Louis Putterman

Brown University · Department of Economics

Trust is key for economic and social development. But why do we trust others? We study the motives behind trust in strangers using an experimental trust game played by 7236 participants, in six samples representative of the general populations of Germany, Italy, Japan, Luxembourg, the UK and the USA. We examine the broadest range of potential deter...

In a representative sample of the U.S. population during the first summer of the COVID-19 pandemic, we investigate how prosociality and ideology interact in their relationship with health-protecting behavior and trust in the government to handle the crisis. We find that an experimental measure of prosociality based on standard economic games positi...

Laboratory experiments are a promising tool for studying how competing institutional arrangements perform and what determines preferences between them. Reliance on enforcement by peers versus formal authorities is a key example. That people incur costs to punish free riders is a well‐documented departure from non‐behavioural game‐theoretic predicti...

The gains in economic welfare achieved over the last several generations depend on social as much as they do on technological innovations. Although much of the technological and commercial progress in question was driven mainly by self-interest and competition, effective functioning of governmental and legal systems and provision of public goods we...

We propose and test empirically a theory describing the endogenous formation and persistence of mega-states, using China as an example. We suggest that the relative timing of the emergence of agricultural societies, and their distance from each other, set off a race between their autochthonous state-building projects, which determines their extent...

We propose and test empirically a theory describing the endogenous formation and persistence of mega-states, using China as an example. We suggest that the relative timing of the emergence of agricultural societies, and their distance from each other, set off a race between their autochthonous state-building projects, which determines their extent...

We propose and test empirically a theory describing the endogenous formation and persistence of mega-states, using China as an example. We suggest that the relative timing of the emergence of agricultural societies, and their distance from each other, set off a race between their autochthonous state-building projects, which determines their extent...

One reason trust is positively correlated with standard of living across societies may be that people treat trustworthiness in sequential social dilemmas as a sign that others will also cooperate in simultaneous collective action problems, and trust tends to correlate with trustworthiness. Trustworthiness and cooperation may both reflect the same d...

Recent studies question whether societies can self-govern public goods dilemmas with the help of decentralized punishment opportunities. One important challenge is imperfect information about individuals’ contributions. In laboratory experiments, imperfect information increases misdirected punishment and thereby hampers the efficacy of the punishme...

It has often been observed that the emergence of states in a region is typically preceded by an earlier transition to agricultural production. Using new data on the date of first state emergence within contemporary countries, we present a global scale analysis of the chronological relationship between the transition to agriculture and the subsequen...

Gender differences in voting patterns and political attitudes towards redistribution are well-documented. The experimental gender literature suggests several plausible behavioral explanations behind these differences, relating to gender differences in confidence concerning future relative income position, risk aversion, and social preferences. We u...

We conduct laboratory and online experiment treatments to study willingness to lend, potential crowd out of philanthropic motivation by financial returns, and preference over borrowers in micro-finance lending. We distinguish between perceptions of transaction-related factors, such as neediness and trustworthiness, and identity-related factors such...

In 2002 Elinor Ostrom and some of her colleagues organized a working group on Testing Theoretical Models of Individual Behavior in Dynamic Social Dilemmas and held the first meeting of this group at Indiana University Bloomington in 2003. There have now been five subsequent meetings of different incarnations of this group (2006, Max Planck Institut...

The importance of cooperative behavior in business environments has been theorized in the field of management. However, measuring cooperation quantitatively is often challenging. We take advantage of experimental methods to overcome this issue. Particularly, we study the decisions that small‐scale entrepreneurs in Ulaanbaatar, Mongolia, make in a l...

We study trust and willingness to cooperate among and between Uyghur and Han college students in Xinjiang, China. In our incentivized laboratory-style decision-making experiment, within and between group interactions occur among identifiable participants without traceability of individual decisions and without explicitly referencing ethnicity. We f...

From 1949, China's leaders brought their country through three decades of income and wealth compression, which was followed by more than three decades of sharply rising inequality. What preferences do China's people hold regarding what price (if any) is worth paying for greater equality? We conduct a laboratory decision‐making experiment mimicking...

Effective states provide public goods by taxing their citizens and imposing penalties for non-compliance. However, accountable government requires that enough citizens are civically engaged. We study the voluntary cooperative underpinnings of the accountable state by conducting a two-level public goods experiment in which civic engagement can build...

Does a person's historical lineage influence his or her current economic status? Motivated by a large literature in the social sciences stressing the effect of an early transition to agriculture on current economic performance at the country level, we examine the relative contemporary status of individuals as a function of how much their ancestors...

Economists conducting laboratory experiments on cooperation and peer punishment find that a non-negligible minority of punishments is directed at cooperators rather than free riders. Such punishments have been categorized as ‘perverse’ or ‘antisocial,’ using definitions that partially overlap, but not entirely so. Which approach better identifies p...

