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Where are you from? Cultural differences in public good experiments
Abstract
We study the effect of cultural differences on contributions in a public good experiment, analysing real-time interactions between Italian and British subjects in their home countries. In the first treatment, subjects play in nationally homogeneous groups. In the second treatment, Italian and British subjects play in heterogeneous groups, knowing the nationality of the group members. In the third treatment, we control for a possible "country effect" by giving players no information on nationality. The data suggest that, in homogeneous groups, British subjects contribute significantly more to the public good; contributions are lower in heterogeneous groups; there is no country effect.
... In the Blind (B-)treatments, participants were not made aware that participants from the other city were actually from another country [23]. Therefore, in both the National and the International Open treatments participants were made aware that the other city was located either in the same country or in another country, although the exact location of the other city was never disclosed. ...
... This is likely to be the case especially with repeated interaction because of the "bad apple" effect, i.e., the phenomenon whereby a few low cooperators in a group leads to a drastic reduction of willingness to cooperate with others [31]. Reduced cooperation in international interaction compared to national interaction has indeed been found [23,32]. ...
... It has to be noted that, with some rare exceptions [23,33], the available evidence on international interaction is limited to one-shot interactions [6,7,42]. The dynamic setting may have created additional motivations for cooperation. ...
Imposing sanctions on non-compliant parties to international agreements is advocated as a remedy for international cooperation failure. Nevertheless, sanctions are costly, and rational choice theory predicts their ineffectiveness in improving cooperation. We test sanctions effectiveness experimentally in international collective-risk social dilemmas simulating efforts to avoid catastrophic climate change. We involve individuals from countries where sanctions were shown to be effective (Germany) or ineffective (Russia) in increasing cooperation. Here, we show that, while this result still holds nationally, international interaction backed by sanctions is beneficial. Cooperation by low cooperator groups increases relative to national cooperation and converges to the levels of high cooperators. This result holds regardless of revealing other group members' nationality, suggesting that participants' specific attitudes or stereotypes over the other country were irrelevant. Groups interacting under sanctions contribute more to catastrophe prevention than what would maximize expected group payoffs. This behaviour signals a strong propensity for protection against collective risks.
... In the Blind (B-)treatments, participants were not made aware that participants from the other city were actually from another country [23]. Therefore, in both the National and the International Open treatments participants were made aware that the other city was located either in the same country or in another country, although the exact location of the other city was never disclosed. ...
... This is likely to be the case especially with repeated interaction because of the "bad apple" effect, i.e., the phenomenon whereby a few low cooperators in a group leads to a drastic reduction of willingness to cooperate with others [31]. Reduced cooperation in international interaction compared to national interaction has indeed been found [23,32]. ...
... It has to be noted that, with some rare exceptions [23,33], the available evidence on international interaction is limited to one-shot interactions [6,7,42]. The dynamic setting may have created additional motivations for cooperation. ...
Imposing sanctions on non-compliant parties to international agreements is advocated as a remedy for international cooperation failure. Nevertheless, sanctions are costly, and rational choice theory predicts their ineffectiveness in solving cooperation problems. Empirically, sanctions were shown to increase cooperation substantially in some cultural areas but to be detrimental in others. We test sanctions' effectiveness experimentally in international collective-risk social dilemmas simulating efforts to avoid catastrophic climate change. We involve individuals from cultural areas where sanctions were shown to have different effectiveness: Russia and Germany. Here we show that, while this result still holds nationally, international interaction backed by sanctions is beneficial. Cooperation by low cooperator groups increases relative to national cooperation and converges to the levels of high cooperators. Moreover, international groups interacting under sanctions contribute more to catastrophe prevention than what is prescribed by the group payoff-maximizing solution. This behavior signals a strong preference for protection against collective risks.
... using a public goods game. This paper differs from the first paper, Castro [19], in two ways: first, individuals in three, instead of two countries interact with one another; and second, we specifically picked our countries to make the transnationality of our public good more salient, i.e., instead of running experiments in England and Italy like Castro [19] does, we run our experiments in Denmark, Spain and Ghana. We made sure that there are noticeable differences across countries: in culture, in wealth, in historicity, and in geographic location. ...
... using a public goods game. This paper differs from the first paper, Castro [19], in two ways: first, individuals in three, instead of two countries interact with one another; and second, we specifically picked our countries to make the transnationality of our public good more salient, i.e., instead of running experiments in England and Italy like Castro [19] does, we run our experiments in Denmark, Spain and Ghana. We made sure that there are noticeable differences across countries: in culture, in wealth, in historicity, and in geographic location. ...
... Lastly, literature on the effects of heterogeneous group compositions on public good provisions find that heterogeneity lowers contributions [13,15,19]. As such, we have the following hypothesis: Hypothesis 4. (Transnational Public Goods) Contributions for transnational public goods will be less than contributions for national public goods, regardless of whether current institutions or endowments are affected by past-generation public good contributions. ...
Two important aspects of global environmental problems are that (1) the actions of past generations affect the opportunities of the present, and (2) both in the past and the present generations, collaboration across different countries is needed to provide global public goods. In this paper, we study how these two aspects influence public good provisions by running simultaneous intercountry laboratory experiments using a modified public goods game in Denmark, Spain and Ghana. While the theoretical predictions of the modified public goods game do not differ from that of the standard public goods game, our experimental results show otherwise. Pooling across results from our Danish, Spanish and Ghanaian participants, we find that present-generation individuals contribute a higher percentage of their endowments when they have better institutions and a lower percentage of their endowments when they have higher endowments. We also find that present-generation individuals contribute less to transnational public goods only when their initial conditions have not been affected by past-generation contributions.
... In the Blind (B-)treatments, participants were not made aware that participants from the other city were actually from another country [23]. Therefore, in both the National and the International Open treatments participants were made aware that the other city was located either in the same country or in another country, although the exact location of the other city was never disclosed. ...
... This is likely to be the case especially with repeated interaction because of the "bad apple" effect, i.e., the phenomenon whereby a few low cooperators in a group leads to a drastic reduction of willingness to cooperate with others [31]. Reduced cooperation in international interaction compared to national interaction has indeed been found [23,32]. ...
... When sanctions were available, groups that are normally high cooperators in national interactions did not decrease cooperation internationally, while groups that are normally low cooperators nationally increased their cooperation internationally. 23 Our results indicate that individuals do not necessarily act parochially in social dilemmas where people cooperate to reduce collective risk. Theoretically, it may be argued that ingroup identity may be fostered by the common threat of losing part of the private account if the loss event occurs [39]. ...
... According to cultural psychological theories, fundamental differences in how culture affects people's perception of the world might predict differences in how people make economic decisions (Miller, 1984;Shweder, 1990;Triandis, 1995). In recent years, much experimental work has focused on cultural effects on prosocial behaviors (e.g., Burlando and Hey, 1997;Ockenfels and Weimann, 1999;Henrich, 2000;Glaeser et al., 2000;Fershtman, Gneezy, 2014;Castro, 2008). However, these studies merely report the differences in prosocial behavior between ethnic groups and naturally attribute the effects culture has on behavior to the individual level. ...
... A few studies have shown that ethnic diversity frequently reduces team performance in both public and private sectors (Watson, Kumar and Michaelsen, 1993;Pelled, Eisenhardt and Xin, 1999;Pitts and Jarry, 2007;Castro, 2008;Hur, 2013), whereas the conservative estimates of the experimental study by Waring and Bell (2013) indicates that ethnic dominance has a much larger negative effect on contributions in the public goods experiment than does caste diversity in India. We found multi-faceted results for different ethnicities in our study. ...
