nep-cbe New Economics Papers
on Cognitive and Behavioural Economics
Issue of 2006‒02‒19
seven papers chosen by
Marco Novarese
Universita del Piemonte Orientale

  1. Public Implementation Eliminates Detrimental Effects of Punishment on Human Cooperation By Erte Xiao; Daniel Houser
  2. Poverty, politics, and preferences: Field Experiments and survey data from Vietnam By Tomomi Tanaka; Colin F Camerer; Quang Nguyen
  3. Inducing a Self-Fulfilling Prophecy in Public Goods Games. By Pablo Brañas-Garza; Enrique Fatas; Pablo Guillen
  4. A Polya Urn Model of Conformity By Jun Xue
  5. The comparative evolution of the employment relationship By Simon Deakin
  6. A Theoretical Analysis of Cooperative Behavior in Multi-Agent Q-learning By Waltman, L.; Kaymak, U.

  1. By: Erte Xiao (George Mason University and IZA Bonn); Daniel Houser (George Mason University)
    Abstract: Development of human societies requires cooperation among unrelated individuals and obedience to social norms. Although punishment is widely agreed to be potentially useful in fostering cooperation, many recent results in psychology and economics highlight punishments' failures in this regard. These studies ignore punishments' social effects, and particularly its role in promoting social norms. We show here, using experiments with human subjects, that public implementation of punishment can eliminate its detrimental effects on cooperation. In a public goods game designed to create tension between group and individual interests, we find that privately implemented punishment reduces cooperation relative to a baseline treatment without punishment. However, when that same incentive is implemented publicly, but anonymously, cooperation is sustained at significantly higher rates than in both baseline and private punishment treatments. These data support our hypothesis that public implementation of punishment enhances the salience of the violated social norm to both the punished and those who observed the punishment, and that this increased salience positively affects group members' norm obedience. Our findings point to the importance of accounting for social consequences of punishment when designing procedures to deter misconduct in social environments including schools, companies, markets and courts.
    Keywords: punishment, cooperation, public goods game, social norms, experiments, behavioral economics
    JEL: C92 D71 H41
    Date: 2006–02
  2. By: Tomomi Tanaka; Colin F Camerer; Quang Nguyen
    Date: 2006–02–08
  3. By: Pablo Brañas-Garza (Department of Economic Theory and Economic History, University of Granada.); Enrique Fatas (LINEEX, Universidad de Valencia); Pablo Guillen (Harvard Business School)
    Abstract: 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.
    Keywords: self-fulfilling prophecy, public goods game, grim trigger strategy,cooperation, automata, beliefs.
    JEL: C92 H41 C72
    Date: 2006–02–08
  4. By: Jun Xue
    Abstract: In this paper we propose to use Polya urn processes to model the emergence of conformity in an environment where people interact with each other sequentially and indirectly, through a common physical facility. Examples include rewinding video tapes, erasing blackboards, and switching headlights, etc. We find that a minimum amount of imitation is able to generate a maximum l evel of conformity. We then reinterpret the result in a group imitation setup, and show that as long as groups imitate each other with positive probabilities, they will end up with the same population composition, irrespective of the initial conditions, and the imitating probabilities.
    Keywords: Polya urn, conformity, emergence, social norms
    JEL: C6 D7
    Date: 2006–02
  5. By: Simon Deakin
    Abstract: It is widely believed that the legal institution of the contract of employment is currently undergoing a conceptual crisis as a result of changes in labour markets, the organisation of production, and the form of the enterprise. A historical and comparative perspective, however, indicates that conceptual crises of this kind are nothing new, and have occurred periodically in the systems of western Europe since the industrial revolution. The employment form serves important functions in a market economy even in an era of deregulation and liberalization, and is unlikely to be replaced by a radically new model in the near future.
    Keywords: labour law, contract, employment relationship
    JEL: J28 K31
    Date: 2005–12
  6. By: Waltman, L.; Kaymak, U. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: A number of experimental studies have investigated whether cooperative behavior may emerge in multi-agent Q-learning. In some studies cooperative behavior did emerge, in others it did not. This report provides a theoretical analysis of this issue. The analysis focuses on multi-agent Q-learning in iterated prisoner?s dilemmas. It is shown that under certain assumptions cooperative behavior may emerge when multi-agent Q-learning is applied in an iterated prisoner?s dilemma. An important consequence of the analysis is that multi-agent Q-learning may result in non-Nash behavior. It is found experimentally that the theoretical results derived in this report are quite robust to violations of the underlying assumptions.
    Keywords: Prisoner?s Dilemma;Cooperation;Nash Equilibrium;Multi-Agent Reinforcement Learning;Multi-Agent Q-Learning;
    Date: 2006–02–01
  7. By: José A. García Martínez (Universidad de Alicante)
    Abstract: In this paper we have introduced and parameterized the concept of ?group cohesion? in a model of local interaction with a population divided into groups. This allows us to control the level of ?isolation? of these groups: We thus analyze if the degree of group cohesion is relevant to achieve an efficient behaviour and which level would be the best one for this purpose. We are interested in situations where there is a trade off between efficiency and individual incentives. This trade off is stronger when the efficient strategy or norm is strictly dominated, as in the Prisoner?s Dilemma or in some cases of Altruism. In our model we have considered that agents could choose to be Altruist of Egoist, in fact, they behave as in Eshel, Samuelson and Shaked (1998) model.
    Keywords: Group Cohesion, Cooperation, Local Interaction, Altruism, Group selection.
    JEL: C70 C78
    Date: 2004–11

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