does the allocation of property rights matter in the commons abstract a popular solution to the tragedy of the commons is to create private property rights to access the commons if resource users care about the welfare of others they may be unwilling to respect property rights regimes that lead to unfair or inequitable outcomes we explore in a series of laboratory experiments whether it is possible to undermine the efficacy of property rights solutions through the allocation process we find that both the extent to which property rights are enforced and how they are allocated significantly affect extraction and compliance our findings suggest that one of the most popular allocation methods is suboptimal we observe that occasional enforcement and the proportional allocation of property rights is dominated by no enforcement and the equal or inverse allocation of property rights our results support the view that allocation matters for property rights solutions to the commons problem

bargaining over reform abstract this paper models the delay in a macroeconomic stabilization as the outcome of a bargaining game between two parties who must reach an agreement over how the stabilization cost is to be shared the paper modifies alesina and drazen s 1991 american economic review 81 1170 1189 war of attrition model by endogenizing the distribution of the stabilization costs through a bargaining game using this bargaining framework the paper analyzes the role of crises and foreign assistance in bringing about a settlement to the distributional conflict in the bargaining game a crisis that increases the welfare loss from not stabilizing the economy will lower the probability of delay in contrast foreign aid that is used to reduce the stabilization costs will further increase the delay in reaching an agreement between the two parties

material interests moral reputation and crowding out species protection on private land we consider how the reputation of being socially responsible works as an effective source of motivation in protecting a public good such as endangered species this paper investigates the mechanism design for endangered species protection on private land under asymmetric information about reputation and land quality we examine optimal monetary transfer by designing an efficient mechanism which takes into account the crowding out effect of monetary rewards on socially responsible behavior we find landowners who have good reputation contribute more than the optimum level landowners with poor reputation sacrifices information rent rather they buy reputation

public good provision mechanisms and reciprocity this paper determines optimal public good provision mechanisms in an environment where agents are motivated by reciprocity in a two agent economy we show that the standard pivot mechanism is not strategy proof if at least one agent cares strongly enough about reciprocity truthful reporting maximises a player s own payoff and hence is viewed as selfish by his opponent who retaliates by understating demand for the public good incentive compatibility is restored if the mechanism is implemented sequentially when agents are asked to report their demands in turn a high report by the first mover he may result in him paying an unfairly large share of the provision cost should the second mover she understate her demand hence truthful reporting is not judged as selfish by the second mover who reciprocates by stating her true demand our results alert the institutional designer to the importance of game dynamics when agents are non selfish

immaterial rewards and sanctions in a voluntary contribution experiment in this article we compare the causes and effects of immaterial rewards and sanctions on cooperation in a voluntary contribution experiment it appears that both rewards and sanctions increase contributions and that rewards are more effective than sanctions only when subjects interact repeatedly within the same group the effect is however insignificant which could be due to the higher variance in presence of rewards and sanctions furthermore it is evidenced that rewards have some negative effect on the future contribution for both the imposer and the imposed when the partner matching is applied but both rewards and sanctions have mainly positive effects under the stranger matching thus it seems that the recipient of the feedback takes the message as a reliable external evaluation of her contribution only under the stranger matching protocol when the strategic use of feedback can largely be excluded jel c92 h41

do binding agreements solve the social dilemma we investigate whether binding agreements can provide a solution to the social dilemma that arises in the presence of pure public goods by signing a binding agreement players can prevent free riding by the contributors to a public good however a well known theoretical result is that the outcome of the endogenous formation of agreements is not necessarily efficient in our setting the individual level of contribution to the public good increases with the size of the coalition reaching an agreement and the global coalition is always the socially optimal structure agreements form sequentially and the equilibrium outcome is an asymmetric structure which consists of two coalitions our experiment therefore lends force to the theoretical result that outcomes may be inefficient in fact we observe an outcome which is even less efficient than that predicted by the equilibrium agreement structure however it seems that when subjects reach agreements they do so with the intention of cooperating rather than free riding furthermore it seems that they learn to cooperate over time and reach the global agreement more often towards the end of sessions keywords

on the effects of asymmetric and endogenous taxation in experimental public goods games abstract in our experimental public goods game subjects face exogenously or endogenously determined asymmetric minimum contributions endogeneity does not affect overall contributions if asymmetric contribution levels are approved of endogenously the disadvantaged subjects contribute significantly less than in case of exogenous determination

