What motivates bandwagon voting behavior: Altruism or a desire to win?

This paper surveys the literature on psychological and strategic mental processes of bandwagon behavior, discusses the literature of bandwagon behavior in the context of the two different types, bandwagon vote choices and bandwagon abstention effects, and examines the rationality of other-regarding bandwagon vote choices. Key experimental results are reported to investigate the extent that bandwagon behavior can be explained by other-regarding preferences in contrast to a psychological desire to simply support a winner. We find support for purely psychological non-other-regarding bandwagon behavior but primarily when subjects have information about the distribution of voter choices in previous elections but individual choices are private. Interestingly, when voting is public this type of bandwagon behavior disappears and bandwagon behavior that could be other-regrading is much higher. Given that observability increases other-regarding behavior in other contexts, our results suggest that some of the observed bandwagon behavior may be explained by other-regarding preferences as well.     

Present-biased preferences,self-awareness and shirking

We model a mechanism design problem in which the principal owns a project that requires work effort by an agent, but agents may have time-inconsistent, present-biased preferences and lack complete self-awareness of these preferences. The self-control problem and naïveté of an agent may lead him to agree to a contract but later shirk or slack-off, even though doing so is observable. When the principal cannot severely punish shirking and agents are completely naïve, the second-best solution entails allowing a present-biased agent to slack-off in order to avoid a greater loss due to shirking. With greater self-awareness among present-biased agents, the principal may do better by screening some from accepting the contract. Furthermore, when shirking can be severely punished, this does not lead to contracts that eliminate effects of the self control problem. Instead the principal may exploit present-biased agents by offering a contract that allows them to slack-off (which agents fail to foresee they will choose to do) but at the expense of foregoing much compensation.     

CONTRACTING OUT,PUBLIC POLICY AND ENTREPRENEURSHIP

Relatively little is known about the impact of public policies on the decisions of firms to contract out parts of their production, despite widespread growth in this practice. The present paper uses a simple principal‐agent model to explore the effects of various public policies which affect employers' incentives to outsource by re‐grading their employees as independent self‐employed contractors. Minimum wages are predicted to increase contracting out, as are payroll and income taxes under several plausible conditions, including worker preferences exhibiting constant relative risk aversion.     

Asymmetric awareness and moral hazard

This paper introduces asymmetric awareness into the classical principal–agent model and discusses the optimal contract between a fully aware principal and an unaware agent. The principal enlarges the agentʼs awareness strategically when proposing a contract and faces a tradeoff between participation and incentives. Leaving the agent unaware allows the principal to exploit the agentʼs incomplete understanding of the world, relaxing the participation constraint, while making the agent aware enables the principal to use the revealed contingencies as signals about the agentʼs action choice, relaxing the incentive constraint. The optimal contract reveals contingencies that have low probability but are highly informative about the agentʼs effort.     

Contractual preferences and moral biases: social identity and procedural fairness in the exclusion game experiment

Many people may suffer from moral biases when making allocation decisions having consequences to others. This means that some factors hinder people from finding, or constructing, their true social preferences in those situations. As a counterforce to this, numerous devices of moral priming have evolved—such as parenting, formal education as well as various formal and informal contracting procedures. This paper focuses on the influences of social identity and the perceived fairness of contracting procedures on subjects’ behaviour in situations of allocation decisions. The analysis of experimental data suggest, first, that males are less likely than females to engage in other-regarding behaviour in a pre-agreement situation where two active players divide an endowment among themselves and a third, passive, player. However, this difference disappeared after the joint contract of the rule of dividing the endowment was made. Second, it was found that students of economics are less likely than other students to behave in an other-regarding way before the contract; this difference remained also in decisions after the contract was made. Finally, both a random selection mechanism and a majority voting mechanism were rated fair by the majority of the subjects. However, the data suggests that fairness ratings are positively associated with compliant behavior only in the case of the majority voting mechanism.     

How to identify trust and reciprocity

This paper uses a three-games (or triadic) design to identify trusting and reciprocating behavior. A large literature on single-game trust and reciprocity experiments is based on the implicit assumption that subjects do not have altruistic or inequality-averse other-regarding preferences. Such experimental designs test compound hypotheses that include the hypothesis that other-regarding preferences do not affect behavior. In contrast, experiments with the triadic design do discriminate between transfers resulting from trust or reciprocity and transfers resulting from other-regarding preferences that are not conditional on the behavior of others. Decomposing trust from altruism and reciprocity from altruism or inequality aversion is critical to obtaining empirical information that can guide the process of constructing models that can increase the empirical validity of game theory.     