Recent investigations have uncovered large, consistent deviations from the predictions of Homo economics that individuals are entirely self-regarding. Our study undertook a cross-cultural study of behavior search for the evidence of other-regarding behaviors and its ethnic difference and accounted for by anatomy of culture. This study recruited 90 subjects of three ethnic groups from market trade-based (ethnic Han), nomadism-based (ethnic Zang) and agriculture-based (ethnic Bouyei) areas in China and conducted public good provision experiment with stranger-treatment design. Under the assumption of self-regarding preferences, the Nash equilibrium is zero contribution by all in a public account using backward induction. However, we found contributions did not reduce to zero over all three sessions. Besides, the differences in contributions between ethnicities strongly depended on the degree of ethnic dominance, and Zang harbored the strongest reciprocal preference generally over all group structures. A particular set of measurable factors was identified as proxies for cultural influences on behavioral differences observed in experiments between ethnicities. The results showed all of the cultural factors accounted for the behavioral differences between the ethnic Han and the other two minor ethnicities. However, behavioral difference between minor ethnicities was attributed to group structure only. (1) People may harbor various forms of prosocial emotions in economic affairs, and especially exhibit stronger at the initial phase rather than what canonical model assumes. (2) Behavioral differences between ethnicities are prominent and can be explained by differences in cultural influence.
... Country A Country B Game Findings Bornhorst, Ichino, Schlag, and Eyal (2004) Northern Europeans Southern Europeans Trust Game Northern Europeans make smaller offers to Southern Europeans Bornhorst et al. (2009) Northern Europeans Southern Europeans Trust Game Northern Europeans emerge with higher payoffs Castro (2008) UK Italy Standard Public Good Game (web based) ...
... What is missing in the literature, however, is a demonstration that less cooperative and more destructive behaviors associated with intercultural interactions are empirically linked to cultural differences between the players. The source of differences between Brits and Italians (Castro, 2008), Japanese and Chinese (Takahashi et al., 2008), or Northern and Southern Europeans (Bornhorst, Ichino, Kirchamp, Schlag, & Winter, 2009) certainly appear to be cultural. But the findings have been demonstrated in quasi-experimental designs without the measurement of additional context variables that empirically link the observed differences to potential cultural sources. ...
Previous research has demonstrated that intercultural interactions produce less positive outcomes in cooperative behaviors in game play than intracultural interactions, yet no study to date has empirically linked these behavioral outcomes to cultural differences between the players. In this study stranger dyads played a modified version of Prisoner's Dilemma either with a partner from the same country or not. Intercultural dyads were less cooperative and more competitive, replicating previous findings. The behavioral outcomes for the intercultural dyads were reliably associated with differences in the dyad's home country scores on Hofstede's (2001) cultural dimension Power Distance, linking cultural differences between players and behavioral outcomes in intercultural game play.
... 31 In a public good environment, Bault et al. (2017) find that interaction experiences, creating social ties, make people care about others and adapt their own contribution to counterpart's contribution, such an influence persisting in time and alimenting long lasting relationships. Laboratory experimental evidence also suggests that cultural differences affect voluntary contributions to public goods and, therefore, that these differences need to be taken into account in the design of charitable-enhancing policies (Finocchiaro Castro, 2008). ...
The chapter aims at offering a preliminary look at public policies in the field of Cultural Heritage with a ‘behavioural’ perspective. The paper investigates how Behavioural Economics and Cultural Heritage interface and whether suggestions can be derived for the design of related Cultural Heritage meaningful policies. Among the policy issues which appear good candidates for behavioural hints, attention is paid mainly to regulation and funding. At the same time, the behavioural implications for the functioning of the public decision-making process are sketched, too.
... Participants in the they condition were simply told they would be matched with another participant in the experiment. Making natural shared identities salient has also previously been used to induce group identity in experiments (Castro, 2008;Dorrough et al., 2015;Fiedler et al., 2018;Jackson, 2008;Kiyonari & Yamagishi, 2004;Perdue et al., 1990;Platow et al., 1999;Yamagishi et al., 2005). ...
Games of pure mutual interest require players to coordinate their choices without being able to communicate. One way to achieve this is through team-reasoning, asking ‘what should we choose’, rather than just assessing one’s own options from an individual perspective. It has been suggested that team-reasoning is more likely when individuals are encouraged to think of those they are attempting to coordinate with as members of an in-group. In two studies, we examined the effects of group identity, measured by the ‘Inclusion of Other in Self’ (IOS) scale, on performance in nondescript coordination games, where there are several equilibria but no descriptions that a player can use to distinguish any one strategy from the others apart from the payoff from coordinating on it. In an online experiment, our manipulation of group identity did not have the expected effect, but we found a correlation of .18 between IOS and team-reasoning-consistent choosing. Similarly, in self-reported strategies, those who reported trying to pick an option that stood out (making it easier to coordinate on) also reported higher IOS scores than did those who said they tended to choose the option with the largest potential payoff. In a follow-up study in the lab, participants played either with friends or with strangers. Experiment 2 replicated the relationship between IOS and team-reasoning in strangers but not in friends. Instead, friends’ behavior was related to their expectations of what their partners would do. A hierarchical cluster analysis showed that 46.4% of strangers played a team reasoning strategy, compared to 20.6% of friends. We suggest that the strangers who group identify may have been team reasoning but friends may have tried to use their superior knowledge of their partners to try to predict their strategy.
... In Bigoni et al.'s (2016) experiments, Southern Italians cooperate less than Northern Italians; this is not surprising since the two regions have long differed historically, economically, and culturally (see e.g., Putnam et al., 1993). Castro (2008) finds that British students contribute more than Italian students. Weimann (1994) reports lower cooperation among US students than German students in a "partners" VCM. ...
In a laboratory experiment we compare voluntary cooperation in Iceland and the US. We furthermore compare the associated thought processes across cultures. The two countries have similar economic performance, but survey measures show that they differ culturally. Our hypotheses are based on two such measures, The Inglehart cultural world map and the Knack and Keefers scale of civic attitudes toward large-scale societal functioning. We prime the participants with different social foci, emphasizing in one a narrow grouping and in the other a larger social unit. In each country we implement this using two different feedback treatments. Under group feedback, participants only know the contributions by the four members of their directly cooperating group. Under session feedback they are informed of the contributions within their group as well as by everyone else in the session. Under group feedback, cooperation levels do not differ between the two cultures. However, under session feedback cooperation levels increase in Iceland and decline in the US. Even when contribution levels are the same members of the two cultures differ in their motives to cooperate: Icelanders tend to cooperate unconditionally and US subjects conditionally. Our findings indicate that different cultures can achieve similar economic and societal performance through different cultural norms and suggest that cooperation should be encouraged through culturally tailored suasion tactics. We also find that some decision factors such as Inequity Aversion do not differ across the two countries, which raises the question whether they are human universals.
... (See SI: section S1.1, S1.2 for participants' demographic and cultural characteristics). The international treatments were conducted under two different settings: In the Blind (B) treatments, participants were not made aware that students from the other city were actually from another country 24 . In the Open (O-)treatments, conversely, German and Russian participants were informed that the other city was located either in Russia or in Germany. ...
Imposing sanctions on noncompliant parties to international agreements is often advocated as a remedy for international cooperation failure, notably in climate agreements. We provide an experimental test of this conjecture in a collective-risk social dilemma simulating the effort to avoid catastrophic climate change. We involve groups of participants from two cultural areas that were shown to achieve different levels of cooperation nationally when peer-level sanctions were available. Here we show that, while this result still holds nationally, international interaction backed by sanctions is overall beneficial. Cooperation by low cooperator groups increases in comparison with national cooperation and converges to the cooperation levels of high cooperation groups. While such an increase is small without sanctions, it becomes sizable when sanctions are imposed. Revealing or hiding counterparts’ nationality does not affect results. Our study supports the proposal to use sanctions to support international cooperation to avert collective risk such as climate change.
... (See SI: section S1.1, S1.2 for participants' demographic and cultural characteristics). The international treatments were conducted under two different settings: In the Blind (B) treatments, participants were not made aware that students from the other city were actually from another country 24 . In the Open (O-)treatments, conversely, German and Russian participants were informed that the other city was located either in Russia or in Germany. ...
