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on Utility Models and Prospect Theories |
| By: | Raúl López-Pérez |
| Abstract: | This paper explicitly introduces norms in games, assuming that they shape (some) players’ utility and beliefs. People feel badly when they deviate from a binding norm, and the less other players deviate, the more badly they feel. Further, people anger at transgressors and get pleasure from punishing them. I then study how social norms and emotions affect cooperation, coordination, and punishment in a variety of games. The model is consistent with abundant experimental evidence that alternative models of social preferences cannot explain. |
| Keywords: | Cooperation, Emotions, Focal Points, Punishment, Reciprocity, Social Norms |
| JEL: | C72 D02 D62 D64 Z13 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:292&r=upt |
| By: | Maria Montero (University of Nottingham) |
| Abstract: | Inequity aversion models have been used to explain equitable payoff divisions in bargaining games. I show that inequity aversion can actually increase the asymmetry of payoff division if unanimity is not required. This is due to the analogy between inequity aversion and risk aversion. Inequity aversion may also affect comparative statics: the advantage of being proposer can decrease as players become more impatient. |
| Keywords: | Noncooperative Bargaining, Coalition Formation, Inequity Aversion |
| JEL: | A13 C78 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.80&r=upt |
| By: | Thomas Dohmen (IZA Bonn); Armin Falk (IZA Bonn and University of Bonn); David Huffman (IZA Bonn); Uwe Sunde (IZA Bonn and University of Bonn) |
| Abstract: | Experimental evidence has convincingly shown the existence of reciprocal inclinations, i.e., a tendency for people to respond in-kind to hostile or kind actions. Little is known, however, about: (i) the prevalence of reciprocity in the population, (ii) individual determinants of reciprocity, (iii) the correlation between positive and negative inclinations within person, and (iv) consequences of reciprocal inclinations for wages, subjective well-being, friendships and other economic and social outcomes. Answering these questions requires moving out of the lab and using a large and representative subject pool, which combines information about subjects’ reciprocal inclinations with extensive socioeconomic background information. In this paper we measure the reciprocal inclinations of 21,000 individuals. We show that most people state reciprocal inclinations, in particular in terms of positive reciprocity. However, there is substantial heterogeneity in the degree of reciprocity, and quite surprisingly, only a weak correlation between positive and negative reciprocity for an individual. In terms of determinants, being female, and increasing age, lead to greater positive and less negatively reciprocal tendencies. Taller people are more positively reciprocal, but height has no impact on negative reciprocity. The asymmetric impact of these determinants provides further indication that positive and negative reciprocity are fundamentally different traits, rather than the outcome of a single underlying tendency. In terms of economic implications, we provide the first evidence using a large representative survey that corroborates an important hypothesis arising from laboratory experiments: Positively reciprocal workers are in fact paid more, and exert greater effort, on the job. Moreover, positively reciprocal people are more likely to be employed, report having more close friends, and have a higher overall level of life satisfaction. In this sense, Homo Reciprocans - in the positive domain - is in fact more successful than his or her non-reciprocal fellows. |
| Keywords: | reciprocity, trust, SOEP, wage regression, unemployment, happiness |
| JEL: | D63 J3 J6 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2205&r=upt |
| By: | Andrea M. Leiter (alpS GmbH - Center for Natural Hazard Management); Gerald J. Pruckner (University Linz) |
| Abstract: | Sensitivity (proportionality) of willingness to pay to (small) risk changes is often used as a criterion to test for valid measures of economic preferences. In a contingent valuation (CV) study conducted in Austria in February 2005 1,005 respondents were asked their willingness to pay (WTP) for preventing an increase in risk by 1/42,500 and 3/42,500, respectively. WTP for the higher risk variation is significantly higher than WTP for the lower risk change. We find evidence that those respondents who have personal experience with avalanches combine the information about future risk increase, provided in the survey, with the observed number of mortal avalanche accidents in the past. The proportionality of WTP holds if such prior experiences are taken into account and the influence of attitudinal factors in scope tests are controlled for. |
| Keywords: | Contingent Valuation, Willingness to Pay, Scope Test, Sensitivity of WTP |
| JEL: | D81 J17 Q54 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2006.90&r=upt |
| By: | Olof Johansson Stenman (Göteborg University); Minhaj Mahmud (Keele University, Centre for Economic Research and School of Economic and Management Studies); Peter Martinsson (Göteborg University) |
| Abstract: | Trust is measured using both survey questions and a standard trust experiment among a random sample of Muslim and Hindu household heads in rural Bangladesh. We found no significant effect of the social distance between Hindus and Muslims in the trust experiment in terms of fractions sent or returned, but the responses to the survey questions do indicate significant differences. Hindus, the minority, trust other people less in general, while Hindus trust Muslims more than Muslims trust Hindus. |
| Keywords: | Social capital; Trust; Social distance; Religion; Trust game; field experiment; Bangladesh. |
| JEL: | C93 Z12 Z13 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:kee:kerpuk:2006/10&r=upt |