the transmission of sustainable harvesting norms when agents are conditionally cooperative experimental and observational studies have highlighted the importance of agents being conditionally cooperative when facing a social dilemma we formalize this mechanism in a theoretical model that portrays a small community having joint access to a common pool resource the diffusion of norms of cooperation takes place via interpersonal relations while individual agents face the temptation of higher profits by overexploiting the resource agents remain conditionally cooperative unless other individuals are misbehaving already we can observe a bubble of conditional cooperators slowly building up followed by a sudden burst which means that a transition from a cooperative social norm to non cooperation occurs interestingly in some parameter regions alternative stable states and limit cycles arise the latter implies that the same community goes through such a transition repeatedly over long time spans history thus repeats itself in the form of the creation and erosion of social capital

mass media instrumental information and electoral accountability journalism is widely believed to be crucial for holding elected officials accountable at the same time economic theory has a hard time providing an instrumental explanation for the existence of accountability journalism according to the common downsian reasoning rational voters should not be willing to pay for information out of purely instrumental motives because the individual probabilities of casting the decisive vote are typically very low we show that this rationale does not apply when a group of voters shares a common goal such as accountability and information is delivered via mass media in contrast to the pessimistic downsian view rational voters can have a considerable willingness to pay for the provision of instrumental information in these scenarios our model thus reconciles the rational voter approach with the common perception of journalism as a watchdog that holds elected officials accountable

reciprocity matching and conditional cooperation in two public goods games experimental and empirical evidence identifies social preferences and proposes competing models of such preferences we find that participants match the contributions of others in the voluntary contribution mechanism vcm we also examine a game with different equilibria the weakest link mechanism wlm here in contrast participants match the minimum contribution of others

reputation in a public goods game taking the design of credit bureaus to the lab abstract we present the results of a new laboratory experiment designed to mimic the ways in which credit bureaus will alter microfinance markets where loans are taken in groups bureaus can build reputations for borrowers at the group or the individual level and the optimal contract is not obvious in a modified public goods game with ejection and re assignment played by guatemalan micro entrepreneurs we find the use of group reputation to be effective in increasing contributions given the costs of transitioning microfinance bureaus to the sharing of individual information our results suggest that this change would not be cost effective

do reputation feedback systems really improve trust among anonymous traders an experimental study feedback systems are claimed to be a crucial component of the success of electronic marketplaces like ebay or amazon marketplace this article aims to compare the effects of various feedback systems on trust between anonymous traders through a set of experiments based on the trust game our results indicate that trust is significantly improved by the introduction of a reputation feedback system however such mechanisms are far from being perfect and are vulnerable to strategic ratings and reciprocation our findings indicate that some changes in rating rules may significantly improve the efficiency of feedback systems by avoiding strategic rating or reciprocation and hence stimulate trust and trustworthiness among traders in particular a system in which individuals are not informed of their partner s rating decision before making their own decision provides better results both in terms of trust and earnings

crime in the lab detecting social interaction abstract according to the standard economic perspective criminal activities vary with the price of crime which depends on the severity of punishment and the detection probability an alternative view claims that crime is also influenced by social interaction phenomena such as peer pressure or neighbourhood effects detecting social interaction in the field is fraught with difficulties however in this paper we argue that given its extensive control possibilities experiments are well suited to show the potential existence of social interaction effects we present an experimental study where people can engage in criminal activities we find support for the importance of social interaction on average subjects steal the more the more others steal this behaviour can be interpreted in terms of reciprocity

irreversible investment managerial discretion and optimal capital structure abstract we explore the significance of employee compensation and alternative reservation income on investment timing endogenous default yield spreads and capital structure in a real options setting a manager s incentive to under over invest in a project is associated to labor income he has to forego in order to work on the project the manager s salary his stake on the project s equity capital and his subsequent income should he decide to terminate operations we find that the optimal level of coupon payments decreases with managerial salary and ownership stake while it is increasing in the manager s reservation income yield spreads optimal leverage ratios are increasing decreasing in the manager s salary and ownership stake while they are decreasing increasing in the manager s reservation income exploring agency costs of debt as deviations from a value maximizing investment policy we document a u shaped relationship between agency costs of debt and the managerial compensation parameters the manager s reservation income salary and ownership share