Imposing sanctions on noncompliant parties to international agreements is often advocated as a remedy for international cooperation failure, notably in climate agreements. We provide an experimental test of this conjecture in a collective-risk social dilemma simulating the effort to avoid catastrophic climate change. We involve groups of participants from two cultural areas that were shown to achieve different levels of cooperation nationally when peer-level sanctions were available. Here we show that, while this result still holds nationally, international interaction backed by sanctions is overall beneficial. Cooperation by low cooperator groups increases significantly in comparison with national cooperation and converges to the cooperation levels of high cooperation groups. While the increase is only marginally significant without sanctions, it becomes sizable when sanctions are imposed. When sanctions are available, individuals are willing to cooperate above the level that would maximize expected payoffs. Revealing or hiding counterparts’ nationality does not affect results.
... Hewstone et al. (2002); Becchetti et al. (2013); Lane (2016). 12 See Castro (2008); Carpenter and Cardenas (2011). 13 Gries et al. (2011). ...
... An additional argument, not fully covered by the typology presented in [18], is rooted in social identity theory, which explains cooperation and norm compliance through the commitment of an individual to the group he feels he belongs to [21]. People tend to cooperate more with their own group members in the wide range of behavioral games [22], including Dictator's game [23], and Public good game [24,25] and the costly punishment of group members for norm violation is itself a second-order public good. If a person strongly associates him-or herself with the group, that may increase the "black sheep effect": the tendency to punish one's own group members more severely than outsiders [26,27]. ...
In this paper, we test whether sanctions applied to an entire group on account of the free-riding of one of its members can promote group cooperation. To measure the efficiency of such collective sanctions, we conducted a lab experiment based on a standard public good game. The results show that, overall, collective sanctions are ineffective. Moreover, when subjects are able to punish their peers, the level of cooperation is lower in the regime of collective sanctions than under individual sanctions. Both outcomes can be explained by a general disapproval of the collective responsibility for an individual fault: in the post-experimental survey, an absolute majority evaluated such regimes as unfair. While collective sanctions are not an effective means for boosting group compliance, there are nevertheless two insights to be gained here. First, there are differences across genders: under collective sanctions, men’s level of compliance is significantly higher than under individual sanctions, while the opposite is true for women. Second, there were intriguing differences in outcomes between the different regime types. Under collective sanctions, a person who is caught tends to comply in the future, at least in the short term. By contrast, under individual sanctions, an individual wrongdoer decreases his or her level of compliance in the next period.
... 6 In addition, the 6 A large body of experimental research has studied the effects of a shared group identity on cooperation and discrimination (Balliet, Wu, and De Dreu 2014;Lane 2016) by inducing a common identity through the minimal group paradigm (Bicskei, Lankau, and Bizer 2016;Chen and Li 2009;Smith 2011) or through the use of natural identities. These studies suggest that homogeneous groups with respect to characteristics such as nationality (Carpenter and Cardenas 2011;Finocchiaro Castro 2008), kibbutz membership (Ruf e and Sosis 2006), or army platoons (Goette, Huffman, and Meier 2006) lead to higher cooperation, owing to either taste-based (Becker 1971) or statistical discrimination (Arrow 1973). Some studies conclude that lower expectations regarding out-group members' contribution (i.e., statistical distinction between out-and in-groups may be dif cult in the case of migration since migrants assimilate over time into the communities. ...
This paper investigates the effects of internal in-migration on cooperation in rural farming communities in Zambia. Potentially, in-migration could trigger discrimination, decrease overall levels of trust, and hence negatively impact the propensity for collective action. We measure cooperative behavior through self-reported survey information and incentivized decisions in a lab-in-the-field experiment. First, we find no evidence in the survey and experimental data that in-migration negatively affects cooperation across villages. Second, we find evidence that in villages where income inequalities between migrants and locals are more pronounced, migrants contribute more to public goods if exposed as the minority in the experiment.
... Experimentation is identified in a recent study as "a powerful tool for the empirical study of economic decision-making" (Chuah et al. 2009, 732) and is becoming increasingly popular in management-oriented studies (Chen, Xie, and Chang 2011;Chuah, Hoffmann, and Larner 2014;De Bruyn and Bolton 2008;Van Witteloostuijn 2015). Culturally induced variations in decisionmaking are observed in the field of cross-cultural experimental economics (Buchan, Croson, and Johnson 2004;Castro 2008;G€ achter and Herrmann 2009;Henrich et al. 2001;Horak 2014Joardar, Kostova, and Ravlin 2007;Tjemkes et al. 2012;Valenzuela, Srivastava, and Lee 2005). Chuah et al. (2009) recommend the Ultimatum Game (UG hereafter) for a cross-cultural study as it "provides a useful tool for the examination of cultural differences precisely because it elicits subjects' monetary as well as social preferences" (Chuah et al. 2009, 734). ...
This study tests the influence of culture on group decision-making behavior among respondents in Korea and Germany. For our field experiment we are using an ultimatum game design, played among participants in Korea and in a benchmark experiment in Germany. We find evidence that taking the mosaic view of culture and making subjects aware of shared affective ties, based on age, educational-institution and regional origin, leads to differences in economic decisions, contrary to what neoclassical economic theory would suggest. Our results indicate that awareness of common group membership in some cultural contexts orients decision-makers towards upholding social norms that induces a greater preference for more selfless, in-group interested decisions, while anonymity makes personal identity salient and promotes more self-interested economic decisions. These effects are more pronounced in Korean participants compared with German participants.
... Higher ethnic fractionalization in U. S. cities was found to be negatively correlated with expenditures for productive public goods (Alesina, Baqir and Easterly, 1999). Even in public goods game experiments the contributions to a public good were smaller in culturally heterogeneous than in homogenous groups (Castro, 2008). In simulations with spatial public goods games, high noise rates (i.e., not accurately transmitted cultural information between agents) led to the collapse of cooperation while it prospered with low noise (Stivala, Kashima and Kirley, 2016). ...
Besides effects on economic well-being, migration of people with distant cultural backgrounds may also have large effects on people’s cultural identity. In this paper, the identity economics of Akerlof and Kranton (2000) is applied to migration. Accordingly, it is assumed that the utility of both the immigrants and the native population encompasses economic well-being and cultural identity. The migration effect on cultural identity depends, among others, on the distance between cultures. In a simple immigration game it is shown that immigrants may prefer to live rather in diaspora communities than to integrate into the host countries’ culture. This subgame-perfect equilibrium choice of immigrants seems the more likely the greater the cultural distance between their country of origin and the destination country is. Among the available policy instruments, restrictions on the freedom of movement and settlement of immigrants may be the most effective way to prevent the setup of large diaspora communities. For young immigrants and later generations of immigrants, integration via compulsory schooling is the most important policy. In general, cultural, religious and social institutions may support integration.
... There is ample evidence for substantial heterogeneity across nations and cultures with respect to other-regarding behavior (e.g., Carpenter & Cardenas, 2011;Carpenter, Daniere, & Takahashi, 2004;Henrich, 2000;Henrich et al., 2001). There also exist some stable differences between cultures (e.g., Castro, 2008;Matsumoto & Hwang, 2011;Ockenfels & Weimann, 1999;Roth, Prasnikar, Okuno-Fujiwara, & Zamir, 1991), which also might matter for economic interactions. This heterogeneity leads to an open research question on whether and to what extent Chinese subjects behave in a conditionally cooperative manner when they have the option of voluntarily contributing to a global public good. ...
... Putnam (2007) highlights that ethnic diversity reduces both in-group and out-group trust (on the complex interconnection between ethnic difference and particularized and generalized trust, see also Bahry, Kozyreva, and Wilson 2005). Support for this comes from laboratory studies on cooperation, involving participants belonging to different nationalities, and reporting a decrease in cooperation in cultural heterogeneous groups and ethnic discrimination in trust and altruism (Fershtman and Gneezy 2001;Fershtman, Gneezy, and Verboven 2005;Finocchiaro Castro 2008;Carpenter and Cardenas 2011). In these type of studies, cooperation is the result of a collective action process that leads to a Pareto-superior outcome in situations, also known as social dilemmas, characterized by a conflict between individual material self-interest and the optimal social outcome. ...
