Rationality and Society

Published by SAGE Publications
Online ISSN: 1043-4631
Publications
Article
In his classic novel, Catch-22 (1961), Joseph Heller describes a thoroughly frustrating situation faced by a combat pilot in World War II. This is generalized to a `generic' 2 × 2 strict ordinal game, which subsumes 12 specific catch-22 games. These games, along with 4 king-of-the-mountain games, turn out to be the only games in which moving power is effective, based on the `theory of moves': each player can induce a better outcome when it possesses this power than when its opponent possesses it. These 16 games constitute 28% of the 57 2 × 2 conflict games, in which there is no mutually best outcome. A specific catch-22 game is used to model the conflict between the pilot and the doctor who can certify his sanity in the Heller novel; a different catch-22 game is used to model medieval witch trials. King-of-the-mountain games portray related situations in which there is a contest to come out on top, but the player who `loses' does not suffer as much as in a catch-22 game. In all these games, cycling is always possible and frequently observed, despite the presence of pure-strategy Nash equilibria in 10 of the 16 games.
 
Article
Welfare states in the Western countries have had very similar goals, yet the choice of institutions to approach these shared goals has generated protracted power struggles among major interest groups and great cross-country variation in institutional structures. Relating recent debates on new institutionalism to earlier debates on power, this paper outlines an augmented rational-actor approach to the explanation of the origins of welfare state institutions and of variations in their degree of path dependence. With a differentiated concept of power costs and the degree of power asymmetry among actors as a central variable, this augmented model partly combines some salient characteristics of the rational-choice, historical, and sociological versions of new institutionalism. The augmented rational-actor approach proves fruitful in understanding conflicts characterizing the emergence and change of major social insurance institutions in 18 rich Western countries since the late nineteenth century and up to the present. It complements rational-choice institutionalism focused on voluntary cooperation, contracts and conventions.
 
Article
Two types of emotions can be distinguished: the affections (stable patterns of malevolence or benevolence toward particular others) and the passions (action-dependent responses to friendly/unfriendly acts). Either type may serve to induce cooperation from a self-interested party, subject to several limitations. Shakespeare 's King Lear is examined as an instance where benevolence fails to elicit cooperation. To meet the necessary condition for evolutionary survival in competition with rational self-interested players, the emotional party must benefit not only in ''feel good '' utility terms but in actual material payoff. SILVER RULE, as an instance of reactive passionate behavior related to the familiar TIT FOR TAT behavior is shown to lose out in evolutionary competition against RATIONAL play unless the SILVER RULE player has a sufficiently high probability of being able to detect when his opponent is a selfish RATIONAL player
 
Article
This paper studies the concept of "mutual aid" developed by Kropotkin, which implies cooperation as a strategic choice. We study this concept in a Sequential Prisoners' Dilemma in a non-cooperative framework and in an indirect evolution framework (with complete and incomplete information). We systematically compare this game with one that models Kant's moral. In the non-cooperative framework both moral concepts imply multiple equilibria. In the indirect evolution framework with complete information Kropotkin's moral concept leads to generalized cooperation, while Kant's rules lead towards general defection. In the indirect evolution framework with incomplete information both moral approaches favor selfishness. However, if some agents have an imperfect detection technology cooperative behavior will not disappear in Kropotkin's case, while it will vanish with Kant's morality.
 
Article
A model is developed in which parents choose the language or languages in which their children are brought up. Their choice of language community into which children are socialized depends both on the practical value of the language as a means of communication and on the emotional attachment of the parents to the language as a carrier of cultural identity. In the model, two languages are considered, and children can be brought up as monoglots or bilinguals, that is be socialized into both linguistic communities. The dynamic structure of the model is investigated and dynamically stable equilibria are characterized. It is shown that the behavior of bilingual parents is the crucial factor in determining the survival chances of bilingualism in society.
 
Article
We develop and implement a collocation method to solve for an equilibrium in the dynamic legislative bargaining game of Duggan and Kalandrakis (2008). We formulate the collocation equations in a quasi-discrete version of the model, and we show that the collocation equations are locally Lipchitz continuous and directionally differentiable. In numerical experiments, we successfully implement a globally convergent variant of Broyden's method on a preconditioned version of the collocation equations, and the method economizes on computation cost by more than 50% compared to the value iteration method. We rely on a continuity property of the equilibrium set to obtain increasingly precise approximations of solutions to the continuum model. We showcase these techniques with an illustration of the dynamic core convergence theorem of Duggan and Kalandrakis (2008) in a nine-player, two-dimensional model with negative quadratic preferences.
 
