Open AccessCommunication
On Adverse Effects of Consumers’ Attaching Greater Importance to Firms’ Ethical Conduct
Games 2017, 8(3), 39; doi:10.3390/g8030039 -
Abstract
Consumers increasingly care about firms’ ethical conduct (e.g., labor and environmental practices) when making their consumption choices. This note presents a simple framework to highlight the possibility that this development may induce a less desirable production technology choice and bring about lower market
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Consumers increasingly care about firms’ ethical conduct (e.g., labor and environmental practices) when making their consumption choices. This note presents a simple framework to highlight the possibility that this development may induce a less desirable production technology choice and bring about lower market transparency. When faced with consumers’ greater moral concerns, more firms may choose an undesirable mode of production and shroud information about it. Full article
Open AccessFeature PaperArticle
Strategic Behavior of Moralists and Altruists
Games 2017, 8(3), 38; doi:10.3390/g8030038 -
Abstract
Does altruism and morality lead to socially better outcomes in strategic interactions than selfishness? We shed some light on this complex and non-trivial issue by examining a few canonical strategic interactions played by egoists, altruists and moralists. By altruists, we mean people who
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Does altruism and morality lead to socially better outcomes in strategic interactions than selfishness? We shed some light on this complex and non-trivial issue by examining a few canonical strategic interactions played by egoists, altruists and moralists. By altruists, we mean people who do not only care about their own material payoffs but also about those to others, and, by a moralist, we mean someone who cares about own material payoff and also about what would be his or her material payoff if others were to act like himself or herself. It turns out that both altruism and morality may improve or worsen equilibrium outcomes, depending on the nature of the game. Not surprisingly, both altruism and morality improve the outcomes in standard public goods games. In infinitely repeated games, however, both altruism and morality may diminish the prospects of cooperation, and to different degrees. In coordination games, morality can eliminate socially inefficient equilibria while altruism cannot. Full article
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Open AccessFeature PaperArticle
Team Incentives under Moral and Altruistic Preferences: Which Team to Choose?
Games 2017, 8(3), 37; doi:10.3390/g8030037 -
Abstract
This paper studies incentives provision when agents are characterized either by homo moralis preferences, i.e., their utility is represented by a convex combination of selfish preferences and Kantian morality, or by altruism. In a moral hazard in a team setting with two agents
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This paper studies incentives provision when agents are characterized either by homo moralis preferences, i.e., their utility is represented by a convex combination of selfish preferences and Kantian morality, or by altruism. In a moral hazard in a team setting with two agents whose efforts affect output stochastically, I demonstrate that the power of extrinsic incentives decreases with the degrees of morality and altruism displayed by the agents, thus leading to increased profits for the principal. I also show that a team of moral agents will only be preferred if the production technology exhibits decreasing returns to efforts; the probability of a high realization of output conditional on both agents exerting effort is sufficiently high; and either the outside option for the agents is zero or the degree of morality is sufficiently low. Full article
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Open AccessArticle
Dual-Process Reasoning in Charitable Giving: Learning from Non-Results
Games 2017, 8(3), 36; doi:10.3390/g8030036 -
Abstract
To identify dual-process reasoning in giving, we exposed experimental participants making a charitable donation to vivid images of the charity’s beneficiaries in order to stimulate affect. We hypothesized that the effect of an affective manipulation on giving would be larger when we simultaneously
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To identify dual-process reasoning in giving, we exposed experimental participants making a charitable donation to vivid images of the charity’s beneficiaries in order to stimulate affect. We hypothesized that the effect of an affective manipulation on giving would be larger when we simultaneously put the subjects under cognitive load using a numerical recall task. Independent treatment checks reveal opposite responses in men and women and cast some doubt on the reliability of our mainstream treatment manipulations and assessment tools. We find no evidence for dual-process decision-making, even among women, whose responses to the manipulations conformed most to our expectations. These results highlight the need for caution in the use of these common manipulations, the importance of independent manipulation checks, and the limitations of dual-process models for understanding altruistic behavior. Full article
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Open AccessArticle
Cooperation in Public Goods Games: Stay, But Not for Too Long
Games 2017, 8(3), 35; doi:10.3390/g8030035 -
Abstract
Cooperation in repeated public goods game is hardly achieved, unless contingent behavior is present. Surely, if mechanisms promoting positive assortment between cooperators are present, then cooperators may beat defectors, because cooperators would collect greater payoffs. In the context of evolutionary game theory, individuals
