Altruism, equity, and reciprocity in a gift-exchange experiment: an encompassing approach

Considerable experimental evidence suggests that non-pecuniary motives must be addressed when modeling behavior in economic contexts. Recent theories of non-pecuniary motives can be classified as altruism-, equity-, or reciprocity-based. We outline the qualitative differences in prediction these alternative explanations yield in a gift-exchange game. We estimate and compare leading approaches in these categories, using experimental data. We then offer a flexible approach that nests the above three approaches, thereby allowing for nested hypothesis testing and for determining the relative strength of each of the competing theories. In addition, the encompassing approach provides a functional form for utility in different settings without the restrictive nature of the approaches nested within it. Using this flexible form for nested tests, we find that intentional reciprocity, distributive concerns, and altruistic considerations all play a significant role in players' decisions.     

Dissertation abstract: Experiments on fairness and reputation

The three dissertation essays investigate different aspects of reputation in games where fairness is an important consideration. The first essay studies the effects of reputation on indirect reciprocity in different dictator games. The first experiment places dictators in two environments where they can either give money to the paired player or take money away from them: in one treatment the paired player is a stranger and in the other treatment the dictator has information on the paired player’s reputation. Contrary to anecdotal evidence, the statistical tests show that the dictators’ behavior towards a stranger is not statistically significantly different from their behavior towards an individual with an established reputation. The findings arise because a high proportion of dictators acted purely in their own self interest in both treatments. The data also provides evidence that dictators are more generous when they know that their choices (but not their identities) will be revealed in the future. In the second experiment the dictators’ choices were restricted to only generous actions. In such environment the dictators sent more money on average to recipients with a reputation for being generous than to recipients without a reputation. The second essay explores the ways in which information about others’ actions affects one’s own behavior in a dictator game. The experimental design discriminates behaviorally between three possible effects of recipient’s within-game reputation on the dictator’s decision: reputation causing indirect reciprocity, social influence, and identification. The separation of motives helps to identify the mechanisms of social transmission of impulses towards selfish or generous behavior. The data analysis reveals that the reputation effects have a stronger impact on dictators’ actions than social influence and identification. In the third essay¹ we examine the reputation effects in a labor market setting by analyzing the influence of negative technological shocks on long run relationships between firms and workers. The positive correlation between wage and effort in static conditions has been demonstrated in many experimental studies and has been one of the prominent explanations for the existence of wage rigidity. We subject these findings to further tests in a non-stationary environment that better corresponds to outside-the-lab market conditions. We observe the positive correlation of wages and effort but do not find support for downward wage rigidity in our data. Once the shocks occur, firms lower the wages and relationships often break down. The workers who accept a lower wage respond with exerting a lower effort. JEL Classification C70, C91, D63, D64 ¹Co-authored with Ninghua Du. Dissertation Committee: Dissertation Advisor: James C. Cox Martin Dufwenberg, Price V. Fishback, Ronald L. Oaxaca     

A solution to the random assignment problem on the full preference domain

We consider the problem of allocating a set of indivisible objects to agents in a fair and efficient manner. In a recent paper, Bogomolnaia and Moulin consider the case in which all agents have strict preferences, and propose the probabilistic serial (PS) mechanism; they define a new notion of efficiency, called ordinal efficiency, and prove that the probabilistic serial mechanism finds an envy-free ordinally efficient assignment. However, the restrictive assumption of strict preferences is critical to their algorithm. Our main contribution is an analogous algorithm for the full preference domain in which agents are allowed to be indifferent between objects. Our algorithm is based on a reinterpretation of the PS mechanism as an iterative algorithm to compute a “flow” in an associated network. In addition we show that on the full preference domain it is impossible for even a weak strategyproof mechanism to find a random assignment that is both ordinally efficient and envy-free.     

A theory of reciprocity

People are reciprocal if they reward kind actions and punish unkind ones. In this paper we present a formal theory of reciprocity. It takes into account that people evaluate the kindness of an action not only by its consequences but also by its underlying intention. The theory is in line with the relevant stylized facts of a wide range of experimental games, such as the ultimatum game, the gift-exchange game, a reduced best-shot game, the dictator game, the prisoner's dilemma, and public goods games. Furthermore, it predicts that identical consequences trigger different reciprocal responses in different environments. Finally, the theory explains why outcomes tend to be fair in bilateral interactions whereas extremely unfair distributions may arise in competitive markets.     