Article
This paper considers state interventions in families on behalf of children whose parents are negligent. The state faces an 'agency problem' when it intervenes on behalf of neglected children because it cannot fully monitor families; for instance, it can give cash transfers to poor parents, but it cannot observe them and make sure that they spend the money on their children. Consideration of this agency problem leads to three additional considerations: that because of the state's agency problem, legislators have preferred giving in-kind benefits, rather than income transfers, to negligent parents; that society benefits economically from maintaining alternatives to the traditional family, such as foster homes; and that parents neglect their children because they prefer their own consumption over that of their children.
 
Article
For voters with "social" preferences, the expected utility of voting is approximately independent of the size of the electorate, suggesting that rational voter turnouts can be substantial even in large elections. Less important elections are predicted to have lower turnout, but a feedback mechanism keeps turnout at a reasonable level under a wide range of conditions. The main contributions of this paper are: (1) to show how, for an individual with both selfish and social preferences, the social preferences will dominate and make it rational for a typical person to vote even in large elections;(2) to show that rational socially-motivated voting has a feedback mechanism that stabilizes turnout at reasonable levels (e.g., 50% of the electorate); (3) to link the rational social-utility model of voter turnout with survey findings on socially-motivated vote choice.
 
Sequential Choice to a Worktime Reduction Program
DETERMINANTS TO A WORKTIME REDUCTION PROGRAM
Article
The assumption of given and known preferences and possibilities so common in economic theory stands in contradiction with the kind of unsystematic changes that characterize many experimental and real situations. Consequently, the theory misspecifies rational choice and generates many puzzles relating to marginal analysis, sunk costs, judgments of fairness, the endowment effect, etc. We model rational cognition and learning in `seemingly riskless' choices and judgments. Preferences and possibilities are given in a stochastic sense and based on revisable expectations. The theory predicts experimental preference reversals and passes a sharp econometric test on the status quo bias drawn from a field study.
 
Article
It took the EU 35 years to achieve a co-operative agreement on co-ordinated measures of savings taxation in a world with mobile capital. Political science has offered two explanations for this co-operation problem. First, co-operation is difficult as a result of the heterogeneity of governments' interests. Countries with a small domestic tax base favour tax competition, while countries with a large tax base prefer tax co-operation. Second, co-operation is difficult as a consequence of specific characteristics of the collective action problem involved. The actors face a prisoners' dilemma. Both explanations have their limits. The first approach is not very good in predicting actual policy preferences of governments, and the second approach dismisses the fact that the EU offers co-operative institutions that should be able to resolve a dilemma. The paper proposes a model which refines these explanations and fits better the positions of EU governments and their problems of finding an agreement.
 
Article
Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effects of this uncertainty, a stochastic dynamic growth model with the public sector is examined. It is shown that deterministic excessive red tape and corruption deteriorate the growth potential through income redistribution and public sector inefficiencies. Most importantly, it is demonstrated that the increase in corruption via higher uncertainty exerts adverse effects on capital accumulation, thus leading to lower growth rates.
 
Article
This paper proposes a new model of wage determination and wage inequality. In this model, wage-setters set workers' wages; they do so either directly, as when individuals vote in a salary committee, or indirectly, as when political parties, via the myriad of social, economic, fiscal, and other policies, generate wages. The recommendations made by wage-setters (or arising from their policies) form a distribution, and all the wage-setter-specific distributions are combined into a single final wage distribution. There may be any number of wage-setters; some wage-setters count more than others; and the wage-setters may differ among themselves on both the wage distribution and the amounts recommended for particular workers. We use probability theory to derive initial results, including both distribution-independent and distribution-specific results. Fortuitously, elements of the model correspond to basic democratic principles. Thus, the model yields implications for the effects of democracy on wage inequality. These include: (1) The effects of the number of wage-setters and their power depend on the configuration of agreements and disagreements; (2) Independence of mind reduces wage inequality, and dissent does so even more; (3) When leaders of democratic nations seek to forge an economic consensus, they are unwittingly inducing greater economic inequality; (4) Arguments for independent thinking will be more vigorous in small societies than in large societies; (5) Given a fixed distributional form for wages and two political parties which either ignore or oppose each other's distributional ideas, the closer the party split to 50-50, the lower the wage inequality; and (6) Under certain conditions the wage distribution within wage-setting context will be normal, but the normality will be obscured, as cross-context mixtures will display a wide variety of shapes.
 
Article
To illustrate the rational-choice modeling of emotions, a game-theoretic model of frustration, in which players respond in anger to their lack of control, is developed. Of the 57 distinct 2X2 strict ordinal conflict games, 12 turn out to be 'frustration games', in four of which 'threat power', based on the theory of moves, offers relief to the frustrated player. Aristophanes' play, Lysistrata, in which the frustrated women induce the men to stop fighting by abstaining from sex, illustrates the exercise of this power. Shakespeare's Macbeth, in which Lady Macbeth, furious at her husband's vacillation, incites him to murder King Duncan, illustrates the choice of 'non-myopic equilibria' in six 'self-frustration games'. In both cases, the players, who start out at inferior states, move initially to still worse states, exploding in anger to effect better outcomes. Conditions are given for the rationality of such moves.
 
