream (a monopolistic seller paired with multiple buyers). We describe two kinds of models of trust for such networked environments, absolute and relativized models, and use this structure to generate a general hypothesis about these environments: that information crowds in cooperation on the competitive side of the market. The experimental results support this hypothesis.networks, trust, reciprocity, experiments, investment game

Sustaining cooperation in trust games

It is well-known in evolutionary game theory that population clustering in Prisoner's Dilemma games allows some cooperative strategies to invade populations of stable defecting strategies. We adapt this idea of population clustering to a two-person trust game. Without knowing it, players are typed based on their recent track record as to whether or not they are trusting (Players 1) and whether or not they are trustworthy (Players 2). They are then paired according to those types: trustors with trustworthy types, and similarly non-trustors with untrustworthy types. In the control comparisons, Players 1 are randomly repaired with Players 2 without regard to type. We ask: are there natural tendencies for people to cooperate more frequently in environments in which they experience more cooperation in comparison with controls?exchange; trust; reciprocity; cooperation; clustering; bargaining; experimental economics

Magnetic Characterization of Iron Formations from drill cores near Iron Mountain, Michigan

The magnetic properties of the ~1.88 Ga Vulcan Iron Formation and Felch Formation were investigated from samples taken from three drill cores through the Felch Trough, north of Iron Mountain, MI. The conducted analyses included measurements of natural remanent magnetization, magnetic hysteresis, first order reversal curves, magnetic anisotropy, scanning electron microscopy, and electron dispersive spectroscopy. The data is compared to the results of a previous magnetic characterization study conducted on surface outcrop samples on two members of the Vulcan formation, the Curry and Traders members, near Iron Mountain, MI. Two distinct members of the Vulcan Formation were identified in the core samples that correlated to the members from the surface samples. While there were some similarities between the surface and core samples, the core samples presented higher magnetic susceptibilities by 1-2 orders of magnitude as well as a lower ratio of hematite to magnetite than the surface samples. The discrepancy may be due to the oxidation of magnetite to hematite by surface weathering. The obtained results, particularly the higher magnetic susceptibility, will be useful for interpretation of data collected by an aeromagnetic survey conducted in the area by the USGS

Minimal Social Cues in the Dictator Game

This paper reports results of an incentivized laboratory experiment manipulating an extremely weak social cue in the Dictator Game. Prior to making their decision, we present dictators with a simple visual stimlulus: either three dots in a “watching-eyes” configuration, or three dots in a neutral configuration. The watching-eyes configuration is suggestive of a schematic face—a stimuli that is known to weakly activate the fusiform face area of the brain (Tong, et al., 2000; Bednar and Miikkulainen, 2003; Johnson and Morton, 1991). Given the experimental evidence for automatic priming of watching eyes of others, it is thus reasonable to hypothesize that even though the social cue is very weak, this activation might be sufficient to produce a significant change in social behavior. Our results demonstrate that such a weak social cue does increase giving behavior—even under conditions of complete anonymity—and this difference in behavior across subjects is entirely explained by differences in the choice behavior of males. In fact, males in our treatment condition, who typically act more selfishly than do females in conditions of complete anonymity, give twice as much to anonymous recipients than females give.dictator game, social preferences, laboratory experiment, social distance

Radiative and convective heating during atmospheric entry

Radiative and convective heating during atmospheric entr

Principal succession: Realities encountered by successor principals during the succession process

In order to better understand the realities of principal succession (an interactive sequencing process for changing school administrators) it was the purpose of this study to examine the relationship between four organizational frames (structural, human resource, political, and symbolic) delineated by Bolman and Deal (1997) and three traits noted in the literature as evident during school principal succession (predecessor leave-taking, succession source, and experience). There is little research regarding school principal succession, and concern exists regarding the adequacy of transition practices within organizations. A questionnaire was employed to survey all school principals in the state of Kansas who succeeded during the 1997–98 or 1998–99 school years. Three rationalizations for the study were: (a) an information base for successor principals, (b) an information base for school districts to access during the hiring process, and (c) an information base for institutions of higher education as they design training programs. Recommendations and suggestions for further research are given for each area of rationalization. The research questions explored and the conclusions for each are as follows: (1) As a function of the predecessor\u27s reason for leaving, what differences will there be in the perceived importance of each of the four frames (structural, human resource, political, and symbolic)? Conclusions were (a) successors value all frames regarding Predecessor Status less when their predecessors left to go to a different district, and (b) the inevitable conflict within a group because of enduring differences and scarce resources as well as understanding the symbolism surrounding “why we do what we do here” outweighs the necessity of organizational configurations and the role principals\u27 competencies play within organizations. (2) What differences will there be between successors from outside the district and successors from inside the district in the perceived importance of each of the four frames (Structural, Human Resource, Political, and Symbolic)? Conclusions were that (a) inside successors valued the Political frame more than outside successors, and (b) contingencies within the Political frame such as power, competency and influence, whether the stakeholders had a say in hiring, and the personality of the predecessor were the issues that most likely influenced decisions to hire from inside or outside the district. (3) How is the perceived importance of each of the four frames (Structural, Human Resource, Political, and Symbolic) related to the number of years of school administration experience prior to entering the present position? Conclusions were that (a) respondents (a majority of whom had the least experience) valued symbolism more than they did the other frames regarding experience, and (b) their valuing of symbolism increased with years of experience. (4) What are the relationships among the four frames (structural, human resource, political, and symbolic)? Conclusions were that (a) all the frames were statistically significantly correlated, (b) the Structural Political, and Symbolic frames were positively correlated with each other, and (c) the Human Resource frame was negatively correlated with the other three, suggesting that successors consciously attend to specific competencies considered vital within the Human Resource frame