Happiness, Morality, and Game Theory

Non-cooperative Games, Happiness, Morality.

Endogenous Social Preferences, Heterogeneity and Cooperation

We set up an analytical framework focusing on the problem of interaction over time when economic agents are characterized by various types of distributional social preferences. We develop an evolutionary approach in which individual preferences are endogenous and account for the evolution of cooperation when all the players are initially entirely selfish. In particular, within motivationally heterogeneous agents embedded in a social network, we adopt a variant of the indirect evolutionary approach, where material payoffs play a critical role, and assume that a coevolutionary process occurs in which subjective preferences gradually evolve due to a key mechanism involving behavioral choices, relational intensity and degree of social openness. The simulations we carried out led to strongly consistent results with regard to the evolution of player types, the dynamics of material payoffs, the creation of significant interpersonal relationships among agents and the frequency of cooperation. In the long run, cooperation turns out to be the strategic choice that obtains the best performances, in terms of material payoffs, and "nice guys", far from finishing last, succeed in coming out ahead.Behavioral Economics; Cooperation; Prisoner's Dilemma; Social Evolution; Heterogeneous Social Preferences; Indirect Evolutionary Approach

Happiness and Tax Morale: an Empirical Analysis

This paper presents empirical evidence that \tax morale" - taxpayers' intrinsic motivation to pay taxes - constitutes a new determinant of happiness, even after controlling for several demographic and socioeconomic factors. Using data on Italian households for 2004, we assess the strength of tax morale by relying on single items as well as composite multi-item indices. Our main result that scal honesty generates a higher hedonic payo than cheating is in line with Harbaugh et al. (2007)'s neuroeconomic nding. Further, it sheds light on the well-known \puzzle of compliance", that is the fact that many individuals pay taxes even when expected penalty and audit probability are extremely low: tax compliance is less puzzling once we show that not only it is materially costly, but also provides sizeable non-pecuniary benets that make it rewarding in itself.Happiness, Tax Morale, Tax Compliance

La grande illusione. False relazioni e felicita' nelle economie di mercato contemporanee

Scopo di questo contributo e' mostrare che i noti paradossi della felicita' messi a fuoco dall'analisi economica degli ultimi decenni (cfr Easterlin 1974; Scitovsky 1976; Frey e Stutzer 2002, Layard 2005) sono riconducibili anche alla sempre maggiore diffusione, all'interno delle cosiddette economie post-industriali, di quelli che potremmo qualificare come "beni pseudogratificatori", intendendo con tale espressione quel sottoinsieme di beni il cui potenziale gratificatorio per chi ne fruisce e' basso, nonostante le aspettative elevate dei soggetti al riguardo. Piu' precisamente, servendoci di una distinzione kahnemaniana, si puo' dire che nel caso dei beni pseudo-gratificatori l'utilita' sperimentata (experienced utility), ovvero l'utilita' ex post, si riveli essere sistematicamente e significativamente inferiore all'utilita' decisionale (decision utility),ovvero all'utilita' ex-ante (cfr, per questa distinzione, Kahneman et al. 1997). Nei paragrafi che seguono, ci concentreremo su due categorie di beni pseudo-gratificatori accomunate da una caratteristica fondamentale: in entrambi i casi in esame, il consumo individuale passa attraverso forme di socialita'. Quando, a livello teorico, si fa riferimento congiuntamente ai beni posizionali e ai beni relazionali, due categorie di beni "a fornitura sociale" (socially provided goods) particolarmente "salienti" all'interno delle economie avanzate contemporanee, si osserva che mentre nel primo caso sono in gioco forme di socialita' strumentale, nel secondo caso la socialita' e' invece di natura espressiva, nel senso che le relazioni in essere hanno un valore intrinseco, agli occhi dei soggetti in esse coinvolti. In questa nostra riflessione, tuttavia, cercheremo di complicare il quadro di riferimento poiche', come detto, la nostra analisi vertera' su beni (relazionali e posizionali) pseudogratificatori: le forme di posizionalita' e relazionalita' che prenderemo in esame, infatti, configurandosi come surrogati a basso costo di beni "genuinamente" posizionali e relazionali, possiedono un potere gratificatorio che si rivela particolarmente modesto ex post (e in itinere), nonostante le (erroneamente) elevate aspettative (ex ante) dei soggetti coinvolti.status; beni posizionali; beni relazionali; effetto Veblen; decision utility