The presence of a state is one of the most reliable historical predictors of social and economic development. In this article, we complete the coding of an extant indicator of state presence from 3500 BCE forward for almost all but the smallest countries of the world today. We outline a theoretical framework where accumulated state experience incre...

Accountable, democratic government is impossible assuming that the self-interested, rational individuals of traditional economic theory are the only available citizens and officials. Approaching near realization of such a form of government, as occurred in parts of the world during recent generations, required reconfiguring autocratic states with t...

We study in five diverse countries a laboratory social dilemma game in which incentives to steal from others lead to the socially inefficient diversion of resources from production unless the members of a given mini-society can abide by norms of non-theft or engage in low cost collective protection of their members’ wealth accumulations. We compare...

We study trust and willingness to cooperate among and between Uyghur and Han college students in Xinjiang, China. In our incentivized laboratory-style decision-making experiment, within and between group interactions occur among identifiable participants without traceability of individual decisions and without explicitly referencing ethnicity. We f...

Reputation is a commonly cited check on opportunism, but it is often unclear what motivates an agent to report another's behavior when it is easy for the aggrieved individual to move on. In a sharply focused laboratory experiment, we find that many cooperators pay to report a defecting partner without the possibility of pecuniary benefit when this...

An active area of research within the social sciences concerns the underlying motivation for sharing scarce resources and engaging in other pro-social actions. In this paper we ask: do parents model social preference behavior to children, and do children emulate this behavior? We develop a theoretical framework to examine this question, and conduct...

Do opportunities to punish non-punishers help to stabilize cooperation? Or do opportunities to punish punishers harm cooperation and its benefits by deterring first order punishment and wasting resources? We compare treatments of a decision experiment without peer punishment and with one order of punishment to ones in which subjects can be punished...

Secure property rights result from a combination of public enforcement, private protective measures, and voluntary norm-compliance. We conduct a laboratory experiment to study how culture interacts with institutions in shaping individuals' behaviors and group outcomes in a property rights dilemma. The experiment is conducted in five countries: Aust...

Cooperation can be induced by an authority with the power to mete out sanctions for free riders, but law enforcement is prone to error. This paper experimentally analyzes preferences for and consequences of errors in formal sanctions against free riders in a public goods game. With type I errors, even full contributors to the public good may be pun...

We study a laboratory social dilemma game in which incentives to steal from others lead to the socially inefficient diversion of resources from production unless the members of a given minisociety can abide by norms of non-theft or engage in low cost collective protection of their members’ wealth accumulations. We compare two treatments in which su...

Gender differences in voting patterns and political attitudes towards redistribution are well-documented. The experimental gender literature suggests several plausible behavioral explanations behind these differences, relating to gender differences in confidence concerning future relative income position, risk aversion, and social preferences. We u...

The process of colonization has shaped the economic and demographic contours of the modern world. In this paper, we study the determinants of the occurrence and timing of colonization of non-European countries by Western European powers. Of particular interest is the role of early development measures that are known to be strong correlates of prese...

Often the fuller the reputational record people's actions generate, the greater their incentive to earn a reputation for cooperation. However, inability to “wipe clean” one's past record might trap some agents who initially underappreciate reputation's value in a cycle of bad behaviour, whereas a clean slate could have been followed by their “refor...

We investigate the endogenous formation of sanctioning institutions supposed to improve efficiency in the voluntary provision of public goods. Our paper parallels Markussen et al. (Rev Econ Stud 81:301–324, 2014) in that our experimental subjects vote over formal versus informal sanctions, but it goes beyond that paper by endogenizing the formal sa...

Reputation is a commonly cited check on opportunism in economic and social interactions. But it is often unclear what would motivate an agent to report another’s behavior when the pool of potential partners is large and it is easy enough for an aggrieved player to move on. We argue that behavioral or social preference motivations may solve this con...

An active area of research within the social sciences concerns the underlying motivation for sharing scarce resources and engaging in other pro-social actions. We develop a theoretical framework that sheds light on the developmental origins of social preferences by providing mechanisms through which parents transmit preferences for generosity to th...

All since the rise of the first civilizations, economic development has been closely intertwined with the evolution of states. In this paper, we contribute to the literature on state history and long-run economic development in four ways. First, we extend and complete the state history index from Bockstette, Chanda and Putterman (2002) by coding th...

We conduct a laboratory experiment to study how demand for redistribution of income depends on self-interest, insurance motives, and social concerns relating to inequality and efficiency. Our choice environments feature large groups of subjects and real world framing, and differ with respect to the source of inequality (earned or arbitrary), the co...