group formation and cooperation in social dilemmas a survey and meta analytic evidence abstract we survey the growing literature on group formation in the context of three types of social dilemma games public goods games common pool resources and the prisoner s dilemma the 62 surveyed papers study the effect of different sorting mechanisms endogenous endogenous with the option to play the game and exogenous on cooperation rates our survey shows that cooperators are highly sensitive to the presence of free riders independently of the sorting mechanism we complement the survey with a meta analysis showing no difference in terms of cooperation between studies implementing an endogenous and exogenous sorting what is more we find that it is no more likely for a cooperator to be matched with like minded partners in endogenously formed groups than in exogenously formed groups these observations are related as we show in the survey the success of a sorting method in matching like minded individuals and the levels of cooperation are closely interlinked

indirect reciprocity and money using an experimental analysis of a simple monetary economy as a basis we argue that a monetary system can be more stable than one would expect from individual rationality we show that positive reciprocity stabilizes the monetary system provided every participant considers the feedback of his choice to the stationary equilibrium if however the participants do not play stationary strategies and some participants notoriously refuse to accept money then due to negative reciprocity their behavior will eventually induce a break down of the monetary system

simultaneous decision making in competitive and cooperative environments we experimentally investigate simultaneous decision making in two contrasting environments a competitive environment a contest and a cooperative environment a voluntary contribution mechanism we find that the cooperative nature of the voluntary contribution mechanism spills over to the contest decreasing sub optimal overbidding in the contest however contributions to the public good are not affected by simultaneous participation in the contest there is a significant negative correlation between decisions made in competitive and cooperative environments i e more cooperative subjects tend to be less competitive and vice versa this correlation can be rationalized by heterogeneous social preferences towards inequality but not by bounded rationality theory

conditional cooperation with negative externalities an experiment abstract empirically the commons are not as tragic as standard theory predicts the predominant explanation for this finding is conditional cooperation yet many real life situations involve insiders who are directly affected by a dilemma and outsiders who may be harmed if the insiders overcome the dilemma the quintessential illustration is oligopoly if insiders overcome their dilemma and collude this inflicts harm on the opposite market side in our experiment harm on outsiders significantly reduces conditional cooperation of insiders we can exclude that this result is driven by inequity aversion reciprocity or efficiency seeking only guilt aversion can rationalize our findings with guilt being most pronounced if the active insiders not only inflict harm on the outsider but increase their own payoff at the expense of the outsider

mandatory minimum contributions heterogeneous endowments and voluntary public good provision abstract in a public good experiment with heterogeneous endowments we investigate if and how the contribution level as well as the previously observed fair share rule of equal contributions relative to one s endowment hofmeyr et al 2007 keser et al 2014 are influenced by minimum contribution requirements we consider three different schedules fixmin requiring the same absolute contributions relmin requiring the same relative contributions and progmin requiring minimum contributions that progressively increase with the endowment we find that minimum contributions exert norm giving character and may lead to an increase in average group contributions this is especially true for the progressive schedule on the individual level this schedule leads to higher relative contributions by the wealthier players and thus violates the fair share norm on the group level it leads to the highest contribution level and the lowest inequality in total profits as measured by the gini index

conditional cooperation and voluntary contributions to public goods we compare a partners condition where the same small group of subjects plays a repeated publi c good game to a strangers condition where subjects play this game in changing group formations subjects in the partners conditi on contribute from t he first period on significantly more to the publi c good than subjects in the strangers conditi on in the strangers conditi on contributions show a continual decay whil e in the partners conditi on contributions fluctuate on a high level until t hey decrease in the final periods we interpret subjects behavior in terms of conditional cooperation which is characterized by both future oriented and reactive behavior

contributions in linear public goods experiments with stranger matching two motivations we investigated why subjects contribute to the public good in a linear public goods game with stranger matching in this experiment subjects were asked to determine their contributions to the publ

rank order competition in the voluntary provision of impure public goods publicly provided goods often create differential payoffs due to timely or spatial distances of group members we design and test a provision mechanism which utilizes rank competition to mitigate free riding in impure public goods in our rank order voluntary contribution mechanism rank order vcm group members compete via observable contributions for a larger share of the public good high contributors receive preferential access a larger share while low contributors receive restricted access a lower share in a laboratory experiment rank order vcm elicits median contributions equal to the full endowment throughout the finitely played games with constant groups in the control treatment with randomly assigned ranks the contributions are significantly lower and decline over time we thus provide evidence of rank competition in situations where discriminatory access to public goods is possible being efficiency enhancing