Article
Over the past 40 years the fraction of mixed race black-white births has increased nearly nine-fold. There is little empirical evidence on how these children fare relative to their single-race counterparts. This paper describes basic facts about the plight of mixed race individuals during their adolescence and early adulthood. As one might expect, on a host of background and achievement characteristics, mixed race adolescents fall in between whites and blacks. When it comes to engaging in risky/anti-social adolescent behavior, however, mixed race adolescents are stark outliers compared to both blacks and whites. We argue that these behavioral patterns are most consistent with the "marginal man" hypothesis, which we formalize as a two-sector Roy model. Mixed race adolescents -- not having a natural peer group -- need to engage in more risky behaviors to be accepted. All other models we considered can explain neither why mixed race adolescents are outliers on risky behaviors nor why these behaviors are not strongly influenced by the racial composition at their school.
 
Article
This paper is concerned with the evolutionary stability of social inequality structures. We study the evolution of a population whose members compare their relative wealth to coordinate their actions in a simple tacit bargaining game. We interpret the equilibrium behaviors that players may adopt as a consequence of their relative wealth, as customs. Two alternative customs are considered: one in which difference in welath is large enough to justify difference in behavior, and another in which difference in wealth is perceived as negligible.
 
Article
Existing research applying the Personal Wellbeing Index (PWI) in China is restricted to urban and rural samples. There are no studies for Chinese off-farm migrants. The specific aims of this study are (a) ascertain whether Chinese off-farm are satisfied with their lives; (b) investigate the equivalence of the PWI in terms of its psychometric properties; and (c) examine whether the responses to the PWI from participants falls within the narrow range predicted by the 'Theory of Subjective Wellbeing Homeostasis???. The PWI demonstrated good psychometric performance in terms of its reliability, validity and sensibility and was consistent with previous studies for Western and non-Western samples. The data revealed a moderate level of subjective well-being (PWI score = 62.6). While Chinese off-farm migrants lead hard lives, the PWI was within the normative range predicted for Chinese societies by the 'Theory of Subjective Wellbeing Homeostasis'. A likely explanation for this finding rests with the circular nature of migration in China. When China's offfarm migrants find it too difficult to cope in the cities, most have the fallback position that they can return to their homes in the countryside. This option provides an external buffer to minimize the inherent challenges of life which would otherwise impinge on the life satisfaction of China's off-farm migrants.
 
Article
Besides meeting the Nash condition (Axelrod's so-called “collective stability”), an evolutionary equilibrium must be an attractor—either an evolutionary equilibrium point (EEP) or an evolutionary equilibrium region (EER). In this analysis of Prisoners' Dilemma and Chicken environments, the “archetype” strategies (COOPERATE and DEFECT in Prisoners' Dilemma and COWARD and DAREDEVIL in Chicken) were augmented by the “reactive” strategies TIT FOR TAT and BULLY—entering separately in 3 x 3 interactions and jointly in 4 x 4 interactions. An instant-response assumption was employed that stacked the deck somewhat in favor of TIT FOR TAT. Nevertheless, in no case was all-TIT FOR TAT ever an EEP, although some conditions generated a mixed EER with only “nice” behaviors represented. A credible model should imply an equilibrium in which both “mean” and “nice” behaviors are represented. Remarkably, none of the conditions postulated here led to such an outcome. This unsatisfying result suggests the importance of introducing a PUNISHER strategy as described elsewhere by the authors.
 
Article
There are two contending schools of thought on how a victor should treat a defeated party after a war or other major dispute. Whereas magnanimity might quell the desire of the defeated party for revenge, it might also be instrumental in the defeated party's resurrection. Similarly, the defeated party might face the conflicting choices of whether to cooperate or not cooperate with the victor. These interdependent choices am modeled by a generic 2 x 2 ''magnanimity game'' (MG), which subsumes 12 different specific games that might arise in the aftermath of a war Rational choices in MG are based on two-sided analysis, in which players can think ahead several moves and take account of each other's preferences Cycling may or may not be permitted, if it is, which player possesses ''moving power'' can be critical to the outcome. The analysis is illustrated by historical examples from 19th- and 20th-century wars.
 
