Games — Open Access Journal of Game Theory

This paper introduces a strategic element into the dictator game by allowing recipients to select their dictator. Recipients are presented with the photographs of two dictators and the envelopes containing their allocations, and are then asked to select which dictator’s gift they would like to receive. The recipient is paid the contents of the envelope they select. The photographs carry information about the gender and race/ethnicity of the dictators, and we ask an independent sample of raters to evaluate the photographs for other characteristics. While gender and ethnicity do not affect the recipient’s choice, one characteristic inferred from the photos makes them significantly more likely to be selected: Their perceived reliability. Full article

In terms of role assignment and informational characteristics, different contexts have been used when measuring distributional preferences. This could be problematic as contextual variance may inadvertently muddle the measurement process. We use a within-subjects design and systemically vary role assignment as well as the way information is displayed to subjects when measuring distributional preferences in resource allocation tasks as well as proper games. Specifically we examine choice behavior in the contexts of role certainty, role uncertainty, decomposed games, and matrix games. Results show that there is large heterogeneity in the choices people make when deciding how to allocate resources between themselves and some other person under different contextual frames. For instance, people make more prosocial choices under role uncertainty as compared to role certainty. Furthermore, altering the way information is displayed given a particular situation can have a more dramatic effect on choice behavior than altering the situation itself. That is, depending on how information is displayed, people may behave as if they would perform a non-strategic decision making task when in fact they are playing a proper game characterized by strategic interdependence. Full article

We analyze choices of sellers, each setting a reserve price in a laboratory first price auction with automated equilibrium bidding. Subjects are allowed to gain experience for a fixed period of time prior to making a single payoff-relevant choice. Behavior of more experienced sellers was consistent with benchmark theory: average reserve price for these sellers was independent of the number of bidders and equaled the predicted level. Less experienced sellers however deviated from the theoretical benchmark: on average, they tended to shade reserve price below the predicted level and positively relate it to the number of bidders. Full article

Previous research has typically focused on distribution problems that emerge in the domain of gains. Only a few studies have distinguished between games played in the domain of gains from games in the domain of losses, even though, for example, prospect theory predicts differences between behavior in both domains. In this study, we experimentally analyze players’ behavior in dictator and ultimatum games when they need to divide a monetary loss and then compare this to behavior when players have to divide a monetary gain. We find that players treat gains and losses differently in that they are less generous in games over losses and react differently to prior experiences. Players in the dictator game become more selfish after they have had the experience of playing an ultimatum game first. Full article

We examine the impact of social distance in dictator game giving. The study is conducted in a field setting with high stakes (two days’ wages). The sample is a representative sample from eleven low-income Mexican villages. Subjects make multiple dictator decisions simultaneously, in a comparative dictator game. We show the relationship between social distance and giving using several family members, a member of the same village, and a stranger from a different village. Dictator giving shows substantial variation across recipient types and varies directly with social distance. We find higher giving towards family members than towards community members and strangers. Furthermore, our results indicate that giving to community members and to strangers is not different. In light of our results, it is important to consider the impact of social distance on inter- and intra-household transfers in policy interventions that alleviate poverty, e.g., conditional transfers. Full article

We consider a dominant platform provider operating both legacy and new platforms that connects users with suppliers in a two-sided market context. In addition to the typical indirect network effects in the two-sided market, backward compatibility works on the new platform. Thus, users joining the new one can also enjoy the services provided by suppliers using the legacy platform. Users and suppliers are linearly differentiated between two platforms as in the Hotelling model and play a subscription game of choosing one platform at the lower level. The suppliers in the new platform may suffer from congestion, which can be alleviated by platform provider’s investment on the new one. The platform provider also determines price margins for the supplier sides. Our equilibrium (eq.) analysis in the subscription game identifies an interior eq. (coexistence of both platforms in both sides). Though the backward compatibility plays a stabilizing role for the interior eq., its stability is fragile due to the network effects. Rather, some boundary eq.’s, where at least one side tips to the legacy or the new platform, are more likely to be stable. The backward compatibility is a key factor that characterizes the stable boundary eq.’s. The upper stage game is led by the platform provider, which tries to maneuver the system toward one of the stable boundary eq.’s using price margins and investment. The platform provider prefers an all-new boundary eq. when the indirect network effect and the maximum price margin for the new platform are large; thus, it puts a significant investment in the new one. With a small indirect network effect for suppliers, however, the platform provider does not invest in the new platform and choose a separate boundary eq. where two sides split into different platforms. Whether the user side completely tips to the new one (completely separated eq.) or not (partially separated eq.) depends on the backward compatibility. The relative advantage of the all-new eq. over the separate eq.’s in terms of social welfare from both sides depends on the backward compatibility as well as the indirect network effects for the new platform. Full article