The literature on the hedonic price approach applied to housing highlights the existence of natives' preferences against living in urban areas with high foreign-born population. At the same time, empirical and experimental evidence show that ethnic fragmentation reduces social cohesion in society. Mainly because of the difficulty to measure social cohesion at the neighborhood level, the correlation between these two phenomena is still largely unexplored. In this paper, we investigate natives' preferences for immigrants following an original approach that combines the hedonic price approach and a framed field experiment. The latter allows us to collect a measure of cooperation at the neighborhood level. We apply this methodology to the city of Milan. Our findings show that natives prefer to live in non-dense immigrants neighborhoods. However, this preference is not attributable to an erosion of social cohesion in those areas.
... In light of these findings, it is not surprising that individuals from different nations also show varying baseline levels of in-group favoritism in survey questions (Van de Vliert, 2010). Nations appear to differ in the extent to which they show more prosocial behavior toward national in-group members than to out-group members; some nations seem to display reduced national in-group favoritism or none at all (Liu et al., 2011;Fershtman, Gneezy & Verboven, 2005;Castro, 2008;Tanaka & Camerer, 2013;Dorrough & Glöckner, 2016; for a meta-analysis see R. Fischer & Derham, 2016). ...
As individuals from different nations increasingly interact with each other, research on national in-group favoritism becomes particularly vital. In a cross-national, large-scale study (N = 915) including representative samples from four Latin American nations (Chile, Peru, Colombia, Venezuela) and the USA, we explore differences regarding nationality-based in-group favoritism. In-group favoritism is assessed through differences in prosocial behavior toward persons from the own nation as compared to persons from other nations in fully incentivized one-shot dictator games. We find strong evidence for national in-group favoritism for the overall sample, but also significant differences among national subsamples. Latin Americans show more national in-group favoritism compared to US Americans (interacting with Latin Americans). While US Americans mainly follow an equal split norm(for both in- and out-group interactions), Latin Americans do so only in in-group interactions. The magnitude of in-group favoritism increases with social distance toward the out-group. © 2018. The authors license this article under the terms of the Creative Commons Attribution 3.0 License.
... Putnam (2007), who focuses on the short and medium run, highlights as ethnic diversity reduces both in-group and out-group trust (on the complex interconnection between ethnic difference and particularized and generalized trust, see also Bahry et al. 2005). Further evidence on the previous effects comes from laboratory studies conducted by experimental economists (Finocchiaro Castro, 2008;Carpenter andCardenas 2011, Bornhorst et al., 2010). ...
The literature on the hedonic price approach applied to housing market highlights the existence of natives’ preferences against living in urban areas with high foreign-born population. At the same time, empirical and experimental evidence show that ethnic fragmentation reduces cooperation at the community level. Mainly because of the difficulty to measure cooperation at the level of neighborhood, the correlation between these two phenomena is still largely unexplored. In this paper, we propose to investigate this issue by combining the hedonic price approach and a framed field experiment that allows us to collect a measure of cooperation at the neighborhood level. We apply this methodology to the city of Milan. The purpose is to pave the way for further research aiming at disentangling between alternative explanations of natives’ preferences for living in homogeneous communities.
... Co-opetition has been studied in the fields of relationship marketing (Hunt, 1997;Palmer, 2000), strategic management (Barbee and Rubel, 1997;Dyer and Singh, 1998), networks (Dyer and Singh, 1998;Gnyawali and Madhavan, 2001;Gulati, 1998;Hakansson and Ford, 2002), and supply chains (Rademakers and McKnight, 1998;Wheatley, 1998). Most research shows that intercultural interactions result in more competition and less cooperation than intracultural interactions (Bornhorst et al., 2009;Castro, 2008;Chuah et al., 2007;Kuwabara et al., 2007;Matsumoto and Hwang, 2011), although some studies show no such difference (Willinger et al., 2003). Matsumoto and Hwang (2011) found Hofstede's (2001) cultural dimension Power Distance to affect the results of intercultural interaction at the dyad level where in prisoner's dilemma games, the intercultural condition produced more competition, and the degree of competition was associated with power distance between the intercultural players. ...
Purpose
The purpose of this paper is to provide an overview on the state of the field in intercultural dynamics on competition and cooperation at the individual, team, and organizational levels. The authors integrate previous studies from multiple disciplines to articulate the contextual importance of intercultural dynamics. The authors also suggest three overarching themes to expand the field of research on intercultural dynamics.
Design/methodology/approach
The authors use an integrative literature review to articulate the importance of intercultural dynamics, provide an introduction to the new contributions in this special issue, and propose new directions for future research.
Findings
Intercultural dynamics research has the potential to expand in three overarching areas: constructive controversy, collaborative communication, and global competency and identity at multiple levels.
Research limitations/implications
Intercultural dynamics is still a nascent field emerging from cross-cultural and strategic management. The authors hope the review lays the groundwork for more studies on intercultural dynamics at the interpersonal, team, organizational, and mixed levels of analysis in both theory building and empirical works.
Practical implications
Understanding intercultural dynamics in competition and cooperation can help individuals and managers in multinationals and born global organizations navigate cultural complexity and foster cooperation.
Social implications
The authors hope the ideas on intercultural dynamics can facilitate collaboration and reduce conflict in intercultural encounters at the individual, organization, and societal levels.
Originality/value
This paper offers an overview on the state of the field and lays groundwork for more systematic inquiries on intercultural dynamics in competition and cooperation.
... Despite numerous empirical studies demonstrating an impact of culture on people's cooperativeness (e.g. Burlando, Hey, 1996;Hemesath, Pomponio, 1998;Ockenfels, Weinmann, 1999;Cadsby et al., 2007;Castro, 2008), the influence of culture has mostly been ignored by the authors examining the puzzle of economics students' uncooperativeness. Clearly, more research is needed to track the influence of culture, gender, and gender socialization on cooperation. ...
The impact of university education on the learners' attitudes remains uncertain. Nevertheless, the Economics students' unwillingness to cooperate is frequently attributed to the content of economic courses, and the theories of profit maximization. This article contributes to the discussion on students' attitudes towards cooperation based on the survey of 341 Polish and Romanian students. Since these countries differ in terms of collectivism/individualism dimension, we focus on tracing the influence of cultures on cooperativeness. Specifically, we investigate three variables. First, the impact of culture on the willingness to cooperate, secondly, the influence of gender on collaboration, and finally, the differences in attitudes among the students of Sociology and Economics. We find significant differences between Polish and Romanian students' attitudes towards cooperation, we also observe higher level cooperation among females than males. We detect a drop in cooperation from the first year to the subsequent years of undergraduate studies in Economics.
... We do this for several reasons. First, general experimental literature shows that there may be considerable cross-country variation in individual behavior in terms of cooperation, coordination and learning [4][5][6][7][8][9][10]. Our experimental design aims to document these differences and offer some observable correlations in the discussion. ...
Everyday, we are bombarded with periodic, exogenous appeals and instructions on how to behave. How do these appeals and instructions affect subsequent coordination? Using experimental methods, we investigate how a one-time exogenous instruction affects subsequent coordination among individuals in a lab. Participants play a minimum effort game repeated 5 times under fixed matching with a one-time behavioral instruction in either the first or second round. Since coordination behavior may vary across countries, we run experiments in Denmark, Spain and Ghana, and map cross-country rankings in coordination with known national measures of fractualization, uncertainty avoidance and long-term orientation. Our results show that exogenous interventions increase subsequent coordination, with earlier interventions yielding better coordination than later interventions. We also find that cross-country rankings in coordination map with published national measures of fractualization, uncertainty avoidance, and long-term orientation.
... Likewise, Castro [55] demonstrates that British subjects play more cooperatively than Italians. This effect completely disappears when the subjects are (knowingly) mixed. ...