Article
A major puzzle for sociologists is how it can be that societies that differ vastly in their culture and economic circumstances maintain a similar ranking of occupations. Economists have identified a similar stability in the wage structure. The difference in pay of skilled and unskilled workers has been stable over time and is surprisingly similar in developed and undeveloped countries. This article contends that these two phenomena reflect the same basic principle: If workers are free to choose their occupation and level of skill, then differences in culture and in the state of development will mainly affect the number of workers in different activities but not their rewards. In the language of economists, free mobility generates highly elastic supply into different occupations and skills. Therefore, occupational rewards are largely independent of demand.
 
Article
This article presents a model of trust in which a Principal chooses either to trust or monitor an Agent who, in turn, chooses either to honor or exploit that trust. The Principal's decision of whether to trust or monitor is based on the relative temptation an Agent faces to exploit the Principal's trust, which comprises two elements - the environmental incentives the Agent faces and the personal characteristics of the Agent. The model is used to develop a reliability condition that the Principal uses to assess the likelihood that trust placed in an Agent will be honored.
 
Article
When people misrepresent their beliefs in response to social pressures, public discourse gets impoverished. Because public discourse is a basic determinant of individual perceptions and understandings, a by-product is the distortion of private knowledge. This article highlights a tendency for beliefs treated as unthinkable to disappear from society's repertoire of ideas, that is, to become unthought. Two mechanisms are identified as the vehicles of this destructive evolutionary process. The first is intragenerational: As individuals we base many of our judgments on social proof. The second is intergenerational: We tend not to think about matters our forebears have treated as settled. The argument distinguishes between hard beliefs, which are based on direct observation, inference, and analysis, and soft beliefs, which are based exclusively on social proof.
 
Article
The Mormon Church is best understood as a club, in the economics sense of the term. It succeeds, in part, because it identifies and selectively rewards high contributors, thereby limiting free-riding and producing large religious benefits for its members. First, it offers a menu of club goods of varying excludability, with the most valued goods excluded from less-committed members. Second, to enforce this menu, it actively monitors its members using a sophisticated administrative structure. The menu design reflects to an extent the costs of excludability of various religious goods, and the menu-monitoring approach implicitly allows some free-riding to dynamically foster commitment. Because the menu-monitoring approach is best understood as complementing other methods in achieving the Mormon Church's religious goals, these findings yield insights into the activities of other religious groups. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
 
Relative Shares-Gifts Only
Gifts and Loans
Relative Surpluses
Article
The fluctuations in incomes inherent in rural communities can be attenuated by reciprocal assistance. A model of reciprocal assistance based upon rational action and voluntary participation is presented. Individuals provide assistance only if the costs of so doing are outweighed by the benefits from expected future reciprocation. A distinction is made between general reciprocity where the counter obligation is expected but not certain and balanced reciprocity where there is a firm counter obligation. This firm counter obligation is reflected by including a loan or quasi-credit element in any assistance. It is shown how this can increase the assistance given and it may explain the widespread use of quasi-credit in rural comunitities. Moreover it is shown that for a range of parameter values consistent with evidence from three villages in southern India, a simple scheme of gift-giving and quasi-credit can do almost as well as theoretically better but more complicated schemes.
 
Article
For voters with social" preferences, the expected utility of voting is approximately independent of the size of the electorate, suggesting that rational voter turnouts can be substantial even in large elections. Less important elections are predicted to have lower turnout, but a feedback mechanism keeps turnout at a reasonable level under a wide range of conditions. The main contributions of this paper are: (1) to show how, for an individual with both sel sh and social preferences, the social preferences will dominate in rational voting in large elections; (2) to show that rational socially-motivated voting has a feedback mechanism that stabilizes turnout at reasonable levels (e.g., 50% of the electorate); (3) to link the rational social-utility model of voter turnout with survey ndings on socially-motivated vote choice; (4) to provide evidence, both from voting and from surveys, broadly consistent with rational and socially-motivated voting.
 
Continued
Article
In this paper, we test how well Rational Action Theory, as developed to explain educational differentials, applies in the Dutch situation. The question we address is the extent to which the mechanisms assumed to be at work can explain class and gender differentials in participation in higher education. After explaining the Dutch educational system and outlining Rational Action Theory, we formulate four hypotheses that we test using data from a panel survey among high school pupils first interviewed in 1991. Evaluating the theory, we conclude that the mechanisms assumed to be at work can indeed explain class differentials in participation in higher education. Moreover, we find support for the hypothesis that the mechanism of relative risk aversion is the most crucial factor in the model. We could not convincingly show that the theory explains gender differentials.
 
