Anonymity in the dictator game revisited

Giving in the dictator game has often been interpreted as evidence of other-regarding preferences. We suspect that giving is determined by subjects’ attempts to appear fair in the eyes of recipients and the experimenter. Therefore, we investigate behavior in the dictator game by using the randomized response technique to increase anonymity. Overall, 290 subjects participated in two experiments. The results demonstrate that the randomized response technique reduces giving to negligible amounts compared to the standard double blind condition. Thus, our results suggest that individuals closely follow egoistic motives in the dictator game when anonymity is convincingly implemented.     

Income inequality in the trust game

This paper presents an experiment measuring how lab-induced income inequality affects trust and trustworthiness. Low endowment subjects paired with high endowment subjects showed more trust than subjects in other pairs; this trust was reciprocated with high trustworthiness.     

An experimental study on individual choice, social welfare, and social preferences

We experimentally study subjects’ compliance with dominance relationships of income distributions in a ranking task. The experiment consisted of four different treatments: Lottery, individual choice, social preferences, and social planner. Our results suggest that people's risk attitudes do not adequately reflect their inequality attitudes. Uninvolved social planners exhibit randomization preferences, while self-interested social planners are generally more inequality averse and try to avoid extreme outcomes.     

Does the trust game measure trust?

Could altruism explain observed choices in the standard trust game? With dominant altruism, trustors would give more to poor trustees. However, we find trustors to give no more to poor than to rich trustees, confirming trust as the dominant motivation for “trust like” choices.     

On the role of social wage comparisons in gift-exchange experiments

This study extends a bilateral gift-exchange experiment by Clark et al. (2010). We investigate how the provision of either quantitative or qualitative information on the average wage paid in all worker-employer relationships impacts the wage set by employers and worker performance. We find that information on the average wage reduces (increases) both wage offers and effort levels in one-shot (repeated) relationships.     

Decision time and steps of reasoning in a competitive market entry game

Entry decisions in market entry games usually depend on the belief about how many others are entering the market, the belief about the own rank in a real effort task, and subjects’ risk preferences. In this paper I am able to replicate these basic results and examine two further dimensions: (i) the level of strategic sophistication, which has a positive impact on entry decisions, and (ii) the impact of time pressure, which has a (partly) negative influence on entry rates. Furthermore, when ranks are determined using a real effort task, differences in entry rates are explainable by higher competitiveness of males. Additionally, I show that individual characteristics are more important for the entry decision in more competitive environments.     

Impartial division of a dollar

For impartial division, each participant reports only her opinion about the fair relative shares of the other participants, and this report has no effect on her own share. If a specific division is compatible with all reports, it is implemented.We propose a family of natural methods meeting these requirements, for a division among four or more participants. No such method exists for a division among three participants.     

What does “clean” really mean? The implicit framing of decontextualized experiments

It is standard in experimental economics to use decontextualized designs where payoff structures are presented using neutral language. Here we show that cooperation in such a neutrally framed Prisoner’s Dilemma is equivalent to a PD framed as contributing to a cooperative endeavour. Conversely, there is substantially less cooperation in a PD framed as a competition. We conclude that in a decontextualized context, our participants by default project a cooperative frame onto the payoff structure.     

Risk attitudes and the stag-hunt game

A stag-hunt game (with the risky and safe actions) has two pure Nash equilibria that are Pareto-rankable. The risky action leads either to the Pareto-superior equilibrium (high payoff) or to out of equilibrium (low payoff) depending on the opponent’s action. Both players may want to obtain high payoff but uncertainty about the opponent’s action may prevent them to take such strategic risk. This paper investigates how information about the risk attitude of an opponent affects a player’s action choice in the stag-hunt game. I find that although a subject’s propensity to choose the risky action depends on her opponent’s risk attitude, it does not depend on her own risk attitude.     