morally motivated self regulation 2 this paper focuses on self regulation motivated by altruistic moral concerns the context is one in which individuals can voluntarily self regulate in the presence of opportunities to free ride on the self regulation of their trading partners moral preferences can mitigate free riding but moral preferences can be limited in the sense that they may be weaker the greater the socioeconomic distance from a trading partner and can depend on whether others are expected to reciprocate the scope of self regulation can be increased by moral suasion but individuals can also form organizations to reduce free riding this paper characterizes the scope of self regulation as a function of the form and strength of moral preferences and explains the effectiveness of organizations in expanding that scope moral preferences can be conditional on the actions of others or limited by socioeconomic distance a citizen thus may self regulate when interacting with someone close but not with someone far away moral preferences can also be conditional or unconditional unconditional moral preferences are independent of the action of others whereas with conditional preferences a citizen is more willing to self regulate if other citizens are expected to reciprocate 3

social learning and voluntary cooperation among like minded people many people contribute to public goods but stop doing so once they experience free riding we test the hypothesis that groups whose members know that they are composed only of likeminded cooperators are able to maintain a higher cooperation level than the most cooperative randomly composed groups our experiments confirm this hypothesis we also predict that groups of like minded free riders do not cooperate yet we find a high level of strategic cooperation that eventually col lapses our results underscore the importance of group composition and social learning by heterogeneously motivated agents to understand the dynamics of cooperation and free riding

anyone for higher speed limits self interested and adaptive political preferences swedish survey evidence indicates that variables reflecting self interest are important in explaining people s preferred speed limits and that political preferences adapt to technological development drivers who believe they drive better than the average driver as well as drivers of cars that are newer and hence safer bigger and with better highspeed characteristics prefer higher speed limits in contrast elderly people prefer lower speed limits furthermore people report that they themselves vote more sociotropically than they believe others vote on average indicating that we may vote less sociotropically than we believe ourselves one possible reason for such self serving biases is that people desire to see themselves as socially responsible

securing property rights a dilemma experiment in austria mexico mongolia south korea and the united states abstract secure property rights result from a combination of public enforcement private protective measures and voluntary norm compliance we conduct a laboratory experiment to study how culture interacts with institutions in shaping individuals behaviors and group outcomes in a property rights dilemma the experiment is conducted in five countries austria mexico mongolia south korea and the united states we find that the security of property varies with the experimentally available institutions and country level indicators such as trust and quality of government subjects from countries with higher levels of trust are more likely to abstain initially from theft devote more resources to production and support funding public protection of property through taxation our findings highlight the relevance of cultural and institutional factors and their interaction in addressing the collective action problem of safeguarding property rights

advocacy and political convergence under preference uncertainty we study the formation of advocacy groups and how they can impact policy outcomes by revealing information about voters preferences to uninformed political candidates we conduct a laboratory experiment based on a two candidate spatial electoral competition setting where the policy preferences of voters are initially unknown and change over time in the control treatment candidates learn about the preferred policy of the median voter through the voting outcome of elections in the advocacy treatments voters can organize themselves into advocacy groups in order to reveal their policy preferences we find that voters often overcome the collective action problem of forming an advocacy group in fact we observe the formation of both informative advocacy groups which convey new information and uninformative advocacy groups which do not overall advocacy groups significantly speed up the convergence to the preferred policy of the median voter however advocacy does not lead to higher earnings as the gains from faster convergence are offset by the costs of group formation

nonlinear behavior of the socio economic dynamics for lake eutrophication control abstract to succeed in combating lake eutrophication cooperation of local inhabitants small factories and farmers in reducing phosphorus discharge is very important but the willingness of each player to cooperate would depend on the cooperation of other players and on the level of environmental concern of the society in general here we study the integrated dynamics of people s choice of behavior and the magnitude of eutrophication assumptions are there are a number of players who choose between alternative options a cooperative and environment oriented option is more costly than the other the decision of each player is affected by social pressure as well as by economical cost of the options the lake pollution increases with the total phosphorus released and a high pollution level in the lake would enhance the social pressure the model includes a positive and a negative feedback loops which create diverse dynamical behavior the model often shows bistability having an equilibrium with a high level of cooperation among people and clean water and the other equilibrium with low cooperation and polluted water which are simultaneously stable the model also shows fluctuation between a high and a low levels of cooperation in alternating years cycle with a longer periodicity or chaotic fluctuation conservatism of people stabilizes the system and sometimes helps maintaining cooperation the system may show unexpected parameter dependence the improved phosphorus removing efficiency might make water more polluted if it causes the decline in the environmental concern and cooperation among people