Age at death and cooperation in the baseline condition (single run, initial 1 million rounds)
OLS regression with dependent variable longevity
Article
Why are people inclined to build friendships and maintain durable, nonreproductive relationships? Previous computational modeling work showed that it can be an efficient survival strategy to choose interaction partners based on relationship length, even if, as a consequence, individuals become unconditionally cooperative in long-term relationships (interpersonal commitment). Such committed individuals can outperform conditional cooperators who play in a fair, reciprocal manner (e.g. tit for tat). However, previous studies did not conduct a sufficiently strict test of the viability of commitment because they did not account for exploiters who specifically take advantage of the tolerance of commitment players. We allow for this by extending previous studies with the possibility of randomly mutating strategies under evolutionary pressures, and thus give a much larger coverage of an infinite strategy space. Our results point to the lack of stable strategies: we find that emerging populations alternate between temporarily stable states. We also show that the viability of strategies increases with increasing levels of interpersonal commitment, and that the effect of interpersonal commitment on viability is larger than the effect of fairness.
 
Summary of hypotheses
Co-working percentages by trust problems and survival chances of the firm (N = 137)
Coefficients of Tobit model explaining hours of co-working by the partner and the logistic regression model explaining the number of co-working family members
Article
This study focuses on co-working by intimate partners and other family members in entrepreneurs’ businesses. We hypothesize that co-working by family is beneficial because it reduces trust problems associated with employment relations. On the other hand, co-working is risky because co-working family members may lose income from, and their investments in, the business in the case of bankruptcy or, specific to coworking partners, in the case of separation. Using data from the survey Households in the Netherlands 1995 (N = 137 entrepreneurs), we find that more trust problems, indicated by monitoring problems and onesided dependence, indeed increase co-working by partners and family. Monitoring problems influence co-working by partners, while onesided dependence influences co-working by family members. We also find that married partners are more likely to co-work than cohabiting partners. Bankruptcy risks are associated with the likelihood of coworking, although the direction of causality remains unclear for the effects of bankruptcy risks.
 
Article
This article studies the influence of trust problems and social embeddedness on the behavior of home maintenance suppliers, especially (1) their efforts to convince households of their trustworthiness, and (2) whether or not they will behave opportunistically. Data were collected by means of a vignette experiment among 83 home maintenance suppliers, with a total of 165 vignettes. To some extent, the problem potential increases the efforts suppliers make to convince the household of their trustworthiness; a large transaction volume increases the amount of time spent on drawing up a quotation. Suppliers are more likely to behave opportunistically if more complex jobs are involved. Network embeddedness prevents opportunism and decreases the investments made in commitments, while dyadic embeddedness has no effect. Apparently, it is less important for suppliers to invest in dyadic relations than staying on good terms with people who can spread negative information about them to others.
 
Article
The concept of path dependence is being used in highly deterministic ways in neo-institutionalist analysis, so that studies using this framework have difficulty in accounting for, or predicting, change. However, the original Polya urn model from which path-dependence theory draws predicts that alternative paths will be possible. It can then be argued that actors will be able to use these when they perceive a need to change. This article seeks to capture this possibility through accommodating a Bayesian parametric decision-maker interacting with an environment. This makes it possible to examine how change may involve such processes as: the use of past or redundant institutional repertoires; transfer of experience across action spaces; or from other agents, through networks of structured relationships; the emergence of perceived 'one best' solutions. This approach points to the need to change how typologies are used in neo-institutionalist research, so that those features of cases that do not fit the pre-conceived framework of a type are not disregarded as 'noise', but properly evaluated as potential resources for change.
 
Article
How does the informational role of interest groups interact with institutions in the political control of the bureaucracy? In 1992, Banks and Weingast argued that bureaucrats hold an informational advantage vis-a-vis political principals concerning variables with direct policy relevance, and that an agency can exploit this information if it chooses to do so because politicians and bureaucrats interact in a world of asymmetric information. They show that when the politician's cost of auditing the agency is high, the agency can extract more, and politicians anticipate this by adapting to it in their design of agencies. Auditing cost depends on the technology available for monitoring, and the ability of an interest group to monitor the agency's choices and performance and relay that information to politicians. The informational advantage is reduced - the agency is more likely to "tell the truth" - when a low-cost monitoring technology is available, and when the group is cohesive enough to participate in monitoring. I test this hypothesis using data on bureaucratic statements on the importance of a series of public policy problems using a cross-section of state-level environmental agencies. I show that importance statements are aligned with objective circumstances when both conditions are satisfied: when the technology is present and as the interest group becomes concentrated. The bureaucracy's informational advantage collapses under these conditions, and the statements conform to those in a "truth-telling" equilibrium.
 
Prisoners' Dilemma
Article
Talcot Parsons suggested in 1963 that there are basically three kinds of authority: utilitarian authority, coercive authority, and persuasive authority. In this paper, I show that the models developed by Gibbons and Rutten (1997), Hirshleifer (1991), Skaperdas (1992), Akerlof (1976) and Basu (1986) can be viewed as models where issues such as authority, power, influence and ideology, in the sense of Parsons, can be formally discussed. I also show the existence of an interesting difficulty in providing a contractarian interpretation of the State under the Parsonian view of governmental authority discussed in this paper.
 
