Provision versus Appropriation in Symmetric and Asymmetric Social Dilemmas

Social dilemmas characterize decision environments in which individuals' exclusive pursuit of their own material self‐interest can produce inefficient allocations. Social dilemmas are most commonly studied in provision games, such as public goods games and trust games, in which the social dilemma can be manifested in foregone opportunities to create surplus. Appropriation games are sometimes used to study social dilemmas that can be manifested in destruction of surplus, as is typical in common‐pool resource extraction games. A central question is whether social dilemmas are more serious for inhibiting creation of surplus or in promoting its destruction. This question is addressed in this study with an experiment involving three pairs of payoff‐equivalent provision and appropriation games. Some game pairs are symmetric, whereas others involve asymmetric power relationships. We find that play of symmetric provision and appropriation games produces comparable efficiency. In contrast, power asymmetry leads to significantly lower efficiency in an appropriation game than in a payoff‐equivalent provision game. This outcome can be rationalized by reciprocal preference theory but not by models of unconditional social preferences.     

Is there a plausible theory for decision under risk? A dual calibration critique

Can any prominent theory of decision under risk rationalize both small-stakes risk aversion and large-stakes risk aversion? Do some prominent theories fail to rationalize patterns of same-stakes risk aversion? How do reference payoffs enter in the answer to these questions? What would be the characteristics of a theory of decision under risk that would be immune to calibration critique? We offer a theoretical duality analysis that addresses these questions. We report dual propositions and corollaries that calibrate the implications of nonlinear transformation of probabilities or payoffs (or both). We also report several experiments that provide data on the empirical relevance of the two types of calibration patterns.     

Tax evasion in transition: Outcome of an institutional clash? Testing Feige's conjecture in Albania

A field survey of households was conducted in Tirana, Albania in 2000. A response rate of 89.3% yielded 1.340 valid questionnaires, allowing me to test Feige's (In: Nelson, J.M., Tilley, C., Walker, L. (Eds.), Transforming Post-communist Political Economics. National Academy Press, Washington, DC, p. 21) conjecture that more tax evasion will be observed, when formal and informal institutions clash. Respondents’ attitudes towards formal and informal institutions were obtained by applying factor analysis to their responses to a series of attitudinal questions. The theoretical importance of the interaction between formal and informal institutions in determining tax evasion finds empirical support in the data.     

Information, bilateral negotiations, and worker recruitment

This paper studies experimentally how firms choose between using a centralized market and bilateral negotiations to recruit new personnel. In the market firms interact with several workers but do not have information about workers’ behavior in the past. In the bilateral negotiations firms negotiate bilaterally with prospective workers and learn about workers’ performance in previous jobs. We show that the interaction between social preferences, the incompleteness of contracts and the existence of information about a worker’s past performance provides an explanation for firms forgoing market opportunities and bilaterally negotiating with a worker. We observe that approximately 30% of all job contracts were bilaterally negotiated when these contracts are incomplete as opposed to only 10% when contracts were complete. The surplus from trade is higher when incomplete contracts can be bilaterally negotiated, which can be attributed to the presence of information.     

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