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Cooperation in repeated public goods game is hardly achieved, unless contingent behavior is present. Surely, if mechanisms promoting positive assortment between cooperators are present, then cooperators may beat defectors, because cooperators would collect greater payoffs. In the context of evolutionary game theory, individuals that always cooperate cannot win the competition against defectors in well-mixed populations. Here, we study the evolution of a population where fitness is obtained in repeated public goods games and players have a fixed probability of playing the next round. As a result, the group size decreases during the game. The population is well-mixed and there are only two available strategies: always cooperate (ALLC) or always defect (ALLD). Through numerical calculation and analytical approximations we show that cooperation can emerge if the players stay playing the game, but not for too long. The essential mechanism is the interaction between the transition from strong to weak altruism, as the group size decreases, and the existence of an upper limit to the number of rounds representing limited time availability. Full article
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Open AccessArticle
The Impact of Previous Action on Bargaining—An Experiment on the Emergence of Preferences for Fairness Norms
Games 2017, 8(3), 34; doi:10.3390/g8030034 -
Abstract
The communication of participants to identify an acceptable bargaining outcome in the Nash bargaining game is all about fairness norms. Participants introduce fairness norms which yield a better outcome for themselves in order to convince the other participant of their bargaining proposal. Typically,
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The communication of participants to identify an acceptable bargaining outcome in the Nash bargaining game is all about fairness norms. Participants introduce fairness norms which yield a better outcome for themselves in order to convince the other participant of their bargaining proposal. Typically, these fairness norms are in line with theoretical predictions, which support a wide variety of different but fair outcomes the participants can choose from. In this experiment, we play two treatments of the Nash bargaining game: in one treatment, the participants play a dictator game prior to bargaining, and in the other treatment they do not. We find that participants who have not played the dictator game intensively discuss the outcome of the game and come to solutions closer to the equal split of the pie the longer they chat. This effect vanishes as soon as the participants have previous experience from a dictator game: instead of chatting, they establish the fairness norm introduced in the dictator game. Remarkably, if the dictator is unfair in the dictator game, he also gets a higher share of the pie in the Nash bargaining game. Full article
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Open AccessCommunication
A Note on Disbelief in Others regarding Backward Induction
Games 2017, 8(3), 33; doi:10.3390/g8030033 -
Abstract
We present experimental results on the role of beliefs in the cognitive ability of others in a problem involving backward induction. Using a modified version of the so-called race game, our design allows the effects of a player’s own inability to perform backward
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We present experimental results on the role of beliefs in the cognitive ability of others in a problem involving backward induction. Using a modified version of the so-called race game, our design allows the effects of a player’s own inability to perform backward induction to be separated from the effects of her disbelief in the ability of others to do so. We find that behavior is responsive to the dependence on others who might fail in backward induction as well as information regarding their backward induction skills. Full article
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Open AccessArticle
Structural Holes in Social Networks with Exogenous Cliques
Games 2017, 8(3), 32; doi:10.3390/g8030032 -
Abstract
It has been empirically shown that structural holes in social networks enable potential large benefits to those individuals who bridge them (Burt, 2004). The work in Goyal and Vega-Redondo (2007) shows that the large payoff differentials caused by structural holes can persist even
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It has been empirically shown that structural holes in social networks enable potential large benefits to those individuals who bridge them (Burt, 2004). The work in Goyal and Vega-Redondo (2007) shows that the large payoff differentials caused by structural holes can persist even when agents strategically add and remove ties to smooth those differentials, thereby providing a game-theoretic rationale for the existence of bridge-agents. The present paper ties back to the initial empirical literature by explicitly assuming that agents are exogenously linked forming cliques, as in a firm environment. In this setting, bridge-agents cannot be sustained under the same conditions of Goyal and Vega-Redondo (2007). Instead, they can be sustained when the deviation possibilities are restricted and only when they connect small groups of agents to the rest. Full article
Open AccessArticle
The Monty Hall Problem as a Bayesian Game
Games 2017, 8(3), 31; doi:10.3390/g8030031 -
Abstract
This paper formulates the classic Monty Hall problem as a Bayesian game. Allowing Monty a small amount of freedom in his decisions facilitates a variety of solutions. The solution concept used is the Bayes Nash Equilibrium (BNE), and the set of BNE relies