Resource-envy-free and efficient allocations: A new solution for production economies with dedicated factors

I consider the problem of determining an equitable and efficient allocation of resources in production economies with factors which must be dedicated to production and cannot be consumed directly. First, I show that in such economies envy-free and efficient allocations exist under standard assumptions. However, I argue this notion of fairness is unsuitable for the present context. I then introduce a new notion of fairness, which I call resource-envy-freeness. First, I associate with each consumption bundle its resource footprint consisting of the vector of factors used to produce it. I then show that preferences over consumption bundles can be extended to preferences over factor bundles. An allocation is resource-envy-free if no agent prefers another agent’s resource footprint to its own. The analysis of resource-envy-free allocations in production is exactly analogous to the analysis of envy-free allocations in exchange. I establish that resource-envy-free and efficient allocations exist under standard assumptions, and I demonstrate that such allocations are intuitively appealing.     

Cooperative game analysis of coordination mechanisms under fairness concerns of a green retailer

This study discusses how a green retailer's fairness concerns affect product greenness and profit and explores how to distribute surplus profits under the fairness concerns using cooperative game theory. Research findings indicate that cooperation contributes to increasing channel profits and improving product greenness, but the fairness concerns are detrimental to them. The three proposed coordination mechanisms (SVM, NSM, and TVM) are feasible to ensure coalition stability, but their beneficiaries differ. NSM benefits a manufacturer, while SVM benefits retailers. Additionally, the green retailer's fairness concerns serve as distribution tools to narrow profit gaps between the manufacturer and the green retailer.     

中国社会保障的公平与效率评估分析——基于公平与效率视角社保发展的文献综述

公平与效率是影响中国社会保障制度建设和改革的重要因素。在普惠型社会保障制度框架的建设下,能否处理好公平与效率的关系,关系到国家的发展与居民幸福指数和安全感的获得？通过回溯中国社会保障制度的发展历程,评估现有制度的问题及原因,分析国内外学者对公平与效率的立场观点和研究成果,探索社会保障制度下公平与效率的最优状态,以丰富社...     

Using social networking websites as a selection tool: The role of selection process fairness and job pursuit intentions

A growing trend in the hospitality industry is openly encouraging applicants to join their social networking sites as part of their recruitment process (0080 and 0185). However, there is a dearth of studies examining how applicants perceive and react to the use of social networking websites in the recruitment and selection process. Therefore, the purpose of the current study was to examine how applicants react to the use of social networking websites as a selection tool. Using experimental methods, participants attending a career fair for hospitality jobs completed a questionnaire after reading about a hospitality company that does or does not use social networking sites in the selection process. The results showed that perceived fairness and job pursuit intentions of applicants were lower for an organization that used social networking websites as a selection tool than an organization that did not use social networking websites as a selection tool.     

On the fairness of airlines’ ticket pricing as a result of revenue management techniques

Pricing and availability of tickets have always been a source of confusion for customers in transportation industries. What is the best time to buy tickets? Why passengers taking the same flight might pay significantly different prices for the same seat? Why round trip tickets between two cities sometimes become cheaper than the one-way flights between them? Is it fair to buy a ticket for an itinerary cheaper than a ticket for just a part of it? These observations make customers wonder why they pay higher prices for shorter flights. In this paper, we study the airlines’ revenue management systems and explain some of these pricing schemes in travel industries. We develop a simulator to study the decision making process of network revenue management and use a numerical study to explore these questions and address some explanations for them. We relate these observations to the revenue management measurements such as the bid price or the adjustment cost and show how the dynamic of the network get influenced by these measures that eventually results in unusual pricing. We explain how a zero or small bid price of a specific leg may cause the price of an itinerary be cheaper than one segment of it and that the small bid price is caused by low demand in comparison to the available capacity. We exhibit network revenue management system and show the above issues for a small network.     

Re-examining the link between fairness and commitment in buyer-supplier relationships

By re-examining the link between fairness and commitment in supply chain relationships, this study elaborates on the existing theory that views fairness only as an antecedent. It proposes that commitment can also precede perceived fairness, thus redefining the link between the concepts as bidirectional in buyer–supplier relationships. The study examines both the buyer and supplier perspectives. Based on interviews at 24 technology industry firms in Finland, this empirical study demonstrates that buyer commitment has a positive impact on how suppliers perceive distributive fairness in the relationship. In turn, this effect is reciprocated by the suppliers through a commitment in the form of relationship-specific investments and continuous improvements that are perceived as fair by the buyer. As a managerial implication the study emphasizes the importance of fairness evaluation to the relationship parties.