Effect of shadow of the future (α) on condition for perpetual cooperation in delayed reward game. U(R * ) = 100, U(0) = 0, U(−c) = −2, t * = 5
OLS regression analysis explaining employee cooperation with the supervisor, risk aversion as job security
OLS regression analysis explaining employee cooperation with the supervisor, risk aversion as lottery question
Article
ICS University of Groningen and Utrecht University In this paper, we examine whether and how the shadow of the future and risk aversion affect employee cooperation with the employer. We distinguish, formalize and test two conflicting arguments as used in the literature, which we denote the reward argument and the relation argument. Whereas the reward argument predicts that risk aversion affects cooperation in a negative way, the relation argument predicts a positive effect of risk aversion on cooperation.We show that both arguments are consistent with the view that a longer shadow of the future increases cooperation. Hypotheses are tested against survey data obtained from two samples of Dutch employees (N =109 and N = 213, respectively). The results suggest moderate support for the relation argument.
 
Article
Two approaches to research on policy implementation are compared in this article. In the first approach, corresponding with the multi-stage view, implementation is understood as a sub-proem requiring specific tools of analysis such as principal-agent theory. In the other approach, which we label the political bargaining view, implementation is seen as an integral part of the policy debate that occurs when political decisions are taken. Using data on the implementation of decisions taken in three Dutch local authorities, we show how the different views can be tested using models. We compare the; predictions of agency performances made by bargaining models with those made by implementation models. The results show that the models of political bargaining produce significantly less accurate predictions of agency performances than the implementation models, suggesting that implementation is best understood as a distinct stage of the policy process.
 
Article
We study voluntary hostage posting - pledging a bond - as a commitment mechanism promoting trust, including trust in economic exchange. A hostage can promote trust by binding the trustee through reducing his incentives for abusing trust, by providing compensation for the trustor in case trust is abused, and by serving as a signal for the trustor about unobservable characteristics of the trustee that are related to the trustee's opportunities and incentives for abusing trust. We provide an integrated model that allows for a simultaneous analysis of how hostages promote trust through binding, compensation, and signaling. We model hostage posting as a mechanism of trust using a game with incomplete information and uncertainty. Our theorems provide conditions for equilibria such that a hostage is posted by the trustee and induces the trustor to place trust that is subsequently honored by the trustee. The article shows that equilibrium selection problems are not severe: the equilibria are unique or there are only few other equilibria with less appealing properties. Hence, the results can be used for predictions on trust based on hostage posting among rational actors.
 
Description of the variables in the vignette experiment. Variable Value Text 
Probit analyses of the choice of vignettes including interaction effects. a Independent variable Hypothesis All Chicago Utrecht Tilburg 
Article
This article describes a vignette experiment on the effects of temporal embeddedness and network embeddedness in trust situations. The experiment uses a setting in which a buyer wants to buy a used car from a car dealer. We distinguish between effects on trust of the past relation and the effects of the expected future relation between the buyer and the dealer. A buyer can learn about the trustworthiness of the dealer from past transactions of the dealer. Moreover, the buyer can control the dealer if the buyer and the dealer expect more transactions in the future, because the buyer may sanction the dealer if the dealer would act untrustworthy in the present transaction, for example, by refraining from future transactions. Temporal embeddedness facilitates learning and control through the bilateral relation of the buyer and the dealer, while network embeddedness facilitates learning and control through third parties. In the experiment, subjects are asked to compare different settings for buying a used car, while the relation between the buyer and dealer is varied in these settings. We conclude that both learning and control affect trust at the level of the dyad (temporal embeddedness) as well as at the group-level (network embeddedness).
 
Mean Propensity to Cooperate by Inning
Moving Average of the Median Earnings for Player who Stopped the Game (Genuine Players Only)
Article
We consider mixed populations (N=21) of genuine (humans) and artificial (robots) agents, repeatedly interacting in small groups whose composition is changed randomly from round to round. Our purpose is to study the spread of cooperative or non-cooperative behavior in the population over time by manipulating the behavior of the robots (cooperative vs. non-cooperative) and their proportion in the population. Our results convey a positive message: adding a handful of cooperative robots increases the propensity of the genuine subjects to cooperate over time, whereas adding a handful of non-cooperative agents does not reduce this propensity. If there are enough persistent cooperative subjects in the population, they not only negate the non-cooperative behavior of the robots but also induce other subjects to behave more cooperatively.
 
