A little fairness may induce a lot of redistribution in democracy

We use a model of self-centered inequality aversion suggested by Fehr and Schmidt (Quart. J. Econom. 114 (3) (1999) 817) to study voting on redistribution. We theoretically identify two classes of conditions when an empirically plausible amount of fairness preferences induces redistribution through referenda. We test the predictions of the adapted inequality aversion model in a simple redistribution experiment and find that it predicts voting outcomes far better than the standard model of voting assuming rationality and strict self-interest.     

An investigation of cultural cohesion in a community bank

This study examines the culture of a medium-sized community bank based in the Western United States. The study aims to identify the organization's culture and then measure the level of cultural cohesion that exists three years after a major cultural campaign was launched. The cultural characteristics the organization valued most highly were integrity, willingness to serve the customer and teamwork - all components of the official bank document on culture. Interestingly, the analysis uncovered some significant value differences among different employee groups and also employees and management; differences which can affect firm performance levels. The analysis also revealed that changing the culture in an organization does not necessarily lead to cultural cohesion.     

Second thoughts on free riding

We use the strategy method to classify subjects into cooperator types in a large-scale online Public Goods Game and find that free riders spend more time on making their decisions than conditional cooperators and other cooperator types. This result is robust to reversing the framing of the game and is not driven by cognitive ability, confusion, or natural swiftness in responding. Our results suggest that conditional cooperation serves as a norm and that free riders need time to resolve a moral dilemma.     

Fairness is intuitive

In this paper we provide new evidence showing that fair behavior is intuitive to most people. We find a strong association between a short response time and fair behavior in the dictator game. This association is robust to controls that take account of the fact that response time might be affected by the decision-maker’s cognitive ability and swiftness. The experiment was conducted with a large and heterogeneous sample recruited from the general population in Denmark. We find a striking similarity in the association between response time and fair behavior across groups in the society, which suggests that the predisposition to act fairly is a general human trait.     

The diffusion of policy innovations -an experimental investigation

What causes a government to adopt a new program or policy? Despite a large number of empirical studies available to date, the relative importance of various determinants remains obscure because of difficulties of statistical identification. We present an experimental setting to study the diffusion of policy innovations in the laboratory. Our approach discriminates between experimentation, experience, and emulation as determinants of policy adoption. The policy innovation we study is an internalization tax to mitigate a local market externality. Our results demonstrate the importance of information about innovations in other states in the diffusion of policy innovations.JEL Classification: C9, D7, H7Correspondence to: Rupert SausgruberWe gratefully acknowledge financial support by the Austrian National Bank (Jubiläumsfonds under project no. 9134) and the Austrian Science Fund (FWF under project no. P17029). We are grateful for comments by Ernst Fehr, Simon Gächter, Simon Hug, Arno Riedl, Frans van Winden and seminar participants at the Universities of Amsterdam, Erfurt, and St. Gallen.     

Money illusion and coordination failure

Economists long considered money illusion to be largely irrelevant. Here we show, however, that money illusion has powerful effects on equilibrium selection. If we represent payoffs in nominal terms, choices converge to the Pareto inferior equilibrium; however, if we lift the veil of money by representing payoffs in real terms, the Pareto efficient equilibrium is selected. We also show that strategic uncertainty about the other players' behavior is key for the equilibrium selection effects of money illusion: even though money illusion vanishes over time if subjects are given learning opportunities in the context of an individual optimization problem, powerful and persistent effects of money illusion are found when strategic uncertainty prevails.     

Designing the spreadsheet-based decision support systems course: An application of Bloom's taxonomy

Decision support systems (DSS) have played an important role in organizations for many years. As DSS continue to be developed for industry applications, a number of business programs in universities offer a specialized course aimed at helping students better understand and develop DSS systems to support decision making. Spreadsheet software coupled with an application programming language can serve as a useful DSS generation software package for such courses. To help students develop their technical skills for spreadsheet-based DSS, the principles underlying Bloom's taxonomy of educational objectives can serve as a guiding framework for instructional design. This article describes how Bloom's taxonomy has been used to support the design of two different DSS courses, an undergraduate course and an MBA course. Student survey data collected over the past four years from students enrolled in nine sections of the DSS courses are reported. Based on the survey findings, as well as the instructor's observations, it appears that a teaching strategy based on Bloom's taxonomy offers a worthwhile framework for instructors who teach a spreadsheet-based DSS course.     

Inequality aversion and voting on redistribution

Some people have a concern for a fair distribution of incomes while others do not. Does such a concern matter for majority voting on redistribution? Fairness preferences are relevant for redistribution outcomes only if fair-minded voters are pivotal. Pivotality, in turn, depends on the structure of income classes. We experimentally study voting on redistribution between two income classes and show that the effect of inequality aversion is asymmetric. Inequality aversion is more likely to matter if the “rich” are in majority. With a “poor” majority, we find that redistribution outcomes look as if all voters were exclusively motivated by self-interest.