An experiment studying people's willingness to sacrifice personal gains so that resources are passed to future generations shows that this occurs only when extractions by free-riders are curbed by majority rule. See Letter p.220

Using data on place of origin of today's country populations and the indicators of level of development in 1500 used by Acemoglu, Johnson, and Robinson (2002), we confirm a reversal of fortune for colonized countries as territories, but find persistence of fortune for people and their descendants. Persistence results are at least as strong for thre...

Using data on place of origin of today's country populations and the indicators of level of development in 1500 used by Acemoglu, Johnson, and Robinson (2002), we confirm a reversal of fortune for colonized countries as territories, but find persistence of fortune for people and their descendants. Persistence results are at least as strong for thre...

After three decades of reform, state ownership still plays a significant if diminishing role in China’s industrial sector. We survey studies that focus on the impact of reform on China’s SOEs both during the early reform years from 1979 to 1992 and during the years of privatisation and corporatisation since 1993. Most studies find evidence that ref...

What role do historical factors play in explaining the large differences in level of economic development among different countries and world regions today? Our answer begins with the observation that cross-country differences in level of economic development, as well as in rate of economic growth since the end of the European colonial era, are str...

Cooperation can be induced by an authority with the power to mete out sanctions for free riders, but law enforcement is prone to error. This paper experimentally analyzes preferences for and consequences of errors in formal sanctions against free riders in a public goods game. With type I errors, even full contributors to the public good may be pun...

We introduce new treatments of a voluntary contribution mechanism with opportunities to punish in order to see how contributions, punishments and earnings change when punishment is in the form of fines the punisher distributes to other members of her group. The linked punishment-reward set up is of theoretical interest and could represent simultane...

Entrusting the power to punish to a central authority is a hallmark of civilization, yet informal or horizontal sanctions have attracted more attention of late. We study experimentally a collective action dilemma and test whether subjects choose a formal sanction scheme that costs less than the surplus it makes possible, as predicted by standard ec...

I discuss correlations between the historical growth of social capabilities and patterns of economic growth across world regions since the industrial revolution and especially in recent decades. Based on this analysis, I argue that the apparent relationship between institutions and economic growth results in part because better institutional perfor...

The expectation that non-cooperators will be punished can help to sustain cooperation, but there are competing claims about whether opportunities to engage in higher-order punishment (punishing punishment or failure to punish) help or undermine cooperation in social dilemmas. In a set of experimental treatments, we find that availability of higher-...

Previous research has shown that opportunities for two-sided partner choice in finitely repeated social dilemma games can promote cooperation through a combination of sorting and opportunistic signaling, with late period defections by selfish players causing an end-game decline. How such experience would affect play of subsequent finitely-repeated...

We study experimentally the protection of property in five widely distinct countries—Austria, Mexico, Mongolia, South Korea and the United States. Our main results are that the security of property varies with experimental institutions, and that our subject pools exhibit significantly different behaviors that correlate with country-level property s...

Research on economic growth suggests that the era of colonization has had an impact on the levels of economic development of countries around the globe. However, why some countries were colonized early, some late, and others not at all, and what effect these differences have had on current income, has not been studied systematically. In the first p...

In this working paper we report on two trust games: a BDM-like game which is interpreted through its use of the possibly suggestive words “show up fee,” “sends,” “tripled,” “send back”; and an uninterpreted spatial game that does not use these words suggestive or not. In the spatial game we found a considerable amount of reciprocity, which implies...

Two decades ago, noticing the increasing attention being given to questions of economic organization and the nature of firms, we compiled the initial version of this Reader. At that time, we noted the growing frequency of references to writings such as Ronald Coase's 1937 classic as well as work published in the 1970s by Armen Alchian and Harold De...

This chapter examines attitudes toward taxation, looking in particular at views about progressivity, taxing big business, and the estate tax. ANES surveys have regularly included some measures about taxation. The chapter finds that the new measures are correlated with the traditional questions (whether rich and poor pay too much or too little in ta...

The American National Election Studies (ANES) is the premier social science survey program devoted to voting and elections. Conducted during the presidential election years and midterm Congressional elections, the survey is based on interviews with voters and delves into why they make certain choices. This book brings together a group of leading so...

What do trust and the economy have to do with each other? In a world of perfect and symmetric information, where all related economic actions are simultaneous and occur in one place, the economy runs in the familiar fashion of the perfectly competitive market. In such a world, trust among economic actors is not needed. But in the real- and the virt...

This study explores the ways in which information about other individual's action affects one's own behavior in a dictator game. The experimental design discriminates behaviorally between three possible effects of recipient's within-game reputation on the dictator's decision: Reputation causing indirect reciprocity, social influence, and identifica...

The burgeoning literature on the use of sanctions to support the provision of public goods has largely neglected the use of formal or centralized sanctions. We let subjects playing a linear public goods game vote on the parameters of a formal sanction scheme capable of either resolving or exacerbating the free-rider problem, depending on parameter...