rational cooperation in the finitely repeated prisoner s dilemma experimental evidence this paper presents experiments designed to examine the sequential equilibrium reputation hypothesis in the finitely repeated prisoner s dilemma the authors test the hypothesis by controlling the subjects ability to build reputations and by manipulating their beliefs that their opponent is irrational or altruistic the responses of subjects strongly support the sequential equilibrium prediction the results also suggest an important role for homemade altruism that is a natural tendency to cooperate that subjects bring to the experiment from the outside the authors find that there may be no difference between the beliefs that an opponent is altruistic and the actual chance it is so copyright 1993 by royal economic society

the impact of information provision on agglomeration bonus performance an experimental study on local networks the agglomeration bonus is an incentive mechanism to induce adjacent landowners to spatially coordinate their land use for the delivery of ecosystem services from farmland this paper uses laboratory experiments to explore the performance of the agglomeration bonus in achieving the socially optimal land management configuration in a local network environment where the information available to subjects varies and the strategic setting is unfavorable for efficient coordination the experiments indicate that if subjects are informed about both their direct and indirect neighbors actions they are more likely to produce the socially optimal configuration thus effectiveness of the policy can be improved by implementing information dissemination exercises among landowners however given the adverse strategic setting increased game experience leads to coordination failure and optimal land choices only at the localized level independent of the information available to subjects thus success of the agglomeration bonus scheme on real landscapes will have to take account of the roles of both information and experience on participant behavior

inter team contests with power differential abstract we investigate the impact of asymmetry on behavior in inter team contests in asymmetric environments one team has a greater probability of winning given the same contribution level unfair contests or has a lower cost of contributing uneven contests we explore how such asymmetries impact behavior asking how being advantaged or disadvantaged influences contributions we find both advantaged and disadvantaged teams contribute much more than theory predicts but in such a way that ex post winning probabilities of the contests are consistent with theoretical predictions at the individual level contributions are predicted by beliefs about own team and opponent team contributions the determinants of contribution by members of the disadvantaged team differ depending on the nature of asymmetry contributions by the disadvantaged team members are responsive to beliefs about contribution by opponents in unfair contests while in uneven contests they are responsive to beliefs about the contribution by teammates

participation and commitment in voluntary coalitions to provide public goods this paper reports experimental evidence on the voluntary formation of coalitions to provide a public good participation and commitment in a coalition are either exogenously imposed or endogenously determined by the players themselves we find larger voluntary participation rates when commitments in the coalition are endogenously determined using a minimum contribution rule rather than exogenously determined however due to a trade off between participation and commitment coalitions with voluntary participation are less effective in facilitating cooperation compared to when all players are forced to participate this paper therefore confirms the rather pessimistic conclusions from coalition formation theories

cooperation and norm enforcement the individual level perspective abstract we explore the relationship between individuals disposition to cooperate and their inclination to engage in peer punishment as well as their relative importance for mitigating social dilemmas using a modified strategy method approach we identify individual punishment patterns and link them with individual cooperation patterns classifying n 628 subjects along these two dimensions documents that cooperation and punishment patterns are aligned for most individuals however the data also reveal a sizable share of free riders that punish pro socially and conditional cooperators that do not engage in punishment analyzing the interplay between types in an additional experiment we show that pro social punishers are important for achieving cooperation incorporating information on punishment types explains large amounts of the between and within group variation in cooperation

characterizing social value of information abstract this paper characterizes the social value of information in bayesian games with symmetric quadratic payoff functions and normally distributed public and private signals the main result provides a necessary and sufficient condition for welfare to increase with public or private information in so doing we represent welfare as a linear combination of the variance of a common term in an equilibrium strategy and that of an idiosyncratic term which are referred to as the common variance and the idiosyncratic variance of actions respectively the ratio of their coefficients is a key parameter in our condition if the coefficient of the common variance is relatively large welfare necessarily increases but if it is relatively small welfare can decrease using our condition we find eight types of games with different welfare effects of information