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This paper formulates the classic Monty Hall problem as a Bayesian game. Allowing Monty a small amount of freedom in his decisions facilitates a variety of solutions. The solution concept used is the Bayes Nash Equilibrium (BNE), and the set of BNE relies on Monty’s motives and incentives. We endow Monty and the contestant with common prior probabilities (p) about the motives of Monty and show that, under certain conditions on p, the unique equilibrium is one in which the contestant is indifferent between switching and not switching. This coincides and agrees with the typical responses and explanations by experimental subjects. In particular, we show that our formulation can explain the experimental results in Page (1998), that more people gradually choose switch as the number of doors in the problem increases. Full article
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Open AccessFeature PaperArticle
Game Theory of Pollution: National Policies and Their International Effects
Games 2017, 8(3), 30; doi:10.3390/g8030030 -
Abstract
In this paper we put forward a simple game-theoretical model of pollution control, where each country is in control of its own pollution, while the environmental effects of policies do not stop at country borders. In our noncooperative differential game, countries as players
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In this paper we put forward a simple game-theoretical model of pollution control, where each country is in control of its own pollution, while the environmental effects of policies do not stop at country borders. In our noncooperative differential game, countries as players minimize the present value of their own costs defined as a linear combination of pollution costs and costs of environmentally friendly policies, where the state vector of the system consists of the pollution stock per country. A player’s time-varying decision is her investment into clean policies, while her expected costs include also pollution caused by her neighbors. We analyze three variants of this game: (1) a Nash game in which each player chooses her investment into clean policies such that her expected costs are minimal, (2) a game in which the players imitate the investments into clean policies of their neighbors without taking the neighbor’s success concerning their costs into account and (3) a game in which each player imitates her neighbors’ investments into clean policies if this behavior seems to bring a profit. In each of these scenarios, we show under which conditions the countries have incentives to act environmentally friendly. We argue that the different results of these games can be used to understand and design effective environmental policies. Full article
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Open AccessArticle
Anticipated Communication in the Ultimatum Game
Games 2017, 8(3), 29; doi:10.3390/g8030029 -
Abstract
Anticipated verbal feedback in a dictator game has been shown to induce altruistic behavior. However, in the ultimatum game which, apart from generosity, entails a strategic component since a proposer may (rightly) fear that the responder will reject a low offer, it remains
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Anticipated verbal feedback in a dictator game has been shown to induce altruistic behavior. However, in the ultimatum game which, apart from generosity, entails a strategic component since a proposer may (rightly) fear that the responder will reject a low offer, it remains an open question whether anticipated verbal communication can be effective in increasing offers. We implement a between-subjects experimental design in the ultimatum game with strategy method manipulating the form of anticipated verbal communication (no communication, one-sided communication from proposers and two-sided communication) and find that offers are significantly higher in the presence of anticipated two-sided communication. However, anticipated one-sided communication from proposers has no effect on offers, suggesting, as found in previous studies, that it is the anticipation of feedback that is relevant. Full article
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Open AccessArticle
Reacting to Unfairness: Group Identity and Dishonest Behavior
Games 2017, 8(3), 28; doi:10.3390/g8030028 -
Abstract
We experimentally investigate whether individuals are more likely to engage in dishonest behavior after having experienced unfairness perpetrated by an individual with a salient group identity. Two individuals generate an endowment together, but only one can decide how to share it. They either
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We experimentally investigate whether individuals are more likely to engage in dishonest behavior after having experienced unfairness perpetrated by an individual with a salient group identity. Two individuals generate an endowment together, but only one can decide how to share it. They either share the same group identity or have distinct group identities. Then, they approach a task in which they can opportunistically engage in dishonest behavior. Our results show that when individuals share the same group identity, unfair distributive decisions do not trigger a dishonest reaction. In contrast, when different group identities coexist, dishonest behavior is observed as a reaction to unfairness. Full article
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Open AccessArticle
Cycles in Team Tennis and Other Paired-Element Contests
Games 2017, 8(3), 27; doi:10.3390/g8030027 -
Abstract
Team Tennis competitions produce aggregate scores for teams, and thus team rankings, based on head-to-head matchups of individual team members. Similar scoring rules can be used to rank any two groups that must be compared on the basis of paired elements. We explore