This paper is a partial review of the literature on ‘social preferences'. There are empirical findings that convincingly demonstrate the existence of social preferences, but there are also studies that indicate their fragility. So how robust are social preferences, and how exactly are they context dependent? One of the most promising insights from the literature, in my view, is an equilibrium explanation of mutually referring conditional social preferences and expectations. I use this concept of equilibrium, summarized by means of a figure, to discuss a range of empirical studies. Where appropriate, I also briefly discuss a couple of insights from the (mostly parallel) evolutionary literature about cooperation. A concrete case of the Orma in Kenya will be used as a motivating example in the beginning.
... Among unrelated others, people were more willing to benefit those they perceived as being similar to them (Karylowski, 1976;Rushton, 1989). Experimental participants were more willing to share with fellow group members in a variety of contexts such as nationality (Castro, 2008), university fraternity (Epp and Wicinas, 2001), or even when experimental instructions simply described the donor and recipient as a "two-member group" (Banerjee and Chakravarty, 2014). ...
This article proposes a comprehensive framework for charitable-giving behaviour incorporating seminal evolutionary concepts of altruism and reciprocity introduced across several decades (Hamilton, 1964; Trivers, 1971; Tooby and Cosmides, 1996; Gintis, 2000). It reviews a wide range of experimental and other empirical results within the context of the framework. These support the proposition that giving depends on the tangibility of a gift’s impact on altruism (direct or code), reciprocity (transactional or friendship) and possessions relative to its alternatives. Finally, it illustrates the practical usefulness of such a framework when applied through five example principles of fundraising practice.
... Such studies focus on individuals' behavioral change after specific social iden- 11 Until today, only few experimental studies have drawn deliberately from the comparison of natural groups in inter-group designs. These natural groups are based on nationality (Goerg et al., 2013;Cox and Orman, 2010;Chuah et al., 2009;Netzer and Sutter, 2009;Finocchiaro Castro, 2008;Chuah et al., 2007;Burns, 2006;Carpenter and Cardenas, 2005;Walkowitz et al., 2004;Bornhorst et al., 2004;Willinger et al., 2003;Fershtman and Gneezy, 2001) as well as, within a country, geography (Etang et al., 2011;Fehr et al., 2008;Bernhard et al., 2006), social class affiliation Pandey, 2014, 2006;Hoff et al., 2011), language (Fershtman et al., 2005), beliefs and values (Ruffle and Sosis, 2006;Fershtman et al., 2005), membership (Goette et al., 2012(Goette et al., , 2006, or gender (Croson et al., 2008). Of all the above studies, nonstudent subject pools are studied only in Pandey (2014, 2006), Goette et al. (2012Goette et al. ( , 2006, Hoff et al. (2011), Etang et al. (2011, Bernhard et al. (2006), Ruffle and Sosis (2006). ...
This dissertation is concerned with selected topics of the social sciences.
At its core lies both a commitment to experimental methods as a tool for evaluating behavior under different sets of rules and a particular interest in the study of individuals in their natural environments.
STUDY 1: A Randomized Controlled Trial of Teaching Methods: Do Classroom Experiments Improve Economic Education in High Schools?
STUDY 2: A Randomized Controlled Trial of Pricing Rules in the Presence of Quality Uncertainty: Pay-per-Minute, Pay-What-You-Want, or Fixed Pricing?
STUDY 3: Cross-Border Norm Compliance: Social Norms and Adaptive Behavior in the Context of the Anti-Littering Norm.
Dissertation available online at https://kops.uni-konstanz.de/handle/123456789/38019.
... We next discuss how the partner's country of origin may affect an individual's tendency to trust and to be trustworthy in forecast sharing. Recent experiments on intercultural interactions (primarily among different western cultures) show that participants extend more cooperative behavior toward partners of the same nationality than those of different nationalities (Glaeser et al. 2000, Castro 2008). These findings conform to social identity theory (Tajfel and Turner 1979), which posits that intergroup behaviors are largely affected by an individual's perceived membership in a social group. ...
Whether and how trust and trustworthiness differ between a collectivist society, e.g., China, and an individualistic one, e.g., the United States, generates much ongoing scientific debate and bears significant practical values for managing cross-country transactions. We experimentally investigate how supply chain members' countries of origin—China versus the United States—affect trust, trustworthiness, and strategic information sharing behavior in a cross-country supply chain. We consider a two-tier supply chain in which the upstream supplier solicits demand forecast information from the retailer to plan production; but the retailer has an incentive to manipulate her forecast to ensure abundant supply. The levels of trust and trustworthiness in the supply chain and supplier's capability to determine the optimal production quantity affect the efficacy of forecast sharing and the resulting profits. We develop an experimental design to disentangle these three aspects and to allow for real-time interactions between geographically distant and culturally heterogeneous participants. We observe that, when there is no prospect for long-term interactions, our Chinese participants consistently exhibit lower spontaneous trust and trustworthiness than their U.S. counterparts do. We quantify the differences in trust and trustworthiness between the two countries, and the resulting impact on supply chain efficiency. We also show that Chinese individuals exhibit higher spontaneous trust toward U.S. partners than Chinese ones, primarily because they perceive that individuals from the United States are more trusting and trustworthy in general. This positive perception toward U.S. people is indeed consistent with the U.S. participants' behavior in forecast sharing. In addition, we quantify that a Chinese supply chain enjoys a larger efficiency gain from repeated interactions than a U.S. one does, as the prospect of building a long-term relationship successfully sustains trust and trustworthiness by Chinese partners. We advocate that companies can reinforce the positive perception of westerners held by the Chinese population and commit to long-term relationships to encourage trust by Chinese partners. Finally, we also observe that both populations exhibit similar pull-to-center bias when solving a decision problem under uncertainty (i.e., the newsvendor problem).
... Partners' behaviour is more uniform, and they conclude that there is a strong effect on behaviour resulting from national differences. In contrast, Castro (2008) finds that in homogeneous groups, British subjects contributed more to the public good than the Italian subjects did. Cason et al. (2002) study voluntary public good provision in a cross-cultural experiment conducted in the USA and Japan in order to examine spiteful behaviour and cultural differences. ...
This study examines group decision making by employing a business simulation game. We investigate whether differences in individual countries' business cultures determine the distinguishing features of group decision making. In particular, this study compares groups categorised by agent, strategy, and the population of agents. Group characteristics are analysed based on the ranking by Hofstede (1980), along four dimensions - power distance, individualism, masculinity, and uncertainty avoidance, of Japan, China, Hong Kong, and Thailand. The four experiments were conducted locally with graduate students at business schools in Japan, China, Hong Kong, and Thailand. The results show that there are differences in the approach to cooperation among teams from each country as we hypothesised and that country-specific variables are the source of differences in behaviour. The research findings have implications of cultural dimensions on business practices and managerial behaviour.
... Partners' behaviour is more uniform, and they conclude that there is a strong effect on behaviour resulting from national differences. In contrast, Castro (2008) finds that in homogeneous groups, British subjects contributed more to the public good than the Italian subjects did. Cason et al. (2002) study voluntary public good provision in a cross-cultural experiment conducted in the USA and Japan in order to examine spiteful behaviour and cultural differences. ...
This study examines group decision making by employing a business simulation game. We investigate whether differences in individual countries' business cultures determine the distinguishing features of group decision making. In particular, this study compares groups categorised by agent, strategy, and the population of agents. Group characteristics are analysed based on the ranking by Hofstede (1980), along four dimensions - power distance, individualism, masculinity, and uncertainty avoidance, of Japan, China, Hong Kong, and Thailand. The four experiments were conducted locally with graduate students at business schools in Japan, China, Hong Kong, and Thailand. The results show that there are differences in the approach to cooperation among teams from each country as we hypothesised and that country-specific variables are the source of differences in behaviour. The research findings have implications of cultural dimensions on business practices and managerial behaviour.
