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on Evolutionary Economics |
| By: | Ann-Christin Posten (University of Limerick); Pınar Uğurlar (Özyeğin University, Istanbul); Sebastian Kube (University of Bonn); Joris Lammers (University of Cologne) |
| Abstract: | An effective way to foster cooperation is to monitor behaviour and sanction freeriding. Yet, previous studies have shown that cooperation quickly declines when sanctioning mechanisms are removed. We test if explicitly expressing trust in players’ capability to maintain cooperation after the removal of sanctions, i.e. vertical communication of trust, has the potential to alleviate this drop in compliance. Four incentivized public-goods experiments (N = 2423) find that the vertical communication of trust maintains cooperation upon the removal of centralized (Study 1), third-party (Study 2), and peer punishment (Study 3), and this effect extends beyond single interactions (Study 4). In all studies, vertical trust communication increases mutual trust among players, providing support to the idea that vertically communicating trust can be a self-fulfilling prophecy. Extrapolating our findings to natural environments, they suggest that authorities should carefully consider how they communicate the lifting of rules and sanctions. |
| Keywords: | Cooperation, Vertical Trust, Punishment, Public Good, Experiment |
| JEL: | H4 D91 C92 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:323&r= |
| By: | Arno Apffelstaedt (University of Cologne); Gönül Doğan (University of Cologne); Fabian Hoffmann (University of Cologne) |
| Abstract: | We introduce a novel concept, group image concerns, showing that individuals change their behavior and are willing to incur personal costs to cultivate a positive image of their groups. We develop an experimental method to identify and quantify group image concerns, and conduct a series of laboratory and online experiments to measure them in three distinct domains. In the first two experiments focused on charitable behavior, participants donate more when their contributions are publicly associated with their group, despite their individual identity remaining private. They also pay significant amounts to keep low donations from other group members private and to make high donations public. These findings emerge for students in the laboratory, using university affiliation as their group identity, as well as for online participants from the general U.S. population, using religious affiliation as their group identity. Additional online experiments explore group image concerns among Democrats and Republicans regarding their group’s knowledge of the U.S. national anthem, as a measure of patriotism, and among U.S. students concerning their university’s reputation for intelligence in solving matrix completion tasks. We isolate group image concerns from individual image concerns and benchmark them against individual image concerns in our laboratory experiment. Our results establish group image concerns as an important driver of individual behavior and a significant source of utility across various domains. |
| Keywords: | social identity and behavior, image concerns, experiments, charitable and prosocial behavior, intelligence, political identity, religious identity, real effort |
| JEL: | D01 D91 C92 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ajk:ajkdps:324&r= |
| By: | Jose Apesteguia; Miguel A. Ballester; Ángelo Gutiérrez-Daza |
| Abstract: | This paper introduces the random discounted expected utility (RDEU) model, which we have developed as a means to deal with heterogeneous risk and time preferences. The RDEU model provides an explicit linkage between preference and choice heterogeneity. We prove it has solid comparative statics, discuss its identification, and demonstrate its computational convenience. Finally, we use two distinct experimental datasets to illustrate the advantages of the RDEU model over common alternatives for estimating heterogeneity in preferences across individuals. |
| Keywords: | Heterogeneity;Risk Preferences;Time Preferences;Comparative Statics;Random Utility Models |
| JEL: | C01 D01 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:bdm:wpaper:2024-03&r= |
| By: | Keyu Wu; Ernst Fehr; Sean Hofland; Martin Schonger |
| Abstract: | Ambiguous prospects are ubiquitous in social and economic life, but the psychological foundations of behavior under ambiguity are still not well understood. One of the most robust empirical regularities is the strong correlation between attitudes towards ambiguity and compound risk which suggests that compound risk aversion may provide a psychological foundation for ambiguity aversion. However, compound risk aversion and ambiguity aversion may also be independent psychological phenomena, but what would then explain their strong correlation? We tackle these questions by training a treatment group’s ability to reduce compound to simple risks, and analyzing how this affects their compound risk and ambiguity attitudes in comparison to a control group who is taught something unrelated to reducing compound risk. We find that aversion to compound risk disappears almost entirely in the treatment group, while the aversion towards both artificial and natural sources of ambiguity remain high and are basically unaffected by the teaching of how to reduce compound lotteries. Moreover, similar to previous studies, we observe a strong correlation between compound risk aversion and ambiguity aversion, but this correlation only exists in the control group while in the treatment group it is rather low and insignificant. These findings suggest that ambiguity attitudes are not a psychological relative, and derived from, attitudes towards compound risk, i.e., compound risk aversion and ambiguity aversion do not share the same psychological foundations. While compound risk aversion is primarily driven by a form of bounded rationality – the inability to reduce compound lotteries – ambiguity aversion is unrelated to this inability, suggesting that ambiguity aversion may be a genuine preference in its own right. |
| Keywords: | ambiguity aversion, compound risk aversion, bounded rationality, reduction of compound lotteries |
| JEL: | C91 D01 D91 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11150&r= |