Antisocial punishment in two social dilemmas

The effect of sanctions on cooperation depends on social and cultural norms. While free riding is kept at bay by altruistic punishment in certain cultures, antisocial punishment carried out by free riders pushes back cooperation in others. In this paper we analyze sanctions in both a standard public goods game with a linear production function and an otherwise identical social dilemma in which the minimum contribution determines the group outcome. Experiments were run in a culture with traditionally high antisocial punishment (Southern Europe). We replicate the detrimental effect of antisocial sanctions on cooperation in the linear case. However, we find that punishment is still widely effective when actions are complementary: the provision of the public good significantly and substantially increases with sanctions, participants punish significantly less and sanctions radically transform conditional cooperation patterns to generate significant welfare gains

The Puzzle of Social Preferences

We present a brief overview of the experimental economics literature on social preferences. In numerous experiments, economically incentivized subjects are willing to sacrifice part of their material earnings to compensate the kind behavior of others, or will be willing to reciprocate at a non-negligible cost, or even pay a positive price for punishing the behavior of selfish individuals. All these actions are labeled as social in economics because there is no apparent way to reconcile them with any reasonable form of pure self-interest. We focus on social dilemma games and want to communicate two main messages. First, research in experimental economics has produced abundant evidence that illustrates the social components of people’s preferences. Second, social sanctions of different types play an important role in facilitating cooperative behavior.

AN EXPERIMENTAL ANALYSIS OF CONDITIONAL COOPERATION

Experimental and empirical evidence identifies the existence of socialpreferences and proposes competing models of such preferences. In this paper, wefurther examine one such social preference: conditional cooperation. We run threeexperimental public goods games, the traditional voluntary contribution mechanism(VCM, also called the linear public goods game), the weak-link mechanism (WLM) andthe best-shot mechanism (BSM). We then analyze the existence and types ofconditional cooperation observed. We find that participants are responsive to the pastcontributions of others in all three games, but are most responsive to differentcontributions in each game: the median in the VCM, the minimum in the WLM and themaximum in the BSM. We conclude by discussing implications of these differences forbehavior in these three mechanisms. This paper thus refines our notions of conditionalcooperation to allow for different types of public good production functions and byextension, other contexts.experimental economics, conditional cooperation, public goods

Within-Team Competition in the Minimum Effort Coordination Game

We report the results of an experiment on a continuous version of the minimum effort coordination game. The introduction of within-team competition significantly increases effort levels relative to a baseline with no competition and increases coordination relative to a secure treatment where the payoff-dominant equilibrium strategy weakly dominates all other actions. Nonetheless, within-team competition does not prevent subjects to polarize both in the efficient and the inefficient equilibria.Coordination Games, Team Incentives, Minimum Effort Game

ASSET MARKETS AND EQUILIBRIUM SELECTION IN PUBLIC GOODS GAMES WITH PROVISION POINTS: AN EXPERIMENTAL STUDY

In this paper we report some experimental results on the effects that auctioning the right to play a public goods game with a provision point may have on equilibrium selection and efficiency. A control treatment reveals that, as in the experimental literature for similar environments, subjects' behavior converges to the inefficient outcome whenever they are endowed with the right to play the game. However, auctioning off such a right among a larger population of players has a significant efficiency-enhancing effect. Once the Pareto-dominant equilibrium in the second stage is reached, the auction price at the first stage increases to its upper limit, dissipating all players' gains associated with the provision of the public good. The full contribution equilibrium was extremely robust: individual subjects' deviations from the equilibrium strategy were not able to force lower market prices and did not affect provision of the public good in subsequent periods.Public Goods; Provision Points; Experimental Markets.

Inducing a Self-Fulfilling Prophecy in Public Goods Games.

This study explores how a self-fulfilling prophecy can solve a social dilemma. We ran two experimental treatments, baseline and automata. Both consisted of a finitely repeated public goods game with a surprise restart. In the automata treatment it was announced that there might be automata playing a grim trigger strategy. This announcement became a self-fulfilling prophecy. That is, most participants actually followed a grim trigger strategy in the automata treatment resulting on an increase on the average contributions to the public good relative to the baseline treatment. Moreover, four out of nine groups managed to fully cooperate almost until the last period. Furthermore, after the surprise restart, when the automata threat is less credible, subjects’ behavior was very close to that in the original game.self-fulfilling prophecy, public goods game, grim trigger strategy,cooperation, automata, beliefs.

Leadership and Overcoming Coordination Failure with Asymmetric Costs

We study how the heterogeneity of agents affects the extent to which changes in financial incentives can pull a group out of a situation of coordination failure. We focus on the connections between cost asymmetries and leadership. Experimental subjects interact in groups of four in a series of weak-link games. The treatment variable is the distribution of high and low effort cost across subjects. We present data for one, two and three low-cost subjects as well as control sessions with symmetric costs. The overall pattern of coordination improvement is common across treatments. Early coordination improvements depend on the distribution of high and low effort costs across subjects, but these differences disappear with time. We find that initial leadership in overcoming coordination failure is not driven by low-cost subjects but by subjects with the most frequent cost. This conformity effect can be due to a kind of group identity or to the cognitive simplicity of acting with identical others.Experiments, Coordination, Organizational change, Heterogeneous agents, Leadership

Empowering consumers to reduce corporate tax avoidance: Theory and Experiments

We analyze corporate tax avoidance in a theoretical model and in a stylized experimental Bertrand setting in which symmetric firms and consumers sell and buy a homogeneous product, when human participants make decisions as firms and consumers. We investigate how market power and information disclosure of firms’ tax avoidance behavior impacts corporate tax avoidance and market competition. By imposing a tax rating, corporate tax behavior becomes more transparent, and consumers actively and costly boycott firms that do not pay their taxes. Firms adapt and anticipate consumer boycotts and increase tax payments, and prices. When rating disclosure is voluntary, the positive effect on corporate tax compliance vanishes in large markets

An experimental analysis of team production in networks

Experimental and empirical evidence highlights the role of networks on social outcomes. In this paper we test the properties of exogenously fixed networks in team production. Subjects make the same decisions in a team-work environment under four different organizational networks: The line, the circle, the star, and the complete network. In all the networks, links make information available to neighbors. This design allows us to analyze decisions across networks and a variety of subjects’ types in a standard linear team production game. Contribution levels differ significantly across networks and the star is the most efficient incomplete one. Moreover, our results suggest that subjects act as conditional cooperators with respect to the information received from the network.public goods, networks, experiments

Stand by me—Experiments on help and commitment in coordination games

We present experiments studying how high-ability individuals use help to foster efficient coordination. After an initial phase that traps groups in a low-productivity equilibrium, incentives to coordinate are increased, making it possible to escape this performance trap. The design varies whether high-ability individuals can offer help and, if so, whether they must commit to help for an extended period. If help is chosen on a round-by-round basis, the probability of escaping the performance trap is slightly reduced by allowing for help. The likelihood of success significantly improves if high-ability individuals must commit to help for an extended time. We develop and estimate a structural model of sophisticated learning that provides an explanation for why commitment is necessary. The key insight is that potential leaders who are overly optimistic about their ability to teach their followers are too fast to eliminate help in the absence of commitment