A number of studies discuss whether and how economists differ from other disciplines in the amount that they contribute to public goods. We view this debate as incomplete because it neglects the willingness to sanction non-cooperative behavior, which is crucial for maintaining social order and for sustaining the provision of public goods. We study the decision whether to engage in costly punishment of a free rider in a survey-based experiment with 1423 students from seven study areas in the social sciences, as well as medicine at Aarhus University, Denmark. Using a dictator game and a social dilemma game, that captures essential features of the public goods game, we replicate previous findings that economics students give significantly less than students from other disciplines. However, when subjects decide whether or not to punish a free rider, we find that economics students are just as likely to punish as students from other disciplines. Full article

Social preference models emphasize that perceived intentions motivate reciprocity. However, laboratory tests of this theory typically manipulate perceived intentions through changes in wealth resulting from a sacrifice in pay by another. There is little evidence on whether reciprocity occurs in response to perceived intentions alone, independent of concurrent changes in pay and giver sacrifice (and any associated guilt from that sacrifice). This paper addresses this gap in the literature by implementing a modified dictator game where gifts to dictators are possible, but where gift transactions are also stochastically prevented by nature. This leads to instances of observed gift-giving intentions that yield no sacrifice or change in outcomes. In addition, this study uses both monetary and non-monetary gifts; previous studies typically use only monetary incentives, even though real-world applications of this literature often involve non-monetary incentives such as business or marketing gifts. The results show that on average, dictators reciprocated strongly to just the intention to give a gift, and they also reciprocated similarly to both monetary and non-monetary gifts. These results are consistent with intentions-based models of social preferences and with much of the marketing literature on business gifts. Full article

Implicit associations and biases are carried without awareness or conscious direction, yet there is reason to believe they may be influenced by social pressures. In this paper, I study social pressure as a motive to give, as well as giving itself under conditions of implicit bias. In doing so, I pair the Implicit Association Test (IAT), commonplace in other social sciences, with a laboratory dictator game with sorting. I find that despite its popularity, the IAT does not predict dictator giving and social pressure does not explain acts of giving from biased dictators. These results are indicative of the meaningful difference between having an implicit bias and acting on one. As such, results can be thought of as a bound on the external validity of the IAT. Full article

We investigate, theoretically and experimentally, the effect of competition on risk taking in a contest in which players only decide on the level of risk they wish to take. Taking more risk implies a chance of a higher performance, but also implies a higher chance of failure. We vary the level of competition in two ways: by varying the number of players (2 players versus 8 players), and by varying the sensitivity of the contest to differences in performance (lottery contest versus all-pay auction). Our results show that there is a significant interaction effect between the two treatments, suggesting that players are particularly prone to take more risks if both the number of players and the sensitivity to performance are higher. Full article

Incentives shape how much people contribute to the welfare of a group. These incentives do not restrict the opportunities but they change the costs of contributions. This paper studies how the random assignment of such incentives affects perceived distributive justice among group members. Do people consider differences in incentives similar to unequal opportunities, that is, situations in which some people have a lower chance to make a high contribution? The results from a real effort experiment show that the economic framing of incentives matters in this context. If some people do not work for the common good because of rather large private costs, they appreciate these ‘negative incentives’ similarly to unequal opportunities. They do not do so, and become less egalitarian, if lower effort for the group increases the chance for private gains (‘positive incentives’). Interestingly, participants reward group members who do not limit their expected contributions to the group despite adverse incentives. Full article

In a context where sustainable consumption and production need to be encouraged, economic experiments can provide significant insights into how individuals consider environmental externalities in their choices and how public policy can foster the environmental public good. Experimental studies aiming to evaluate market mitigation of externalities through the provision of green goods usually choose to adopt neutral language in terms of framing. Our study implements an incentivized economics experiment to explore how supply and demand consider negative externalities. Furthermore, the study addresses the impact of using non-abstract wording when describing negative externalities. Two types of goods can be produced and bought, namely goods generating negative externalities on other consumers (either labelled as B or brown) and goods that cause no harm to others (either labelled A or green). We conclude that the provision of green goods increases from 18.1% in the abstract frame to 70% in the environmental frame. Framing is, therefore, a relevant variable for the outcome of this experimental market. This has important implications for economic experiments aiming to evaluate pro-environmental behaviours and provide policy orientations for the provision of green goods. Full article

