nep-evo New Economics Papers
on Evolutionary Economics
Issue of 2012‒05‒08
nine papers chosen by
Matthew Baker
City University of New York

  1. Students, Volunteers and Subjects: Experiments on Social Preferences By Pablo Branas-Garza; Antonio M. Espin; Filippos Exadaktylos
  2. Peer Effects and Social Preferences in Voluntary Cooperation By Christian Thoeni; Simon Gaechter
  3. Social preferences are stable over long periods of time By Carlsson, Fredrik; Johansson-Stenman, Olof; Pham, Khanh Nam
  4. The roles of incentives and voluntary cooperation for contractual compliance By Simon Gaechter; Esther Kessler; Manfred Koenigstein
  5. The Experimental Economics of Religion By Robert Hoffmann
  6. Unbeatable Imitation By Duersch, Peter; Oechssler, Jorg; Schipper, Burkhard C.
  7. Certainty and Severity of Sanctions in Classical and Behavioral Models of Deterrence: A Survey By Entorf, Horst
  8. Extremism Drives Out Moderation By Bettina Klose; Dan Kovenock
  9. Are small groups Expected Utility? By Andrea Morone; Piergiuseppe Morone

  1. By: Pablo Branas-Garza (GLoBE, University of Granada and Economic Science Institute, Chapman University); Antonio M. Espin (GLoBE, University of Granada); Filippos Exadaktylos (GLoBE, University of Granada)
    Abstract: Economic experiments are usually conducted with university students who voluntarily choose to participate. Outside as well as within the discipline, there is some concern about how this “particular” subject pool may systematically produce biased results. Focusing on social preferences, this study employs a representative sample of a city’s population and reports behavioral data for five experimental decisions. The dataset allows for a ceteris paribus comparison between self-selected students (i.e. the standard subject pool) and the representative population. We demonstrate that in spite of volunteers’ and students’ effects, experimental subjects seem to be an appropriate subject pool for the study of social preferences.
    Keywords: experimental economics, external validity, subject pool, selfselection bias, field experiment.
    JEL: C90 D03
    Date: 2012
  2. By: Christian Thoeni (University of St.Gallen); Simon Gaechter (University of Nottingham)
    Abstract: Substantial evidence suggests the behavioral relevance of social preferences and also the importance of social influence effects (“peer effects”). Yet, little is known about how peer effects and social preferences are related. In a three-person gift-exchange experiment we find causal evidence for peer effects in voluntary cooperation: agents’ efforts are positively related despite the absence of material payoff interdependencies. We confront this result with major theories of social preferences which predict that efforts are unrelated, or negatively related. Some theories allow for positively-related efforts but cannot explain most observations. Conformism, norm following and considerations of social esteem are candidate explanations.
    Keywords: social preferences, voluntary cooperation, peer effects, reflection problem, gift-exchange; conformism; social norms; social esteem
    JEL: C92 D03
    Date: 2011–09
  3. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, Göteborg University); Pham, Khanh Nam (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We measure people’s prosocial behavior, in terms of voluntary money and labor time contributions to an archetypical public good, a bridge, and in terms of voluntary money contributions in a public good game, using the same non-student sample in rural Vietnam at four different points in time from 2005 to 2011. Two of the experiments are natural experiment, one is a field experiment and one is a public good experiment. Since the experiments were conducted far apart in time, the potentially confounding effects of moral licensing and moral cleansing are presumably small, if existing at all. Despite large contextual variations, we find a strong positive and statistically significant correlation between voluntary contributions in these experiments, whether correcting for other covariates or not. This suggests that pro-social preferences are fairly stable over long periods of time and contexts.<p>
    Keywords: natural field experiment; preference stability; social preferences; moral licensing; moral cleansing.
    JEL: C93 H41
    Date: 2012–04–30
  4. By: Simon Gaechter (University of Nottingham); Esther Kessler (University College London); Manfred Koenigstein (Universitaet Erfurt)
    Abstract: Efficiency under contractual incompleteness often requires voluntary cooperation in situations where self-regarding incentives for contractual compliance are present as well. Here we provide a comprehensive experimental analysis based on the gift-exchange game of how explicit and implicit incentives affect cooperation. We first show that there is substantial cooperation under non-incentive compatible contracts. Incentive-compatible contracts induce best-reply effort and crowd out any voluntary cooperation. Further experiments show that this result is robust to two important variables: experiencing Trust contracts without any incentives and implicit incentives coming from repeated interaction. Implicit incentives have a strong positive effect on effort only under non-incentive compatible contracts.