... Experimental evidence as to the eect of heterogeneity on cooperation in the (linear) PGG is conicting, and explanations of behavior are still inconclusive. Finocchiaro-Castro (2008) compares the behavior of English and Italian students. Using a partner design in a repeated PGG (group members interacting repeatedly with each other) he nds evidence for higher contribution levels in homogeneous than in mixed groups (under common knowledge of others' nationalities). ...
We investigate voluntary contribution to public goods in culturally heterogeneous groups with a laboratory experiment conducted among 432 Hindu and Muslim subjects in India. With our specification of ‘Leading by example’ we test for an interaction effect between leadership and religious heterogeneity in a high stake environment. While cultural diversity does not affect contributions in the standard linear Public Goods Game, it reduces cooperation in the presence of a leader. Furthermore, we show that preferences for conditional cooperation are only prevalent in pure groups. In mixed groups, poor leadership and uncertainty about followers’ reciprocity hinders the functionality of leadership as an institutional device to resolve social dilemmas.
... Notable work includes the investigation of trust in a bargaining framework within a cross-cultural framework (Kachelmeier and Shehata 1991;Munier and Zaharia 2002;Roth et al. 1991). Others have compared contribution levels among different countries (Cason et al. 2002;Castro 2008;Ockenfels and Weimann 1999). ...
Budget constraints at the local government level towards the provision of public goods have fuelled interest in the voluntary contribution and provision point mechanisms. However, due to their public nature, these mechanisms are not without problems. The literature shows the presence of free riding and socially inefficient contribution levels. This paper experimentally tests the effect of cultural and historical information pertaining to heritage houses in Penang, Malaysia, on public contributions for their conservation. This paper considers a standard linear one-shot four-person public good game and the decision of the subjects being to contribute either to a private or to a public account. We devise 4 treatments: a Control treatment, a treatment where subjects are provided with cultural and historical information pertaining to the heritage houses, a treatment that includes a contribution threshold, and finally a treatment that combines the use of cultural and historical information with the contribution threshold. The main finding shows that 60–75 % of the subjects contributed more than what they believed others in the same group would contribute when they were provided with the pertinent cultural and historical information. Most of the subjects contributed less than their belief, while 75–77 % cooperated ‘selfishly’ in treatments without the information. These findings are in agreement with the literature, namely that contributions are higher in treatments with a contribution threshold. Moreover, the combination of a contribution threshold and cultural information could encourage more pro-social behaviours.
... Specifically, they focused on three contexts: (1) all players share the subjects' culture; (2) the player's culture makes up a large majority of the players and (3) the players' culture is a small minority of the players. On a similar vein, Finocchiaro Castro's (2008) lab experiment investigated the effects of interactions between Italian and British subjects by comparing the behavior of groups formed by subjects of the same nationality but also considering the behavior of mixed groups composed of half British and half Italian subjects. His results showed no country effect, but significantly lower individual contribution levels in heterogeneous groups. ...
Is culture an important variable to explain whether groups can successfully provide public goods? A wealth of empirical evidence on both industrialized and developing countries shows that cooperation levels decrease in the presence of ethnic divisions. Although several laboratory works deal with cultural differences, so far most studies restrict their attention to cross-cultural comparisons among internally homogeneous societies. We depart from these contributions and conduct an intercultural public goods game with punishment experiment in Italy, a country where immigration is a quite recent, but politically hot phenomenon. We investigate the effects of introducing a varying number of foreign participants within a homogeneous pool of native subjects. Our results indicate that foreigners contribute significantly less than natives, natives react lowering their own contribution levels, and, consequently, the degree of cultural diversity negatively affects the overall level of cooperation. In terms of sanctioning, we observe no difference in the overall amount of assigned and received punishment points; however, behaving mostly as free-riders, foreigners are more likely to use anti-social punishment. In the absence of institutional restrictions ruling out anti-social punishment, this might amplify the documented detrimental effect on cooperation.
We compare efficiency-enhancing cooperation and its underlying motives in Iceland and the US. The two countries are distinct along all measures of national culture known to us. They are however both developed democracies with similar GDP/capita (PPP adjusted). These similarities make it possible to hold constant aspects of culture related to wealth and institutions. In an experimental Voluntary Contribution Mechanism (VCM), we prime the participants with different social foci, emphasizing either their directly cooperating team or their wider social unit. With a team focus, cooperation levels do not differ between the two cultures, but this superficial similarity masks deep-seated differences: When the focus is on the wider social unit cooperation increases in Iceland and declines in the US. Both when the contribution levels are the same and when they differ, members of the two cultures differ in their motives to cooperate: Icelanders tend to cooperate unconditionally, and US subjects conditionally with a strong emphasis on reciprocity. Our findings indicate that different cultures can achieve similar economic and societal performance through different cultural norms and suggest that cooperation should be encouraged through culturally tailored persuasion tactics.
Lebanon is the country with the highest density of refugees in the world, raising the question of whether the host and refugee populations can cooperate harmoniously. We conduct a lab-in-the-field experiment in Lebanon studying intra- and inter-group behavior of Syrian refugees and Lebanese nationals in a repeated public goods game without and with punishment. We randomly assign participants to Lebanese-only, Syrian-only, or mixed sessions. We find that randomly formed pairs in homogeneous sessions, on average, contribute and punish significantly more than those in mixed sessions, suggesting in-group cooperation is stronger. These patterns are driven by Lebanese participants. Further analysis indicates that behavior in mixed groups is more strongly conditioned on expectations about the partner's cooperation than in homogeneous groups.
Stereotypes matter for economic interaction if counterparty utility is informed by factors other than price. Stereotyped agents may engage in efforts to counter stereotype by adapting to in-group standards. We present a model informing the optimal extent of these efforts depending on an agent’s (a) share of total transactions between out- and in-group agents; and (b) share of repeated transaction pairings with in-group counterparties. Low values of (a) suppress the effect of adaptation efforts on the stereotype itself ( persistence ). In turn, low values of (b) mean that out-group agents cannot dissociate from stereotype ( stickiness ). Significantly, the model implies that the optimum level of effort may require adaptation beyond in-group standards, and that such over-adaptation attains maximum likelihood in cases where stereotype is sticky and persistent at the same time. We test our model with data on private equity buyout investments conducted in Japan between 1998 and 2015 by domestic Japanese and Anglo-Saxon funds. We document that the latter not only adapt, but eventually over-adapt. In addition, we show that their efforts are effective in reducing a premium initially asked by domestic counterparties.
We study the behaviour of individuals with different geographic origins interacting in a same public good game. We exploit the peculiar composition of the experimental sample to compare the performance of groups where individuals have mixed origins to homogeneous groups. We find that, despite the absence of any geographic framing, mixed groups exhibit significantly lower contributions. We also find that cooperation levels differ significantly across geographic origins, in line with the existing literature. This is explained by a different impact of coordination opportunities, such as communication, as we show by manipulating them. Our results point towards integration as a crucial aspect for the economic development of intercultural societies. They also confirm that, rather than being explained just by the differences in institutions and economic opportunities, the Italian North–South divide embeds elements of distrust, prejudice and a consequent path dependence in the level of social capital
This study provides an overview, categorization, and integration of what has been achieved in the niche of cross-culture experimental economics (CCEE) so far, aiming to inspire indigenous management researchers to extend their methodological toolbox by including experimental methods. As a result of the review, we find that most of the early studies lack depth and contextualization as well as detailed explanation about why human behavior differs. Hence, a better understanding about the influence of culture on economic decision making is rather limited if it cannot be explained in more detail. In contrast, deep contextualization is a principle in indigenous management research (IMR). Both have so far not benefited from each other in the study of how culture affects human behavior, as both currently develop in parallel. Following the call for high-quality IMR (Tsui, 2004), this paper argues that an experimental methodology can make a contribution to IMR in the future by drawing on the strengths of both IMR (i.e., contextualization) and CCEE (i.e., methodology).
