Binding Contracts, Non-Binding Promises and Social Feedback in the Intertemporal Common-Pool Resource Game
Abstract
:1. Introduction
2. Previous Findings
3. The Intertemporal CPR Game
Hypotheses
4. Experiment 1: Binding Contracts and Non-Binding Promises
4.1. Procedure
- In the no regulation condition, no further instructions were given to subjects;
- In the contract condition, subjects had to decide whether or not they wanted to sign a contract which, if signed unanimously, would authorize the computer to invest their whole endowment in Asset B in every round. Furthermore, they were made aware of two facts. They were told that if the contract was not signed by all subjects, they would be able to choose the amount they wanted to invest in Asset A or Asset B. They were also told that their decision to sign the contract or not would be displayed next to their number on the screen and would be visible to the other subjects in their group. The latter design feature allows for a better comparison of the contract condition and the promise condition, which is described next;
- In the promise condition, subjects had to decide whether or not they wanted to promise to invest their total endowment in Asset B in every round. Moreover, they were made aware of two facts. They were told that, irrespective of their decision, they would be able to choose the amount they wanted to invest in Asset A or Asset B. They were also told that their decision to make a promise or not would be displayed next to their number on the screen and would be visible to the other subjects in their group (see Figure A1 in the Appendix A).
4.2. Results
4.3. Discussion
5. Experiment 2: Private and Public Social Feedback
5.1. Procedure
- In the no regulation condition, no further instructions were given to subjects;
- In the contract condition, subjects were given the same instructions as in the contract condition in the first experiment;
- In the private feedback condition, subjects were informed that after each round they would have the possibility to rate the other four subjects’ investment decisions. They were told that the ratings could be positive, negative or neutral and would express approval, disapproval or indifference (see Figure A2 in the Appendix A). Moreover, they were made aware that they would neither know which of the other subjects submitted a rating nor would the other subjects learn how they had been rated;
- In the public feedback condition, subjects received the same instructions as in the private feedback condition, but with one exception. Subjects were made aware of the fact that their score (i.e., number of positive minus number of negative ratings) would be displayed next to their number on the screen and would be visible to the other subjects in their group (see Figure A3 in the Appendix A).
5.2. Results
6. General Discussion and Conclusions
Author Contributions
Funding
Conflicts of Interest
Appendix A
Experimental Instructions
Ex. 1: All 5 | Ex. 2: Only you | Ex. 3: All 5 | Ex. 4: Only you | |
---|---|---|---|---|
invest in A | invest in A | invest in B | invest in B | |
Your investment in A | 100 | 100 | 0 | 0 |
Your investment in B | 0 | 0 | 100 | 100 |
Total investment in A | 500 | 100 | 0 | 400 |
Total investment in B | 0 | 400 | 500 | 100 |
Your gain from A (+35%) | 135 | 135 | 0 | 0 |
Your gain from B (+5%) | 0 | 0 | 105 | 105 |
Costs from A (−2%) | −10 | −2 | 0 | −8 |
Your profit | 125 | 133 | 105 | 97 |
Ex. 1: All 5 invest in A (your average profit = 80). | ||||||||||
Round | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
Your investment in A | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 |
Your investment in B | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Total investment in A | 500 | 500 | 500 | 500 | 500 | 500 | 500 | 500 | 500 | 500 |
Total investment in B | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Your gain from A (+35%) | 135 | 135 | 135 | 135 | 135 | 135 | 135 | 135 | 135 | 135 |
Your gain from B (+5%) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Costs from A (−2%) | −10 | −20 | −30 | −40 | −50 | −60 | −70 | −80 | −90 | −100 |
Your profit | 125 | 115 | 105 | 95 | 85 | 75 | 65 | 55 | 45 | 35 |
Ex. 2: Only you invest in A (your average profit = 124) | ||||||||||
Round | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
Your investment in A | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 |
Your investment in B | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Total investment in A | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 |
Total investment in B | 400 | 400 | 400 | 400 | 400 | 400 | 400 | 400 | 400 | 400 |
Your gain from A (+35%) | 135 | 135 | 135 | 135 | 135 | 135 | 135 | 135 | 135 | 135 |
Your gain from B (+5%) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Costs from A (−2%) | −2 | −4 | −6 | −8 | −10 | −12 | −14 | −16 | −18 | −20 |