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Team Tennis competitions produce aggregate scores for teams, and thus team rankings, based on head-to-head matchups of individual team members. Similar scoring rules can be used to rank any two groups that must be compared on the basis of paired elements. We explore such rules in terms of their strategic and social choice characteristics, with particular emphasis on the role of cycles. We first show that cycles play an important role in promoting competitive balance, and show that cycles allow for a maximum range of competitive balance within a league of competing teams. We also illustrate the impact that strategic behavior can have on the unpredictability of competition outcomes, and show for a general class of team tennis scoring rules that a rule is strategy-proof if and only if it is acyclic (dictatorial) and manipulable otherwise. Given the benefits of cycles and their relationship with manipulability, a league valuing competitive balance may invite such social choice violations when choosing a scoring rule. Full article
Open AccessArticle
Gender, Emotions, and Tournament Performance in the Laboratory
Games 2017, 8(3), 26; doi:10.3390/g8030026 -
Abstract
Individuals face competitive environments daily, and it is important to understand how emotions affect behavior in these environments and resulting economic consequences. Using a two-stage laboratory experiment, I analyze the role of reported emotions in tournament performance and assess how the behavioral response
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Individuals face competitive environments daily, and it is important to understand how emotions affect behavior in these environments and resulting economic consequences. Using a two-stage laboratory experiment, I analyze the role of reported emotions in tournament performance and assess how the behavioral response differs across genders. The first stage serves to induce emotions, while the second stage presents the subject with a one-on-one winner-take-all tournament with the individual who generated the feeling, using a real-effort task. Ultimately, I show that women respond to the negative feelings more strongly than men. I find that women increase performance when experiencing negative emotions, while male performance remains unaffected. Remarkably, there is no gender gap in tournament performance when there are negative emotions. Full article
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Open AccessArticle
Multi-Leader Multi-Follower Model with Aggregative Uncertainty
Games 2017, 8(3), 25; doi:10.3390/g8030025 -
Abstract
We study a non-cooperative game with aggregative structure, namely when the payoffs depend on the strategies of the opponent players through an aggregator function. We assume that a subset of players behave as leaders in a Stackelberg model. The leaders, as well the
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We study a non-cooperative game with aggregative structure, namely when the payoffs depend on the strategies of the opponent players through an aggregator function. We assume that a subset of players behave as leaders in a Stackelberg model. The leaders, as well the followers, act non-cooperatively between themselves and solve a Nash equilibrium problem. We assume an exogenous uncertainty affecting the aggregator and we obtain existence results for the stochastic resulting game. Some examples are illustrated. Full article
Open AccessArticle
Clusters with Minimum Transportation Cost to Centers: A Case Study in Corn Production Management
Games 2017, 8(2), 24; doi:10.3390/g8020024 -
Abstract
In Northern Thailand, the size and topographical structure of farmland makes it necessary for operators of small-scale waste management systems to be able to reach their clients in an effective manner. Over the past decades, corn contract farming has increased, and the chief
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In Northern Thailand, the size and topographical structure of farmland makes it necessary for operators of small-scale waste management systems to be able to reach their clients in an effective manner. Over the past decades, corn contract farming has increased, and the chief method for eliminating waste from these farms has chiefly been open burning on the fields, which produces enormous amounts of greenhouse gases (GHG) and Polycyclic Aromatic Hydrocarbons (PAHs). To find a way to reduce GHG emissions in the corn production system, this work focuses on finding clusters with minimum transportation time from waste disposal centers. To solve the clustering problems, four models are created and solved on AIMMS and MATLAB. Simulation results indicate that the number of clients essentially affects the performance of the procedure. The case studies are on corn production management in Chiang Mai, the region’s economic capital, as well as in 9 provinces in Northern Thailand, including Chiang Mai, whose combined corn production comprises 32.73 percent of the national production. With roughly 15% of the corn cobs and husks involved in the study, we found that by changing the waste elimination process, the total CO2 emissions can be reduced by up to 12,008.40 tons per year in Chiang Mai and up to 180,198.14 tons per year in the 9 provinces of Northern Thailand. Full article
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Open AccessArticle
Security Investment, Hacking, and Information Sharing between Firms and between Hackers
Games 2017, 8(2), 23; doi:10.3390/g8020023 -
Abstract
A four period game between two firms and two hackers is analyzed. The firms first defend and the hackers thereafter attack and share information. Each hacker seeks financial gain, beneficial information exchange, and reputation gain. The two hackers’ attacks and the firms’ defenses