How should economists incorporate culture into their economic analysis? What empirical approaches to identifying, measuring, and analyzing the relationship between culture and economic action are most appropriate for economists? In particular, what can experimental economists learn from the methods of economic anthropologists, sociologists, and historians who study culture? We argue that while both quantitative and qualitative approaches can reveal interesting relationships between culture and economic actions/outcomes, especially in experimental research designs, qualitative methods help economists better understand people’s economic choices and the economic outcomes that emerge from those choices. This is because qualitative studies conceptualize culture as a pattern of meaning, take the relevant cultural data to be people’s thoughts and feelings, treat the market as a cultural phenomenon, and allow for novel explanations.
From the point of view of economic development, the world is far from being homogeneous. Among the possible causes of such uneven evolution, culture is starting to attract the attention of a growing number of scholars. The present paper surveys some of the most important contributions on culture and economics, with a particular focus on the definition and measurement of culture and on the impact of different cultural traits on economic variables. According to this review of the literature, cultures emphasising individual effort while providing equal opportunities for everyone are more likely to encourage sustained economic growth.
This dissertation presents three projects within the fields of behavioural and experimental economics. The first consists of a meta-analysis of lab experiments measuring economic discrimination. Most importantly, I find that the strength of discrimination in economics experiments varies depending on the dimension of identity across which discrimination is measured, and depending on the type of game used to measure it. The second project investigates the relationship between discriminatory behaviour and social norms. A lab experiments finds that discrimination is stronger when it is perceived to be more socially appropriate. In the third project, a field experiment investigates the effect of different nudges on voter registration rates. In particular, emphasising the possibility of being fined for failing to register is successful in raising registration rates, but offering the possibility of financial gain for registering is not. An online experiment in the same project suggests the conflicting normative effects of the two nudges may help explain these differences.
Multilingualism is the global norm, but the implications of this for cooperation and public goods provision have not been studied before. We test whether the language in which a public goods game is played affects subjects' contributions amongst a bilingual population in eastern Uganda, finding that subjects contribute 30% more on average in the national language. This treatment effect is solely driven by those most associated with the local Gisu identity, for whom contributions are 43–74% higher in the national language. This difference fits with Gisu culture's high value on self-reliance and low value on reciprocity and cooperation, due to a violent history of intense competition over land. Language is thus shown to affect cooperation, but only for individuals who both have different latent norms and for whom language activates these norms.
NB: The experimental script, data and code are available at https://paulclist.github.io
Economists are increasingly using experiments to study and measure discrimination between groups. In a meta-analysis containing 441 results from 77 studies, we find groups significantly discriminate against each other in roughly a third of cases. Discrimination varies depending upon the type of group identity being studied: it is stronger when identity is artificially induced in the laboratory than when the subject pool is divided by ethnicity or nationality, and higher still when participants are split into socially or geographically distinct groups. In gender discrimination experiments, there is significant favouritism towards the opposite gender. There is evidence for both taste-based and statistical discrimination; tastes drive the general pattern of discrimination against out-groups, but statistical beliefs are found to affect discrimination in specific instances. Relative to all other decision-making contexts, discrimination is much stronger when participants are asked to allocate payoffs between passive in-group and out-group members. Students and non-students appear to discriminate equally. We discuss possible interpretations and implications of our findings.
This paper aims to explore the potential of the discrete choice analysis-approach as a toolbox and research paradigm for the study of moral decision making. This aim is motivated by the observation that while the study of moral choice behaviour has received much attention in Economics and Psychology, the explicit consideration of the moral dimension of decisions is rare in the Choice modelling field. I first review a number of classical theories and results concerning the nature of moral decision making, and how it is shaped by social processes. Based on this review, I discuss in what ways the discrete choice modelling approach can be used to gain new insights into moral decision making, and how ideas from the moral decision making literature may be used to enhance the behavioural realism of choice models. I will argue that these research endeavours hold the potential to further increase the appeal and applicability of discrete choice models in the broader social sciences.
Using data from four previous experiments, I examine the relationship between contribution heterogeneity and the changes in average contributions that occur from round to round. Specifically, I develop and test the hypothesis that when there is greater contribution heterogeneity in a particular round, average contributions will decrease more between the current round and the next round, all else being equal. I find strong support for my hypothesis with partner and stranger matching, and with and without belief elicitation about the average contributions of others. When beliefs are elicited, changes in average contributions tend to be positively associated with changes in average beliefs, but the relationship is not as strong as the one between changes in average contributions and contribution heterogeneity. In order to determine the driving force underlying the empirical relationship between contribution heterogeneity and changes in average contributions, I simulate contributions under different counterfactual assumptions about belief heterogeneity and contribution preference heterogeneity using one of the data sets. I compare the simulation models in terms of how well each matches the data. The simulations indicate that contribution preference heterogeneity is a stronger factor underlying the dynamics of contributions than belief heterogeneity.
This paper explores philanthropic finance by analysing data on the sizes and structures of the 20 highest-giving private foundations in the US, the UK, Germany and Japan in 2005. It is shown that socio-cultural rather than purely economic indicators are better predictors of private foundation giving. Foundations in the four countries show similarities in terms of age, geographic scope, areas of funding and lack of performance measurement. Methods of income generation, asset management and capital deployment, however, differ significantly between countries. We suggest that, while philanthropic culture and governance exist, they bear the features of national business culture and governance. Conclusions are drawn for the feasibility of competition and collaboration, as well as the use of performance metrics, among private foundations.
Although theory suggests individuals are more willing to incur a personal cost to benefit ingroup members, compared to outgroup members, there is inconsistent evidence in support of this perspective. Applying meta-analytic techniques, we harness a relatively recent explosion of research on intergroup discrimination in cooperative decision making to address several fundamental unresolved issues. First, summarizing evidence across studies, we find a small to medium effect size indicating that people are more cooperative with ingroup, compared to outgroup, members (d = 0.32). Second, we forward and test predictions about the conditions that moderate ingroup favoritism from 2 influential perspectives: a social identity approach and a bounded generalized reciprocity perspective. Although we find evidence for a slight tendency for ingroup favoritism through categorization with no mutual interdependence between group members (e.g., dictator games; d = 0.19), situations that contain interdependence result in stronger ingroup favoritism (e.g., social dilemmas; d = 0.42). We also find that ingroup favoritism is stronger when there is common (vs. unilateral) knowledge of group membership, and stronger during simultaneous (vs. sequential) exchanges. Third, we find support for the hypothesis that intergroup discrimination in cooperation is the result of ingroup favoritism rather than outgroup derogation. Finally, we test for additional moderators of ingroup favoritism, such as the percentage of men in the sample, experimental versus natural groups, and the country of participants. We discuss the implications of these findings for theoretical perspectives on ingroup favoritism, address implications for the methodologies used to study this phenomenon, and suggest directions for future research. (PsycINFO Database Record (c) 2014 APA, all rights reserved).
Empirical evidence suggests that the propensity to cooperate in common pool resource dilemmas is higher for small, homogeneous groups with efficacious monitoring and sanctioning mechanisms. Given that transition from socialist to market economies is associated with larger, more heterogeneous groups with diluted opportunities for monitoring and sanctioning, individuals in later-stage transition economies may be expected to be less cooperative than their early-stage counterparts. However, evidence from experiments conducted with subjects in two economies at different stages of transition suggests that this may not be the case. These findings have implications for both theorists and practitioners alike.
Similarity breeds connection. This principle--the homophily principle--structures network ties of every type, including marriage, friendship, work, advice, support, information transfer, exchange, comembership, and other types of relationship. The result is that people's personal networks are homogeneous with regard to many sociodemographic, behavioral, and intrapersonal characteristics. Homophily limits people's social worlds in a way that has powerful implications for the information they receive, the attitudes they form, and the interactions they experience. Homophily in race and ethnicity creates the strongest divides in our personal environments, with age, religion, education, occupation, and gender following in roughly that order. Geographic propinquity, families, organizations, and isomorphic positions in social systems all create contexts in which homophilous relations form. Ties between nonsimilar individuals also dissolve at a higher rate, which sets the stage for the formation of niches (localized positions) within social space. We argue for more research on: (a) the basic ecological processes that link organizations, associations, cultural communities, social movements, and many other social forms; (b) the impact of multiplex ties on the patterns of homophily; and (c) the dynamics of network change over time through which networks and other social entities co-evolve.