Alchian and Demsetz's (1972) influential explanation of the classical business firm argues that there is need for a concentrated residual claim in the hands of a central agent, to motivate the monitoring of workers. We model monitoring as a way to transform team production from a collec-tive action dilemma with strong free riding incentives to a pr...

The sanctioning of norm-violating behavior by an effective formal authority is an efficient solution for social dilemmas. It is in the self-interest of voters and is often favorably contrasted with letting citizens take punishment into their own hands. Allowing informal sanctions, by contrast, not only comes with a danger that punishments will be m...

Entrusting the power to punish to a central authority is a hallmark of civilization. We study a collective action dilemma in which self-interest should produce a sub-optimal outcome absent sanctions for non-cooperation. We then test experimentally whether subjects make the theoretically optimal choice of a formal sanction scheme that costs less tha...

We conduct trust game experiments in which subjects can sometimes exchange proposals either in numerical (tabular) form, or using chat messages followed by exchange of numerical proposals. Numerical communication significantly increases trusting and trustworthiness; inclusion of 1-min verbal communication in a chat room generates an even larger and...

The sanctioning of norm-violating behavior by an effective formal authority is an efficient solution for social dilemmas. It is in the self-interest of voters and is often favorably contrasted with letting citizens take punishment into their own hands. Allowing informal sanctions, by contrast, not only comes with a danger that punishments will be m...

Corporate social responsibility (CSR) has been the subject of much discussion in recent years, and it is hard to find any sizeable company that does not try to present its employment practices, environmental behavior, and involvement with the communities in which it operates in a favorable light. Yet the concept of CSR remains problematic for econo...

Competitive companies cannot be expected to advance social welfare unless it contributes to profits. One way that a company’s pro-social actions can enhance profits is by boosting consumers’ trust in and goodwill towards the company. In two related experiments, we show that projecting a positive persona enhances trusting between individuals. Specif...

We invited “residents” of a virtual world who vary in real-world age and occupation to play a trust game with stakes comparable to “in world” wages. In different treatments, the lab wall was adorned with an emotively suggestive photograph, a suggestive text was added to the instructions, or both a photo and text were added. We find high levels of t...

We construct a matrix showing the share of the year 2000 population in every country that is descended from people in different source countries in the year 1500. Using the matrix to adjust indicators of early development so that they reflect the history of a population's ancestors rather than the history of the place they live today greatly improv...

We devise a new experimental game by nesting a voluntary contributions mechanism in a broader spectrum of incentive schemes. With it, we study tensions between egalitarianism, equity concerns, self-interest, and the need for incentives. In a 2x2 design, subjects either vote on or exogenously encounter incentive settings while assigned unequal incom...

In an era in which the “tragedy of the commons” has acquired new meaning on a global scale, social scientists are beginning to find hope in human nature. True, we are self-interested creatures capable of destroying the habitats that support us as we each focus on getting our share of the global commons before others beat us to it. Yet Homo sapiens...

We use two types of cross-country growth regression models to revisit explanations of slow growth in Africa looking at growth rate variation among African countries only. Both sets of models produce results that are surprising given conclusions based on global sample: within Africa, we find a greater coastal population negatively and greater ethnic...

The burgeoning literature on the use of sanctions to support public goods provision has largely neglected the use of formal or centralized sanctions. We let subjects playing a linear public goods game vote on the parameters of a formal sanction scheme capable both of resolving and of exacerbating the free-rider problem, depending on parameter setti...

The burgeoning literature on the use of sanctions to support public goods provision has largely neglected the use of formal or centralized sanctions. We let subjects playing a linear public goods game vote on the parameters of a formal sanction scheme capable both of resolving and of exacerbating the free-rider problem, depending on parameter setti...

We study a voluntary contributions mechanism in which punishment may be allowed, depending on subjects' voted rules. We found that out of 160 group votes, even when groups had no prior experience with unrestricted punishment, no group ever voted to allow unrestricted punishment and no group ever allowed punishment of high contributors. Over a serie...

Subjects in collective action experiments like the voluntary contribution mechanism (Davis and Holt, 1993) display varying predispositions ranging from stronger or weaker inclinations to cooperate (including willingness to engage in costly punishment of non-cooperators) to relatively single-minded pursuit of self-interest to costly resistance again...

The facts that people can sometimes commit to fulfill promises even when there are no binding penalties and that kind and trusting acts are often reciprocated by trustworthy ones make possible forms of group action that might be ruled out in a hypothetical world of perfectly opportunistic individuals. I discuss some new experiments with a modified...

After three decades of reform, state ownership still plays a significant if diminishing role in China's industrial sector. We survey studies that focus on the impact of reform on China's SOEs both during the early reform years from 1979 to 1992 and during the years of privatisation and corporatisation since 1993. Most studies find evidence that ref...