Parental background and other-regarding preferences in children

Other-regarding preferences are important for establishing and maintaining cooperative outcomes. In this paper, we study how the formation of other-regarding preferences during childhood is related to parental background. Our subjects, aged 4–12 years, are classified into other-regarding types based on simple binary-choice dictator games. The main finding is that the children of parents with low education are less altruistic, more selfish, and more likely to be weakly spiteful. This link is robust to controlling for a rich set of children’s characteristics and class fixed effects. It also stands out against the overall development of preferences, as we find children to become more altruistic, less selfish, and less likely to be weakly spiteful with increasing age. The results, supported by a complementary analysis of World Values Survey data, suggest an important role of socialization in the formation of other-regarding preferences.     

Robustness of simple menus of contracts in cost-based procurement

We consider a model of cost-based procurement in which the principal faces Knightian uncertainty about the agent's preferences for cost reduction. We show that a particularly simple incentive scheme—a menu comprising a fixed-price contract and a cost-reimbursement contract—minimizes the maximum expected payment, where this maximum is taken over the set of possible agent preferences. For some parameters of the problem, a range of alternative incentive schemes also satisfy this criterion. We show that the simple incentive scheme is not weakly dominated by any of the alternatives: there does not exist an alternative mechanism for which the expected payment is no higher for all realizations of the agent's preferences and strictly lower for some realization.     

Distributive politics with other-regarding preferences

This paper analyzes a nonsmooth model of probabilistic voting with two parties and a broad family of other-regarding behavior, including fairness and quasi-maximin preferences, income-dependent altruism, and inequity aversion. The paper provides conditions for equilibrium existence and uniqueness. It also characterizes the Nash equilibrium in pure strategies when parties hold either symmetric payoffs, or minor forms of asymmetries. The characterization shows that the two parties converge to an equilibrium policy that maximizes a mixture of a “self-regarding utilitarian” social welfare function and an aggregate of society's other-regarding preferences. These results are shown to be applicable to other nonsmooth frameworks, such as probabilistic voting with loss averse voters. The characterization also shows that the direction and the size of the inefficiencies emerging from electoral competition depend in a subtle way on the nature of the other-regarding preferences (and resp., loss aversion).     

On the optimality of privacy in sequential contracting

This paper studies the exchange of information between two principals who contract sequentially with the same agent, as in the case of a buyer who purchases from multiple sellers. We show that when (a) the upstream principal is not personally interested in the downstream level of trade, (b) the agent's valuations are positively correlated, and (c) preferences in the downstream relationship are separable, then it is optimal for the upstream principal to offer the agent full privacy. On the contrary, when any of these conditions is violated, there exist preferences for which disclosure is strictly optimal, even if the downstream principal does not pay for the information. We also examine the effects of disclosure on welfare and show that it does not necessarily reduce the agent's surplus in the two relationships and in some cases may even yield a Pareto improvement.     

OTHER-REGARDING UZAWA PREFERENCES AND LIVING STANDARD CATCH-UP

This paper provides a new rationale for Uzawa preferences based on social choice; instead of positing that poor people are more patient because they are poor, it posits that poor people should be more patient if they wish their living standards to catch up with richer people. To provide a setting for this new rationale, the present paper studies the socially optimal choice of living standards over time by social planners for countries that, from low levels of total factor productivity (TFP), experience a gradual catch-up of their TFP level with that of the leader country. In the TFP catch-up scenario, the socially optimal choice of consumption and saving based on time additive preferences leads to no catch-up of living standards. To generate living standard catch-up we propose other-regarding Uzawa preferences, in which the rate of time preference is influenced by the gap in living standards between follower country and leader country. This other-regarding specification is consistent with recent findings emphasized in behavioural economics. The other-regarding Uzawa preferences form is illustrated quantitatively by simulating a model of the world economy.     

Implications of trust, fear, and reciprocity for modeling economic behavior

This paper reports three experiments with triadic or dyadic designs. The experiments include the moonlighting game in which first-mover actions can elicit positively or negatively reciprocal reactions from second movers. First movers can be motivated by trust in positive reciprocity or fear of negative reciprocity, in addition to unconditional other-regarding preferences. Second movers can be motivated by unconditional other-regarding preferences as well as positive or negative reciprocity. The experimental designs include control treatments that discriminate among actions with alternative motivations. Data from our three experiments and a fourth one are used to explore methodological questions, including the effects on behavioral hypothesis tests of within-subjects vs. across-subjects designs, single-blind vs. double-blind payoffs, random vs. dictator first-mover control treatments, and strategy responses vs. sequential play. Electronic Supplementary Material Supplementary material is available in the online version of this article at . JEL Classification C70, C91, D63, D64     

Informed principal with correlation

In this paper we analyze an adverse selection model with one principal and one agent, who are both risk neutral and have private information. We assume that the private information of the principal is correlated with that of the agent. The main result of the paper is that the principal can extract a larger share of the surplus from the agent than in the case where her information is public. The principal can design such a contract because she exploits the fact that her type is an informative signal on the agent's one. We fully characterize the equilibrium of the game in which different types of principal offer the same menu of contracts that leaves the agent uninformed about the principal's type. This gives more freedom to the principal when setting the transfers because the agent's constraints need to hold only at an interim stage.     