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A four period game between two firms and two hackers is analyzed. The firms first defend and the hackers thereafter attack and share information. Each hacker seeks financial gain, beneficial information exchange, and reputation gain. The two hackers’ attacks and the firms’ defenses are inverse U-shaped in each other. A hacker shifts from attack to information sharing when attack is costly or the firm’s defense is cheap. The two hackers share information, but a second more disadvantaged hacker receives less information, and mixed motives may exist between information sharing and own reputation gain. The second hacker’s attack is deterred by the first hacker’s reputation gain. Increasing information sharing effectiveness causes firms to substitute from defense to information sharing, which also increases in the firms’ unit defense cost, decreases in each firm’s unit cost of own information leakage, and increases in the unit benefit of joint leakage. Increasing interdependence between firms causes more information sharing between hackers caused by larger aggregate attacks, which firms should be conscious about. We consider three corner solutions. First and second, the firms deter disadvantaged hackers. When the second hacker is deterred, the first hacker does not share information. Third, the first hacker shares a maximum amount of information when certain conditions are met. Policy and managerial implications are provided for how firms should defend against hackers with various characteristics. Full article
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Open AccessFeature PaperArticle
Emotions and Behavior Regulation in Decision Dilemmas
Games 2017, 8(2), 22; doi:10.3390/g8020022 -
Abstract
We introduce a dynamic model of emotional behavior regulation that can generalize to a wide range of decision dilemmas. Dilemmas are characterized by availability of mutually exclusive goals that a decision maker is dually motivated to pursue. In our model, previous goal pursuant
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We introduce a dynamic model of emotional behavior regulation that can generalize to a wide range of decision dilemmas. Dilemmas are characterized by availability of mutually exclusive goals that a decision maker is dually motivated to pursue. In our model, previous goal pursuant decisions produce negative emotions that regulate an individual’s propensity to further pursue those goals at future times. This emotional regulation of behavior helps explain the non-stationarity and switching observed between so-called “preferences” revealed in repeated decision dilemmas (e.g., by choosing A over B at time 1, then choosing B over A at time 2). We also explain how behavior regulation under dilemma conditions is affected by the set of available options and how the strength and decay rate of emotions affect the tendency to choose behaviors pursuant of extremely (rather than moderately) different options over time. We discuss how emotional behavior regulation insights provided by our model can extend to a variety of topics including approach and avoidance, temptation and self-control, moral balancing, impulse buying and shopping momentum, dieting and exercise, work and leisure, sleep regulation, cooperation, and competition. Full article
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Open AccessFeature PaperArticle
A Study of the Triggers of Conflict and Emotional Reactions
Games 2017, 8(2), 21; doi:10.3390/g8020021 -
Abstract
We study three triggers of conflict and explore their resultant emotional reactions in a laboratory experiment. Economists suggest that the primary trigger of conflict is monetary incentives. Social psychologists suggest that conflicts are often triggered by fear. Finally, evolutionary biologists suggest that a
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We study three triggers of conflict and explore their resultant emotional reactions in a laboratory experiment. Economists suggest that the primary trigger of conflict is monetary incentives. Social psychologists suggest that conflicts are often triggered by fear. Finally, evolutionary biologists suggest that a third trigger is uncertainty about an opponent’s desire to cause harm. Consistent with the predictions from economics, social psychology, and evolutionary biology, we find that conflict originates from all three triggers. The three triggers differently impact the frequency of conflict, but not the intensity. Also, we find that the frequency and intensity of conflict decrease positive emotions and increase negative emotions and that conflict impacts negative emotions more than positive emotions. Full article
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Open AccessArticle
Watching Eyes and Living up to Expectations: Unkind, Not Kind, Eyes Increase First Mover Cooperation in a Sequential Prisoner’s Dilemma
Games 2017, 8(2), 20; doi:10.3390/g8020020 -
Abstract
(1) Background: Why and when images of watching eyes encourage prosocial behavior is still subject to discussion, and two recent meta-analyses show no effect of watching eyes on generosity. This study aims to discern the effect of watching eyes of different valence on
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(1) Background: Why and when images of watching eyes encourage prosocial behavior is still subject to discussion, and two recent meta-analyses show no effect of watching eyes on generosity. This study aims to discern the effect of watching eyes of different valence on two separate aspects of prosocial behavior, and additionally investigates whether individuals’ social value orientation moderates the effect of eyes. (2) Methods: Individuals take on the role of either a first or second mover in an incentivized, anonymous sequential prisoner’s dilemma (n = 247), a two-person game which separates the need to form expectations about the other player (first mover cooperation, trust) from the motive of greed (second mover cooperation, reciprocity). During decision-making, a picture of either kind eyes, unkind eyes, or a control picture is presented above each decision matrix. (3) Results: The results indicate that unkind eyes, and not kind eyes, significantly boost first mover cooperation. In contrast, neither type of eye cues increase second mover cooperation. Social value orientation does not moderate these effects. (4) Conclusions: Thus, the data suggest that the valence of eye cues matters, and we propose that unkind eyes urge first movers to live up to the interaction partner’s expectations. Full article
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