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on Evolutionary Economics |
| By: | Antonio M. Espín (GLOBE, Departamento de Teoría e Historia Económica, Universidad de Granada); Filippos Exadaktylos (BELIS, Murat Sertel Center for Advanced Economic Studies, Istanbul Bilgi University); Benedikt Herrmann (Institute for Health and Consumer Protection, Joint Research Centre, European Commission); Pablo Brañas-Garza (Economic Science Institute, and Department of Economics and International Development, Middlesex University Business School) |
| Abstract: | The ultimatum game (UG) is widely used to study human bargaining behavior and fairness norms. In this game, two players have to agree on how to split a sum of money. The proposer makes an offer, which the responder can accept or reject. If the responder rejects, neither player gets anything. The prevailing view is that, beyond self-interest, the desire to equalize both players’ payoffs (i.e., fairness) is the crucial motivation in the UG. Based on this view, previous research suggests that responders follow short-run psychological incentives when imposing fairness through the rejection of low offers. However, competitive spite, which reflects the desire to reduce others’ payoffs, can also account for the behavior observed in the UG, and has been linked to short-run, present-oriented aspirations as well. In this paper, we explore the relationship between individuals’ inter-temporal preferences and their behavior in a large-scale dual-role UG experiment. We find that impatience (present orientation) predicts the rejection of low, “unfair” offers as responders and the proposal of low, “unfair” offers as proposers, which is consistent with spite but inconsistent with fairness motivations. This behavior systematically reduces the payoffs of those who interact with impatient individuals. Thus, impatient individuals appear to be keen on reducing their partners’ share of the pie, even at the risk of destroying it. These findings indicate that competitive spite, rather than fairness, is the short-run motivation in ultimatum bargaining. |
| Keywords: | ultimatum game, costly punishment, delay discounting, impatience, fairness, spite, cooperation, competition |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:13-17&r=evo |
| By: | Thorsten Chmura (Centre for Decision Research and Experimental Economics, University of Nottigham); Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn); Markus Englerth |
| Abstract: | For a rational choice theorist, the absence of crime is more difficult to explain than its presence. Arguably, the expected value of criminal sanctions, i.e. the product of severity times certainty, is often below the expected benefit. We rely on a standard theory from behavioral economics, inequity aversion, to offer an explanation. This theory could also explain how imperfect criminal sanctions deter crime. The critical component of the theory is aversion against outperforming others. To test this theory, we exploit that it posits inequity aversion to be a personality trait. We can therefore test it in a very simple standard game. Inequity averse individuals give a fraction of their endowment to another anonymous, unendowed participant. We have prisoners play this game, and compare results to findings from a meta-study of more than 100 dictator games with non-prisoners. Surprisingly, results do not differ, not even if we only compare with other dictator games among close-knit groups. To exclude social proximity as an explanation, we retest prisoners on a second dictator game where the recipient is a charity. Prisoners give more, not less. |
| Keywords: | crime, imperfect sanctions, selfishness, inequity aversion, dictator game, social proximity, charity |
| JEL: | A12 C91 C93 D03 D63 K14 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2013_05&r=evo |
| By: | L. Bagnoli; G. Negroni |
| Abstract: | Two parties bargaining over a pie, the size of which is determined by their previous investment decisions. Investment costs are heterogeneous. The bargaining rule is sensitive to investment behavior. Two games are studied which differ for the considered sociopolitical structure: communal property in one case and private property in the other. We hereby show that in both games when a unique stochastically stable outcome exists a norm of investment and a norm of surplus division must coevolve. While the investment norm always supports the efficient investment profile, the surplus division norm may differ among these games depending on the size of investment cost gap. Under private property only the egalitarian surplus division evolves. Under communal property instead two different surplus division norms may evolve: the egalitarian one and an inegalitarian norm. We show that no cap to payoffs inequality emerges under private property while an inequality payoff cap endogenously evolves under communal property. The games have been proposed to explain the social norms used in modern hunter-gatherer societies. |
| JEL: | C78 D83 L14 Z13 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp888&r=evo |
| By: | Florian Lindner; Matthias Sutter |
| Abstract: | Arad and Rubinstein (2012a) have designed a novel game to study level-k reasoning experimentally. Just like them, we find that the depth of reasoning is very limited and clearly different from equilibrium play. We show that such behavior is even robust to repetitions, hence there is, at best, little learning. However, under time pressure, behavior is, perhaps coincidentally, closer to equilibrium play. We argue that time pressure evokes intuitive reasoning and reduces the focal attraction of choosing higher (and per se more profitable) numbers in the game. |
| Keywords: | Level-k reasoning, Time pressure, Repetition, Experiment |
| JEL: | C91 C72 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2013-13&r=evo |
| By: | Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn) |
| Abstract: | Sanctions are often so weak that a money maximizing individual would not be deterred. In this paper I show that they may nonetheless serve a forward looking purpose if sufficiently many individuals are averse against advantageous inequity. Using the Fehr/Schmidt model (QJE 1999) I define three alternative channels: (a) identical preferences are common knowledge, but inequity is not pronounced enough to sustain cooperation; (b) heterogeneous preferences are common knowledge; (c) there is preference uncertainty. In a linear public good with punishment meted out by a disinterested participant, I test two implications of the model: (a) participants increase contributions in reaction to imperfect punishment; (b) imperfect punishment helps sustain cooperation if participants experience free-riding |
| Keywords: | Deterrence, Public Good Experiment, Inequity Aversion, imperfect sanction, Fehr/Schmidt preferences, centralized punishement |
| JEL: | H41 D63 K42 C91 D03 K14 K13 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2013_09&r=evo |
| By: | Brent, Daniel A.; Cook, Joseph H.; Olsen, Skylar |