Message-contingent delegation

The paper studies the role of delegation and authority in a principal-agent relation in which a non-contractible action has to be taken. The agent has private information relevant for the principal, but has policy preferences different from the principal. Consequently, an information revelation problem arises. I consider a partially incomplete contracting environment with contractibility of messages and decision rights and with transferable utility. I contribute to the literature by allowing for message-contingent delegation and by deriving the optimal partially incomplete contract. It is shown that message-contingent delegation creates incentives for information revelation and may outperform unconditional authority and unconditional delegation.     

国有控股公司治理中合谋防御的机制设计

本文对委托人、监督者和代理人的主体进行重新界定,并对无合谋防御机制时的情形作了分析,再针对合谋行为设计出监督者主导和委托人主导两种合谋防御机制。在监督者主导的防御机制中,委托人事前给出一组契约,授权监督者向代理人提供子契约,委托人提供的契约可使得监督者和代理人所得到的转移支付都不小于其实施合谋时的信息租金,让监督者和代理人没有激励进行合谋。在委托人主导型的防御机制中,委托人同时与监督者和代理人签订契约,如代理人谎报自己的成本类型,委托人会对代理人实施罚金,而给予监督者奖励,让监督者有动力积极履行职责,且能激励高成本类型的代理人降低生产成本。     

SHOULD YOU ALLOW YOUR EMPLOYEE TO BECOME YOUR COMPETITOR? ON NONCOMPETE AGREEMENTS IN EMPLOYMENT CONTRACTS*

We discuss a principal–agent model in which the principal has the opportunity to include a noncompete agreement in the employment contract. We show that not imposing such an agreement can be beneficial for the principal, as the possibility to leave the firm generates implicit incentives for the agent. The principal prefers to impose such a clause if and only if the value created is sufficiently small relative to the agent's outside option. If the principal can use an option contract for retaining the agent, she will never prefer a strict noncompete agreement.     

Generous actors,selfish actions: markets with other-regarding preferences

This paper points out that classical competitive outcomes arise in two different market environments even if agents have non-classical preferences. Consumers with separable, other-regarding preferences behave as if they have classical preferences in competitive equilibrium. These outcomes need not be efficient, but under plausible conditions will be efficient following a redistribution of income. In simple double-auction environments competitive outcomes arise under a wide range of assumptions on preferences even without assuming separability. I discuss the importance of the domain of definition of preferences and how the preferences present in the economy influence the performance of the trading institution.

联合确定基数合约:对魏茨曼模型的一个改进

本文针对国内外委托代理理论主要局限于理论分析层面而实用性不强的特点,在概要评论有关利润基数确定的相关文献的基础上,通过对美国一家公司委托代理实际案例的研究,提出了旨在能够解决实际委托代理关系的"联合确定基数法"。文章分析了联合确定基数法与棘轮效应模型的区别和联系,以数学方法论证了联合确定基数法的若干命题,描述了公司利润基数确定的利益诱导机制,并对比分析了联合确定基数法与西方教科书中的"激励设计模型"。本文试图以联合确定基数法为核心内容的一次性动态模型,代替蕴含着讨价还价过程的多次性动态模型。     

Self-selection and variations in the laboratory measurement of other-regarding preferences across subject pools: evidence from one college student and two adult samples

We measure the other-regarding behavior in samples from three related populations in the upper Midwest of the United States: college students, non-student adults from the community surrounding the college, and adult trainee truckers in a residential training program. The use of typical experimental economics recruitment procedures made the first two groups substantially self-selected. Because the context reduced the opportunity cost of participating dramatically, 91 % of the adult trainees solicited participated, leaving little scope for self-selection in this sample. We find no differences in the elicited other-regarding preferences between the self-selected adults and the adult trainees, suggesting that selection is unlikely to bias inferences about the prevalence of other-regarding preferences among non-student adult subjects. Our data also reject the more specific hypothesis that approval-seeking subjects are the ones most likely to select into experiments. Finally, we observe a large difference between self-selected college students and self-selected adults: the students appear considerably less pro-social.     

Delegation versus centralization: The role of externalities

We study a simple contracting game with a principal and two agents. Contracts exert externalities on non-contractors. The principal can either contract both agents in a centralized manner, or delegate one agent to contract the other. We show that the choice of the principal depends on the sign of the externality. If this is positive, the principal prefers to delegate as long as the agency costs are not too high; if the externality is negative, the principal prefers to centralize for all sizes of agency costs.