Incentives in the probabilistic serial mechanism

The probabilistic serial mechanism (Bogomolnaia and Moulin, 2001 [9]) is ordinally efficient but not strategy-proof. We study incentives in the probabilistic serial mechanism for large assignment problems. We establish that for a fixed set of object types and an agent with a given expected utility function, if there are sufficiently many copies of each object type, then reporting ordinal preferences truthfully is a weakly dominant strategy for the agent (regardless of the number of other agents and their preferences). The non-manipulability and the ordinal efficiency of the probabilistic serial mechanism support its implementation instead of random serial dictatorship in large assignment problems.     

Overconfidence as a social bias: Experimental evidence

The overconfidence bias is discussed extensively in economic studies, yet fails to hold experimentally once monetary incentives and feedback are implemented. We consider overconfidence as a social bias. For a simple real effort task, we show that, individually, economic conditions effectively prevent overconfidence. By contrast, the introduction of a very basic, purely observational social setting fosters overconfident self-assessments. Additionally, observing others’ actions effectively eliminates underconfidence compared to the individual setting.     

Voice matters in a dictator game

We conducted a laboratory experiment to study the effects of communication in a dictator game, while maintaining subjects’ anonymity. In the experiment, the recipient has an opportunity to state a payoff-irrelevant request for his/her share before the dictator dictates his/her offer. We found that the independence hypothesis that voice does not matter is rejected. In particular, if the request is for less than half of the pie, the dictator’s offer increases as the recipient’s request increases. Additionally, there is no dictator who is other-regarding and, at the same time, does not react to the recipient’s request.

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Electronic Supplementary Material  The online version of this article () contains supplementary material, which is available to authorized users.      

The endowment effect and intertemporal choice: a laboratory investigation

We present a laboratory investigation of intertemporal choice (i.e., elicited discount rates) allowing for the influence of the endowment effect. Consistent with the previous literature, we hypothesize that the endowment effect in an intertemporal choice setting results in substantially higher discount rates relative to when individuals treat the resources in question as found money. Our results support this hypothesis and our experimental design provides a new protocol for conducting choice experiments wherein the endowment effect is an important determinant of behaviour.     

Motives for sharing in social networks

What motivates people in rural villages to share? We first elicit a baseline level of sharing using a standard, anonymous dictator game. Then using variants of the dictator game that allow for either revealing the dictator's identity or allowing the dictator to choose the recipient, we attribute variation in sharing to three different motives. The first of these, directed altruism, is related to preferences, while the remaining two are incentive-related (sanctions and reciprocity). We observe high average levels of sharing in our baseline treatment, while variation across individuals depends importantly on the incentive-related motives. Finally, variation in measured reciprocity within the experiment predicts observed ‘real-world’ gift-giving, while other motives measured in the experiment do not predict behavior outside the experiment.     

An experimental investigation of entry cost effects in sealed-bid dollar auctions

We experimentally study the effect of entry costs on bidding and entry behavior in common value auctions. We find, with entry costs, players bid lower in first price and higher in second price auctions, compared to no entry fee auctions.     

Self-enforcing exchange among generations: Implications for consumption and mobility

A three-generation OLG model with one-directional altruism and two-directional intra-family transfers is presented. Adults invest in their children's education and make transfers to their elderly parents. However, due to lack of altruism, adults with high earnings do not share consumption equally with their elderly parents but spend a larger share of their earnings on own consumption and on their children's education. This allows the model to be consistent with three empirical observations that are difficult to reconcile with traditional altruistic frameworks of intergenerational social interactions and mobility: (i) consumption is not perfectly shared between members of an extended family, (ii) consumption is not equally persistent over the lifecycle as across generations, and (iii) the intergenerational persistence of earnings is particularly high at the top end of the earnings distribution.     

Building rational cooperation

Experiments have shown that people have a natural taste for cooperation. This paper takes a first step in understanding how formal and informal institutions might be designed to utilize these private tastes to facilitate more efficient economic interactions. We examine a twice-played prisoners’ dilemma in which the total of the stakes in the two periods is fixed, but the distribution of these stakes can be varied across periods. We verify experimentally that it is best to “start small,” reserving most of the stakes for the second period.     

Conditional punishment

We elicit human conditional punishment types by conducting experiments. We find that their punishment decisions to an individual are on average significantly positively proportional to other members’ punishment decisions to that individual.