Article
The Forum consists of comments on previously published papers and responses by authors. Unlike the Comment section in many other academic journals, the Forum includes solicited as well as unsolicited contributions. We encourage debates by actively seeking points of view contrary to those expressed in articles published in the journal. The Forum section is intended to promote an open and critical debate that contributes to the intellectual vitality and further development of rational-choice-based theory and research. Forum contributions should follow the form used by Rationality and Society and should not exceed five double-spaced pages.
 
Variables, their operationalization and descriptive statistics
Effects on the duration until a seat is taken (Cox proportional hazard models)
Effects on the time until a student enters the auditorium (Cox proportional hazard models)
Article
Schelling’s segregation model, one of the most influential contributions to the theory of collective choice, has almost exclusively been applied to the study of the housing market. We employ this analytical framework for a field experiment on the seating decisions within a classroom and thus a low-cost decision-making situation. In contrast to residential choices, individuals face minimal costs when choosing a seat and cannot within our subject pool reduce their neighbourhood choices to a visible criterion such as race. The experiment reveals nevertheless considerable segregation based on individual characteristics even in the absence of such a direct selection mechanism. Individual choices are largely determined by the 'costs' of a seat, the participants’ psychological background and their self-declared seating behaviour. We also observe structure in the seating dynamic as individuals tend to sit in clusters, but avoid being directly placed next to another person. Our results strongly support the assertion that auditorium seating and equivalent social processes are not random but guided by both strategic reasoning and individual preferences.
 
Return game with imperfect information
Return game with the aid of the church
Article
Hurricane Katrina caused over one hundred billion dollars in property damage in the Greater New Orleans region. Although much attention has been paid to why particular communities have begun to recover and others have failed to rebound, very little attention has been paid to how the communities that have recovered actually went about doing so. This paper attempts to close that gap by examining how the church provision of club goods can foster social cooperation and community redevelopment in the wake of a disaster. In particular, we investigate the swift return of the community surrounding the Mary Queen of Vietnam (MQVN) Catholic Church in New Orleans East after Hurricane Katrina. Utilizing a unique bundle of club goods provided by the MQVN Catholic Church, residents in the New Orleans East Vietnamese-American community (a) rebuilt their distinct ethnic–religious–language community, (b) overcame the social coordination difficulties created by Katrina, and (c) engaged in successful political action to protect their community.
 
Possibilities of exchange of voting positions, dependent on the position of the actor in comparison to the expected outcomes on the two issues (left or right).
Article
This study focuses on externalities of exchanges of voting positions in collective decision-making. Exchanges are represented by nonconstant two-person cooperative games. It is assumed that the rate of exchangeis specified by the Raiffa-Kalai-Smorodinsky solution,and a model is specified to identify the exchanges. Externality effects of these exchanges are assessed with two codict measures we develop here. The measures assess within--group. and between--group.conflict, respectively, and are applied to collective decision-making in the European Union regarding. support for fishery infrastructure. The application shows that the measures provide indispensable insights into the decision-making setting and that these can be used far strategjc intervention in the setting. It also shows that both actors power and the outcomes in exchange with externalities are very different from those in exchange without externalities as studied by theories of network exchange
 
Article
"Using a real-time, spatial, renewable resource environment, we observe participants in a set of experiments formulating informal rules during communication sessions between three decision rounds. In all three rounds, the resource is open access. Without communication, the resource is persistently and rapidly depleted. With face-to-face communication, we observe informal arrangements to divide up space and slow down the harvesting rate in various ways. We observe that experienced participants, who have participated in a similar private property type of experiments, are more effective in creating rules, although they mimic the private property regime of their prior experience. Inexperienced participants need an extra round to reach the same level of resource use, but they craft a diverse set of novel rule sets."
 
The amounts received and returned by the second-mover collapsed across medium conditions (no-communication, FtF, CMC), and separated by group size. The values were sorted first by the amount received and then by the amount returned
Mean trust, reciprocity, and first-mover expectations by communication medium and group size No-communication FtF-dyadic CMC-dyadic FtF-group CMC-group
Predicted reciprocity by level of trust
Article
We study the behavioral consequences of interpersonal communication prior to experimental Trust games. We manipulated the richness of the communication medium and the size of the communicating group. Communication richness failed to produce significant differences in first-mover investments, but the size of the communicating group did: The amounts sent were significantly higher in the dyadic communication conditions than in the group communication and no-communication conditions. We also found that first-movers’ expectations of second-movers’ reciprocation strongly predicted their levels of investment.
 