Your profit | 133 | 131 | 129 | 127 | 125 | 123 | 121 | 119 | 117 | 115 |
Ex. 3: All 5 invest in B (your average profit = 105) | ||||||||||
Round | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
Your investment in A | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Your investment in B | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 |
Total investment in A | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Total investment in B | 500 | 500 | 500 | 500 | 500 | 500 | 500 | 500 | 500 | 500 |
Your gain from A (+35%) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Your gain from B (+5%) | 105 | 105 | 105 | 105 | 105 | 105 | 105 | 105 | 105 | 105 |
Costs from A (−2%) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Your profit | 105 | 105 | 105 | 105 | 105 | 105 | 105 | 105 | 105 | 105 |
Ex. 4: Only you invest in B (your average profit = 61) | ||||||||||
Round | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
Your investment in A | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Your investment in B | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 |
Total investment in A | 400 | 400 | 400 | 400 | 400 | 400 | 400 | 400 | 400 | 400 |
Total investment in B | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 |
Your gain from A (+35%) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Your gain from B (+5%) | 105 | 105 | 105 | 105 | 105 | 105 | 105 | 105 | 105 | 105 |
Costs from A (−2%) | −8 | −16 | −24 | −32 | −40 | −48 | −56 | −64 | −72 | −80 |
Your profit | 97 | 89 | 81 | 73 | 65 | 57 | 49 | 41 | 33 | 25 |
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1 | Both the first and the second experiment were programmed and conducted with the software z-Tree [36]. |
2 | In fact, seven sessions were conducted. Since not enough subjects showed up in Session 1, the missing treatment condition was tested in Session 7 where ten subjects were randomized on two treatments. The analysis is based on the pooled session 1 and 7 data. However, Session 7 data not generated by subjects in the missing treatment is excluded from the analysis. |
3 | The set of scenarios chosen for illustration was balanced, in the sense that it did not prime subjects on a particular behavior (see instructions in the Appendix A). |
4 | Note that in the contract condition there is no difference between investments of subjects who had signed a contract and those who had not. Therefore, the analysis is based on the pooled data disregarding whether or not subjects had initially signed the contract. |
M1 | M2 | M3 | ||||
---|---|---|---|---|---|---|
Coef | SE | Coef | SE | Coef | SE | |
Main Effects | ||||||
no regulation (ref.) | 28.370 *** | 3.836 | 28.085 *** | 3.918 | 33.872 *** | 4.056 |
promise no | −1.808 | 4.966 | −2.516 | 5.289 | −5.777 | 4.473 |
promise yes | 18.004 * | 7.633 | 19.991 * | 7.970 | 18.440 * | 6.489 |
contract no | 4.475 | 5.159 | 4.519 | 5.343 | 3.741 | 4.127 |
period | −4.160 *** | 0.588 | −3.591 *** | 0.819 | −2.378 ** | 0.680 |
Interactions with Period | ||||||
promise no | 1.416 | 1.127 | 1.620 | 1.191 | ||
promise yes | −3.975 * | 1.552 | −4.260 ** | 1.351 | ||
contract no | −0.088 | 0.812 | −0.749 | 0.829 | ||
Conditional Cooperation | ||||||
others’ A (lag 1) | −0.080 ** | 0.027 | ||||
N1 (decisions) | 1600 | 1600 | 1440 | |||
N2 (groups) | 18 | 18 | 18 | |||
adj. R2 | 0.12 | 0.14 | 0.16 |
M1 | M2 | M3 | ||||
---|---|---|---|---|---|---|
Coef | SE | Coef | SE | Coef | SE | |
Main Effects | ||||||
no regulation (ref.) | 33.843 *** | 3.430 | 32.535 *** | 3.424 | 36.689 *** | 2.923 |
contract no | −4.192 | 6.789 | −4.192 | 6.793 | −2.947 | 5.744 |
priv. feedback | −1.639 | 6.448 | −1.639 | 6.452 | −0.956 | 5.131 |
publ. feedback | 16.578 *** | 2.344 | 23.771 *** | 3.024 | 17.427 *** | 2.811 |
period (lin.) | −1.240 | 0.731 | −1.343 | 0.722 | −0.953 | 0.746 |
period (quad.) | −0.590 ** | 0.168 | −0.430 * | 0.173 | −0.404 * | 0.173 |
Interaction with Publ. Feedback | ||||||
period (lin.) | 0.567 | 1.409 | −1.129 | 1.474 | ||
period (quad.) | −0.880 ** | 0.271 | −0.304 | 0.266 | ||
Conditional Cooperation | ||||||
others’ A (lag 1) | −0.061 * | 0.023 | ||||
N1(decisions) | 1650 | 1650 | 1485 | |||
N2(groups) | 18 | 18 | 18 | |||
adj. R2 | 0.06 | 0.06 | 0.09 |
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Przepiorka, W.; Diekmann, A. Binding Contracts, Non-Binding Promises and Social Feedback in the Intertemporal Common-Pool Resource Game. Games 2020, 11, 5. https://doi.org/10.3390/g11010005
Przepiorka W, Diekmann A. Binding Contracts, Non-Binding Promises and Social Feedback in the Intertemporal Common-Pool Resource Game. Games. 2020; 11(1):5. https://doi.org/10.3390/g11010005
Chicago/Turabian StylePrzepiorka, Wojtek, and Andreas Diekmann. 2020. "Binding Contracts, Non-Binding Promises and Social Feedback in the Intertemporal Common-Pool Resource Game" Games 11, no. 1: 5. https://doi.org/10.3390/g11010005