Moral Sentiments and Material Interests behind Altruistic Third-Party Punishment

Social norms are ubiquitous in human life. Their role is essential in allowing cooperation to prevail, despite the presence of incentives to free ride. As far as norm enforcement devices are concerned, it would be impossible to have widespread social norms if second parties only enforced them. However, both the quantitative relevance and the motivations underlying altruistic punishment on the part of ‘unaffected’ third parties are still largely unexplored. This paper contributes to shed light on the issue, by means of an experimental design consisting of three treatments: a Dictator Game Treatment, a Third-Party Punishment Game Treatment (Fehr and Fischbacher, 2004) and a Metanorm Treatment, that is a variant of the Third-party Punishment Game where the Recipient can punish the third party. We find that third parties are willing to punish dictators (Fehr and Fischbacher, 2004; Ottone, 2008) and, in doing so, they are affected by ‘reference-dependent fairness’, rather than by the ‘egalitarian distribution norm’. By eliciting players’ normative expectations, it turns out that all of them expect a Dictator to transfer something – not half of the endowment. Consequently, the Observers’ levels of punishment are sensitive to their subjective sense of fairness. A positive relation between the level of punishment and the degree of negative subjective unfairness emerges. Subjective unfairness also affects Dictators’ behaviour: their actual transfers and their ideal transfer are not significantly different. Finally, we interestingly find that third parties are also sensitive to the receivers’ (credible) threat to punish them: as the Dictator’s transfer becomes lower and lower than the Observer’s ideal transfer, the Observer’s reaction is – other things being equal – significantly stronger in the Metanorm Treatment than in the Third-Party Punishment Game Treatment. Hence, despite their being to some extent genuinely nonstrategically motivated, also third parties – like second parties – are sensitive to the costs of punishing.Third-Party Punishment, Moral Sentiments, Material Interests, Subjective Unfairness, Social Norms

Legitimate Punishment, Feedback, and the Enforcement of Cooperation

In real life, punishment is often implemented only insofar as punishers are entitled to punish and punishees deserve to be punished. We provide an experimental test for this principle of legitimacy in the framework of a public goods game, by comparing it with a classic (unrestricted) punishment institution. A significant advantage of our institution is that it rules out antisocial punishment, a phenomenon which recent studies document to play a key role in undermining the scope for self-governance. Our findings show that, despite the lack of additional monetary incentives to cooperate, the introduction of legitimate punishment leads to substantial efficiency gains, in terms of both cooperation and earnings. Therefore, in businesses and other organizations, this device could successfully deal with the principal-agent problem, with the principal delegating a task to a team of agents. Further, we interestingly find that removing the information over high contributors’ choices only leads to a dramatic decline in cooperation rates and earnings. This result implies that providing feedback over virtuous behavior is necessary to make an institution based on legitimate punishment effective.Experimental Economics, Public Good Games, Costly Punishment, Cooperation, Legitimacy, Immunity

Free Riders and Cooperators in Public Goods Experiments: Can Evolutionary Dynamics Explain their Coexistence?

An oft-cited and robust result from Public Goods Game experiments is that, when subjects start playing, the aggregate level of contributions is significantly different from zero. At the same time, a sizeable proportion of players free ride from the outset. Behavioural economics has persuasively shown that these laboratory findings are compatible with the presence of motivationally heterogeneous agents, displaying both standard, self-centred preferences and non-standard, interdependent preferences. However, at the theoretical level, economists would prefer to account for motivational heterogeneity endogenously, instead of simply assuming it from the outset. Our work provides such endogenisation, by assuming that social evolution is driven by material payoffs only. By separately focusing on different types of ‘experimentally salient’ pro-social players (such as Reciprocators, Strong Reciprocators and Altruists), we are able to shed light – to our knowledge, for the first time, within the public good framework – on the evolutionary stability of two-type populations consisting of positive proportions of both ‘nice’ and ‘mean’ guys.Free Riding, Strong Reciprocity, Altruism, Nonstrategic Punishment, Public Goods Game, Evolutionary Game Theory

Endogenous Preferences and Private Provision of Public Goods: a Double Critical Mass Model

In this paper we set up an evolutionary game-theoretic model aimed at addressing the issue of local public good provision via direct commitment of voluntary forces (namely, private donors and nonprofit providers) only. Two classes of agents are assumed to strategically interact within a double critical mass model, where the provision and maintenance, on voluntary bases, of a public-type good is concerned. Uncertainty as to equilibrium outcomes emerges as within both categories a positive proportion of agents faces the temptation to opportunistically free ride on others efforts. Further, private donors and nonprofit providers payoff functions are interdependent, in the sense that (a) potential donors decide to be actual donors only insofar as a large enough proportion of nonprofit organizations provides a high effort level, otherwise they act as free riders; (b) nonprofit organizations, in turn, prefer to exert a high productive effort only insofar as a large enough proportion of potential donors acts as actual donors, otherwise they exert a low effort level. Through this analytical framework, we are able to focus on the critical factors affecting the dynamic outcome of such interaction: under certain conditions, in a medium-long run perspective, even in contexts where, initially, either a large proportion of agents behaves as free riders or a large proportion of nonprofit organizations exerts a low effort level, the local public good may be provided.Public Goods; Evolutionary Crowding-out; Voluntary Sector;

Free riders and strong reciprocators coexist in public goods experiments: evolutionary foundations

Experimental evidence indicates that free riders and strongly reciprocal papers coexist in the public goods game framework. By means of an evolutionary analysis, we provide an endogenization of this behavioral regularity.Free Riding, Cooperation, Strong Reciprocity, Public Goods Game, Evolutionary Game Theory.

Free riders and strong reciprocators coexist in public goods experiments: evolutionary foundations

Experimental evidence indicates that free riders and strongly reciprocal papers coexist in the public goods game framework. By means of an evolutionary analysis, we provide an endogenization of this behavioral regularity.Free Riding, Cooperation, Strong Reciprocity, Public Goods Game, Evolutionary Game Theory