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We use a contest framework to investigate the nature of organizational culture. Organization members decide whether to participate in the contest and if they do participate they have two possible modi operandi: be helpful or not. We state sufficient conditions, in terms of contest design, for the existence of various types of organizational culture and we show the possibility (at equilibrium) of a mixed organizational culture, i.e. the coexistence of two subcultures: a helping one and an individualistic one. We find that cooperation emerges only when prize density is sufficiently high. However, in a mixed culture the degree of cooperation decreases in the number of prizes.
 
Prisoner's Dilemma with Variable Dependence (PD/Dm) (Changes in Player A's payoffs)
Trust and cooperation in Prisoner's Dilemma (PD) and Prisoner's Dilemma with Variable Dependence (PD/D) games
Trends over trial blocks of trust (number of entrusted coins) and cooperation (proportion of coins returned by the trusted player) in the PD and the PD/D condition.
Trends over trials in the fourth through sixth trial blocks of trust (number of entrusted coins) and cooperation (proportion of coins returned by the trusted player) in the PD/D condition.
Article
In this article we introduce a new experimental game called Prisoner’s Dilemma with Variable Dependence (PD/D), which allows players to separate their trust in their exchange partners from their cooperation with them in an ongoing relationship. The game allows researchers to observe the emergence of trust and cooperation separately, and ascertain the causal relationship between them. In six studies that use the PD/D design, we find that the players of PD/D consistently achieve very high cooperation rates, sometimes mean cooperation rates of about 95%, which are higher than in standard PD games sharing similar design features. These findings demonstrate that separating trust from cooperation is critical for building trust relations. They also show that the GRIT (Graduated Reciprocation In Tension reduction) strategy helps build such relations in the absence of mutual trust. Our results suggest that it is cooperation which leads to trust, not the other way around.
 
Marginal effect of generalized social trust on recycling behavior with different perceptions of recycling  
Claimed and actual recycling rates in four countries
Testing H 1
Testing H 2 and H 3
Article
This paper presents a new argument that links generalized social trust and collective action in situations with a large number of actors who do not have specific information on each other. Generalized social trust enhances large-N cooperation through the social exchange heuristic, which stimulates conditional cooperation in social dilemmas. Using data from a survey in four countries and recycling behavior as an indicator of collective action, this explanation is tested with individual-level data. While the relationship between generalized social trust and large-N collective action is often hypothesized, there is scant micro-level evidence as it has mainly been tested at the macro level. The results show that people holding generalized social trust cooperate more readily in large-N dilemmas, and that they most likely do so because of the social exchange heuristic.
 
Article
Laboratory experiments provide the most rigorous method of testing scientific theories. However, their current use is primarily limited to testing theories of individual behavior. I suggest the conditions under which one can test theories of corporate behavior in laboratory experiments, using human subjects in the role of purposive corporate actors (such as groups or the state). Using the Condorcet Jury Theorem, I demonstrate that, when four conditions are met, laboratory experiments with human subjects represent statistically conservative tests of such theories. I address the issue of `external validity' and argue that it is not a concern for laboratory experiments as a means of testing theories with clearly stated scope conditions. Finally, I point out that, contrary to popular belief, supermajority decision rules, used by juries and legislatures alike presumably for more important decisions, actually lead to inferior collective decisions.
 
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The main question addressed in this paper is how the great variation in the level of social trust in different countries can be explained. Most empirical research on this question has been based on survey data which has limitations when it comes to capturing the causal mechanisms. Building on theories that point to the importance of trustworthy governmental institutions for creating social trust, two parallel experiments were conducted in two countries where the levels of corruption and social trust are very different. One group of 64 Swedish and one group of 82 Romanian undergraduate students responded to a number of scenarios which describe situations at a police station or a doctor's surgery in a foreign country. The results supported the hypothesis that trust in authorities influences the perceptions of the trustworthiness of others in general. Even though some of the effects were stronger for one sample than for the other, the influence of vertical trust on social trust was true for both the high- and the low-trusting sample.
 
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The relationship between the Supreme Court and the legislature has been studied from various angles. This paper develops a dynamic model using the Theory of Moves. The model is then applied to a path-dependence analysis of the relations between the Supreme Court and the parliament in Israel between 1970 and 2007. While at the beginning of this period the Supreme Court limited the ability of citizens to appeal in matters concerning decisions of the parliament and the government, by the end of the period it had expanded this ability significantly, thus implementing an informal policy of procedural judicial activism. More specifically, the empirical analysis traces three turning points in the path-dependence analysis, which can also be explained and understood as temporary equilibria in the dynamic interaction ultimately leading to a stable equilibrium.
 
Top-cited authors
John Goldthorpe
  • University of Oxford
David Sally
  • The Tuck School of Business
Andreas Diekmann
  • University of Leipzig and ETH Zurich
Peter Preisendörfer
  • Johannes Gutenberg University Mainz (Germany)
Toshio Yamagishi
  • Hitotsubashi University