Using a laboratory experiment, we collected data on dictator giving among student strangers and married couples in a suburban area in the United States. Confirming common belief and prior empirical evidence, we find that giving among spouses is greater than giving among anonymous students. We further investigated factors associated with spousal giving which may provide insight for the development of future theories, or into explaining other-regarding preferences. Our data shows that giving is positively associated with who manages household money and controls household income. This result is robust after controlling for each spouse’s personal income and using various econometric specifications. The results suggest that spousal giving may be due to household economic roles in addition to other-regarding preferences. Full article

To examine the stability of prosocial behavior in groups and pairs, we use an indirect approach. We conducted linear public good experiments with two and four subjects repeatedly three times at intervals of one week. All experiments were carried out without providing feedback and used a payment mechanism promoting stable behavior. We study the dynamics of behavior in repeated sessions and find that pairs are much better at establishing and stabilizing cooperation than groups of four. Furthermore, we conducted all experiments in a partner and a stranger design. As is known from the literature, cooperation in a stranger design should be lower than in a partner design. Once again, we are interested in the differences of the strength of this cooperation reducing effect between pairs and groups. Unlike pairs, groups show very low contributions to the public good in the stranger treatment and display a strong tendency to decrease cooperation in the partner treatment. The results in all treatments demonstrate that decreasing cooperation is a stable pattern of behavior in dynamic social dilemma contexts. Finally, we conducted a norm elicitation experiment using a method introduced by Krupka and Weber (2013) and find that in pairs symmetric behavior plays a very important role. Full article

We consider the problem of how to apply a generalized second price (GSP) auction to a buyer–seller network. GSP auctions are often used to sell online ads where buyers care about the position or placement of the ad. GSP auctions can also be applied to wireless data transmissions with congestion where buyers care about the speed of data transmission; however, such an auction would take place over a network as a buyer could only purchase from a seller (or cell tower) that he was linked to (or was close to). Two GSP auctions over a network are considered: separate GSP auctions, and integrated GSP auctions with pauses. The efficiency of these auctions is examined with efficiency favoring the integrated auction with pauses. Full article

We study the strategies used by experimental subjects in repeated sequential prisoners’ dilemma games to identify the underlying motivations behind instrumental reciprocity, that is, reciprocation of cooperation only if there is future interaction. Importantly, we designed the games so that instrumental reciprocity is a mistake for payoff-maximizing individuals irrespective of their beliefs. We find that, despite the fact that instrumental reciprocity is suboptimal, it is one of the most frequently used cooperative strategies. Moreover, although the use of instrumental reciprocity is sensitive to the costs of deviating from the payoff-maximizing strategy, these costs alone cannot explain the high frequency with which subjects choose to reciprocate instrumentally. Full article

We experimentally study how people resolve a tension between favoritism and fairness when allocating a profit in a team production setting. Past research shows that people tend to favor their ingroup at the cost of an outgroup when allocating a given amount of money. However, when the money to be allocated depends on joint production, we find that most players allocate proportionally according to others’ relative contributions, irrespective of their social identity affiliations. We discuss the implications of our findings on how distributive norms could shape team cooperation. Full article

This paper examines a persuasion game between two agents with one-sided asymmetric information, where the informed agent can reveal her private information prior to playing a Battle-of-the-Sexes coordination game. There is a close connection between the extent of information revelation and the possibility of coordination failure; while, in the absence of any coordination failure, there exist equilibria with full disclosure, in the presence of strategic uncertainty in coordination there exists an equilibrium with no information revelation. We provide a purification argument for the non-existence result, as well demonstrate that it is robust to several extensions, including both-sided asymmetric information and imprecise information revelation. Full article

Many anthropological records exist of seemingly worthless tokens exchanged in traditional societies. The most famous instances of such tokens are probably the Kula necklaces and armbands first described by B. Malinowski. In our experiment, each participant can send a token to another participant before each round of a repeated public good game. We use as examples of tokens a bracelet built by the participants in the lab, a simple piece of cardboard provided by the experimenter, and an object brought from home by the participants. Notwithstanding the cheap-talk nature of the decision to send the token, both sending and receiving the token are associated with a significant increase in contributions to the public good. Regression analysis shows that contributions to the public good in the treatments featuring a bracelet and a cardboard piece are higher than in a control study. The home object appears not to have been equally useful in increasing contributions. Full article