| Abstract: | Utilizing social norms is gaining momentum as a cost-eective mechanism to pro- mote sustainable behavior. We analyze household water data from multiple pilot programs for a company that provides information campaigns containing social comparisons of water use and per- sonalized conservation recommendations in order to reduce household water consumption. We nd signicant treatment eect heterogeneity across the distribution of consumption and environmental attitudes. In the two pilots with a full year of data one utility achieves savings of 6.5%; while the other in aggregate achieved limited conservation gains. Heterogeneity based on the distribution of consumption is more important in the utility with signicant savings, with the highest users saving the most water. In contrast ideology appears to be more important in the utility with an insignif- icant average treatment eect with dis-savings for those with very low environmental preferences and strong savings for the most environmentally-conscious. Inter-regional ideology may play an critical role since the utility with signicant savings is in a much "greener" community, whereas intra-utility ideology is in uential in conservative areas. We caution interpretation of the results, particularly for Utility B, as the data are still incomplete. |
| Keywords: | Water demand, Social norms, Behavioral economics, Water conservation, Consumer/Household Economics, Public Economics, Q21, Q25, Q54, |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:149697&r=evo |
| By: | Chuang, Yating |
| Keywords: | Consumer/Household Economics, Institutional and Behavioral Economics, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea13:150156&r=evo |
| By: | Sven Fischer (Max Planck Institute for Research on Collective Goods, Bonn); Kristoffel Grechenig (Max Planck Institute for Research on Collective Goods, Bonn); Nicolas Meier |
| Abstract: | We run several experiments which allow us to compare cooperation under perfect and imperfect information and under a centralized and decentralized punishment regime. We nd that (1) centralization by itself does not improve cooperation and welfare compared to an informal, peer-to-peer punishment regime and (2) centralized punishment is equally sensitive to noise as decentralized punishment, that is, it leads to signicantly lower cooperation and welfare (total prots). Our results shed critical light on the widespread conjecture that the centralization of punishment institutions is welfare increasing in itself. |
| Keywords: | Public Goods, cooperation, centralized punishment, imperfect information, decentralized punishment, peer to peer punishment |
| JEL: | C92 K42 H42 D03 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2013_06&r=evo |
| By: | Sule Alan (Institute for Fiscal Studies and University of Cambridge); Nazli Baydar; Teodora Boneva; Thomas Crossley (Institute for Fiscal Studies and University of Essex); Seda Ertac |
| Abstract: | We study the transmission of risk attititudes in a unique survey of mothers and children in which both participated in an incentivised risk preference elicitation task. We document that risk preferences are correlated between mothers and children when the children are just 7 to 8 years old. This correlation is only present for daughters. We show that a measure of parental involvement is a strong moderator of the association between mothers' and daughers' risk tolerance. These findings support a role for socialisation in the intergenerational transmission of preferences that predict economic behaviour. |
| Keywords: | risk preferences, intergenerational transmission, children's economic decisions, field experiements |
| JEL: | C93 J16 D03 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:13/12&r=evo |
| By: | Jeanet Sinding Bentzen (Department of Economics, University of Copenhagen) |
| Abstract: | Across 800 regions of the World, this research shows that people are more religious when living in regions that are more frequently razed by natural disasters. This is in line with psychological theory stressing that religious people tend to cope with adverse life events by seeking comfort in their religion or searching for a reason for the event; for instance that the event was an act of God. This is termed religious coping. Natural disasters are a source for adverse life events, and thus one way to interpret my findings is by way of religious coping. The results are robust to various measures of religiousness, and to inclusion of country fixed effects, income, education, demographics, religious denominations, and other climatic and geographic features. The results hold within Christianity, Islam and Buddhism, and across continents. To eliminate bias from omitted variables and selection (perhaps religious people are less likely to move out of disaster areas as they see the disaster as an act of God), I further show that second generation immigrants whose mothers descend from natural disaster areas, are more religious than their counterparts with ancestors from calmer areas. Why should economists care? Evidence suggests that religiousness influences economic outcomes (e.g., McCleary & Barro (2003), Iannaccone (1998)). |
| Date: | 2013–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuiedp:1302&r=evo |
| By: | Matija Kovacic (University Ca’ Foscari Venice); Claudio Zoli (University of Verona) |
| Abstract: | Ethnic heterogeneity can potentially be related to the occurrence of conflicts with longlasting economic effects. Two main measures of ethnic heterogeneity are employed in the econometric literature on ethnic diversity and conflict: the Gini heterogeneity or fractionalization index and the discrete polarization index. However, still no broad consensus is reached on which distributional aspect of ethnic diversity is associated with the outbreak of conflict. In this paper we argue that the relative importance of each pattern of ethnic diversity depends on the trade-off between the groups' power and its interaction with other groups. Following the Esteban and Ray [On the measurement of polarization, Econometrica, 62(4), 1994] approach to social antagonism, we axiomatically derive a parametric class of indices of conflict potential that ombines the groups' effective power and the between-groups interaction. We use a discrete metric to define the distances between groups and we do not treat each group as a unitary actor. Moreover, we assume that the effective power of a group depends not only on its own relative size but also on the relative size of all the other groups in the population. We show that for certain parameter values the obtained indices reduce to the existing indices of ethnic diversity, while in general the derived indices combine in a non-linear way three different aspects of ethnic diversity, namely the fractionalization, the polarization and the ethnic dominance. The power component of the extreme element of the class of indices is given by the relative Penrose-Banzhaf index of voting power. The results from our empirical exercise show that the derived extreme index outperforms the existing indices of ethnic diversity in the explanation of ethnic conflict onset. |
| Keywords: | Ethnic distribution, Conflict, Polarization, Fractionalization, Power indices, Dominance. |
| JEL: | O11 Z13 O57 D63 D72 D74 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2013-294&r=evo |