    Keywords: principal-agent games; gift-exchange experiments; incomplete contracts, explicit incentives; implicit incentives; repeated games; separability; experiments
    JEL: C70 C90
    Date: 2011–06
  5. By: Robert Hoffmann (Nottingham University Business School)
    Abstract: This article surveys the experimental economics approach to the study of religion. The field has a place in the context of the scientific study of religion generally and the social psychology of religion in particular, but employs distinct economic methods which promise new and different insights. In particular, certain features of the experimental approach as used by economists such as incentive compatibility are particularly appropriate for studying the effect of religion on individual behaviour. The paper discusses results obtained so far in terms of two roles of religion in shaping individual behaviour, i.e. as a social group identifier and as a set of values.
    Keywords: religion, religiosity, experiments
    Date: 2011–07
  6. By: Duersch, Peter (University Heidelberg); Oechssler, Jorg (University Heidelberg); Schipper, Burkhard C. (University CA, Davis)
    Abstract: We show that for many classes of symmetric two-player games, the simple decision rule "imitate-if-better" can hardly be beaten by any strategy. We provide necessary and sufficient conditions for imitation to be unbeatable in the sense that there is no strategy that can exploit imitation as a money pump. In particular, imitation is subject to a money pump if and only if the relative payoff function of the game is of the rock-scissors-paper variety. We also show that a sufficient condition for imitation not being subject to a money pump is that the relative payoff game is a generalized ordinal potential game or a quasiconcave game. Our results apply to many interesting examples of symmetric games including 2 x 2 games, Cournot duopoly, price competition, public goods games, common pool resource games, and minimum effort coordination games.
    JEL: C72 C73 D43
    Date: 2012–04
  7. By: Entorf, Horst (Goethe University Frankfurt)
    Abstract: This survey summarizes the classical fundamentals of modern deterrence theory, covers major theoretical and empirical findings on the impact of certainty and severity of punishment (and the interplay thereof) as well as underlying methodological problems, gives an overview of limitations and extensions motivated by recent findings of behavioral economics and discusses 'rational' deterrence strategies in subcultural societies.
    Keywords: economics of crime, behavioral economics, deterrence, survey
    JEL: K4 H0
    Date: 2012–04
  8. By: Bettina Klose (University of Zurich); Dan Kovenock (Economic Science Institute, Chapman University)
    Abstract: This article investigates the impact of the distribution of preferences on equilibrium behavior in conflicts that are modeled as all-pay auctions with identity-dependent externalities. In this context, we define centrists and radicals using a willingness-topay criterion that admits preferences more general than a simple ordering on the line. Through a series of examples, we show that substituting the auction contest success function for the lottery contest success function in a conflict may alter the relative expenditures of centrists and radicals in equilibrium. Extremism, characterized by a higher per capita expenditure by radicals than centrists, may persist and lead to a higher aggregate expenditure by radicals, even when they are relatively small in number. Moreover, we show that centrists may in the aggregate expend zero, even if they vastly outnumber radicals. Our results demonstrate the importance of the choice of the institutions of conflict, as modeled by the contest success function, in determining the role of extremism and moderation in economic, political, and social environments.
    Keywords: Conflict, All-pay Auction, Identity-dependent Externalities, Radicalism, Extremism, Contest Success Function.
    JEL: D72 D74 C72 D44
    Date: 2012
  9. By: Andrea Morone (Department of Economics, Universitat Jaume I; Department of Economics, University of Bari); Piergiuseppe Morone (Department of Economics, Universitat Jaume I; Department of Economics, University of Foggia)
    Abstract: In this paper we analyse the empirical performance of several preference functionals using individual and group data. Our investigation aims to address two fundamental questions that have, until now, not been addressed in literature. Specifically, we intend to assess if there exists a risky choice theory that statistically fits group decisions significantly better than alternative theories, and if there are significant differences between individual and group choices. Experimental findings reported in this paper provide answers to both questions showing that when risky choices are undertaken by small groups (dyads in our case), disappointment aversion outperforms several alternative preference functionals, including expected utility. Since expected utility typically emerged as the dominant model in individual risky choices, this finding suggests that differences between individual and group choices exist, showing that the preference aggregation process drives out EU.
    Keywords: group decision, expected utility, risk and uncertainty.
    JEL: C91 C92 D81 D70
    Date: 2012

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