Humans are a striking anomaly in the natural world. While we are similar to other mammals in many ways, our behavior sets us apart. Our unparalleled ability to adapt has allowed us to occupy virtually every habitat on earth using an incredible variety of tools and subsistence techniques. Our societies are larger, more complex, and more cooperative than any other mammal's. In this stunning exploration of human adaptation, Peter J. Richerson and Robert Boyd argue that only a Darwinian theory of cultural evolution can explain these unique characteristics. Not by Genes Alone offers a radical interpretation of human evolution, arguing that our ecological dominance and our singular social systems stem from a psychology uniquely adapted to create complex culture. Richerson and Boyd illustrate here that culture is neither superorganic nor the handmaiden of the genes. Rather, it is essential to human adaptation, as much a part of human biology as bipedal locomotion. Drawing on work in the fields of anthropology, political science, sociology, and economicsâand building their case with such fascinating examples as kayaks, corporations, clever knots, and yams that require twelve men to carry themâRicherson and Boyd convincingly demonstrate that culture and biology are inextricably linked, and they show us how to think about their interaction in a way that yields a richer understanding of human nature. In abandoning the nature-versus-nurture debate as fundamentally misconceived, Not by Genes Alone is a truly original and groundbreaking theory of the role of culture in evolution and a book to be reckoned with for generations to come. âI continue to be surprised by the number of educated people (many of them biologists) who think that offering explanations for human behavior in terms of culture somehow disproves the suggestion that human behavior can be explained in Darwinian evolutionary terms. Fortunately, we now have a book to which they may be directed for enlightenment . . . . It is a book full of good sense and the kinds of intellectual rigor and clarity of writing that we have come to expect from the Boyd/Richerson stable.ââRobin Dunbar, Nature âNot by Genes Alone is a valuable and very readable synthesis of a still embryonic but very important subject straddling the sciences and humanities.ââE. O. Wilson, Harvard University
We can summarize our results as follows. First, the canonical model is not supported in any society studied. Second, there is considerably more behavioral variability across groups than had been found in previous cross-cultural research, and the canonical model fails in a wider variety of ways than in previous experiments. Third, group-level differences in economic organization and the degree of market integration explain a substantial portion of the behavioral variation across societies: the higher the degree of market integration and the higher the payoffs to cooperation, the greater the level of cooperation in experimental games. Fourth, individual-level economic and demographic variables do not explain behavior either within or across groups. Fifth, behavior in the experiments is generally consistent with economic patterns of everyday life in these societies.
International management studies have been based primarily on the comparison of managerial behavior in countries around the world. Often these studies have implied that business people behave similarly with their domestic colleagues as with their foreign counterparts. In questioning that assumption, this study tests whether intra-cultural behavior accurately predicts cross-cultural behavior. Using a negotiation simulation and a sample of 462 Japanese, American, and Canadian businesspeople, behaviors in cross-cultural negotiations were found to differ in some important ways from those in intra-cultural negotiations.© 1989 JIBS. Journal of International Business Studies (1989) 20, 515–537
This paper presents the results of a within-subject experiment testing whether an increase in the monetary stakes by a factor of 50 – which had never been done before – influences individual behavior in a simple ultimatum bargaining game. Contrary to current wisdom, we found that lowest acceptable offers stated by the responder are proportionally lower in the high-stake condition than in the low-stake condition. This result may be interpreted in terms of the type of utility functions which characterize the subjects. However, in line with prior results, we find that an important increase of the monetary stakes in the ultimatum game has no effect on the offers made by the proposer. Yet, the present research suggests that the reasons underlying these offers are quite different when the stakes are high.
We report the results of experiments conducted over the internet between two different laboratories. Each subject at one site is matched with a subject at another site in a trust game experiment. We investigate whether subjects believe they are really matched with another person, and suggest a methodology for ensuring that subjects’ beliefs are accurate. Results show that skepticism can lead to misleading results. If subjects do not believe they are matched with a real person, they trust too much: i.e., they trust the experimenter rather than their partner. Copyright Springer Science + Business Media, LLC 2006
This paper studies voluntary public good provision in the laboratory, in a cross-cultural experiment conducted in the United States and Japan. Our environment differs from the standard voluntary contribution mechanism because subjects first decide whether or not to participate in providing this non-excludable public good. This participation decision is conveyed to the other subject prior to the subjects' contribution decisions. We find that only the American data are consistent with the evolutionary-stable-strategy Nash equilibrium predictions, and that behavior is significantly different across countries. Japanese subjects are more likely to act spitefully in the early periods of the experiment, even though our design changes subject pairings each period so that no two subjects ever interact twice. Surprisingly, this spiteful behavior eventually leads to more efficient public good contributions for Japanese subjects than for American subjects. Copyright Kluwer Academic Publishers 2002
Evidence shows that real-effort investments can affect bilateral bargaining outcomes. This paper investigates whether similar investments can inhibit equilibrium convergence of experimental markets. In one treatment, sellers’ relative effort affects the allocation of production costs, but a random productivity shock ensures that the allocation is not necessarily equitable. In another treatment, sellers’ effort increases the buyers’ valuation of a good. We find that effort investments have a short-lived impact on trading behavior when sellers’ effort benefits buyers, but no effect when effort determines cost allocation. Efficiency rates are high and do not differ across treatments.
We can summarize our results as follows. First, the canonical model is not supported in any society studied. Second, there is considerably more behavioral variability across groups than had been found in previous cross-cultural research, and the canonical model fails in a wider variety of ways than in previous experiments. Third, group-level differences in economic organization and the degree of market integration explain a substantial portion of the behavioral variation across societies: the higher the degree of market integration and the higher the payoffs to cooperation, the greater the level of cooperation in experimental games. Fourth, individual-level economic and demographic variables do not explain behavior either within or across groups. Fifth, behavior in the experiments is generally consistent with economic patterns of everyday life in these societies.
How much do cultural biases affect economic exchange? We answer this question by using data on bilateral trust between European
countries. We document that this trust is affected not only by the characteristics of the country being trusted, but also
by cultural aspects of the match between trusting country and trusted country, such as their history of conflicts and their
religious, genetic, and somatic similarities. We then find that lower bilateral trust leads to less trade between two countries,
less portfolio investment, and less direct investment, even after controlling for the characteristics of the two countries.
This effect is stronger for goods that are more trust intensive. Our results suggest that perceptions rooted in culture are
important (and generally omitted) determinants of economic exchange.
In an experiment comparing two-person bargaining and multiperson markets in Israel, Japan, the United States, and Yugoslavia, market outcomes converged to equilibrium everywhere, with no payoff-relevant differences between countries. Bargaining outcomes were everywhere different from equilibrium predictions (both in agreements and in the substantial frequency of disagreements) and differences were observed between countries. Because of the experimental design, the fact that the market behavior is the same in all countries supports the hypothesis that the observed differences are not due to differences in languages, currencies, or experimenters, but may tentatively be attributed to cultural differences. Copyright 1991 by American Economic Association.
Gender is rarely included as a factor in economics models. However, recent work in experimental economics, as well as in psychology and political science, suggests that gender is an important determinant of economic and strategic behavior. We examine gender differences in bargaining using the ‘‘trust game’ ’ introduced by Joyce Berg et al. (1995). 1 In this two-person game, the ‘‘proposer’ ’ is given a choice of sending some, all, or none of his or her $10 experimental payment to an anonymous partner, the ‘‘responder.’ ’ The experimenter triples any money sent. The responder then chooses how much of his or her total wealth (his or her $10 experimental payment plus the tripled money) to return to the proposer. Any money the responder does not return may be kept (thus the responder is playing a dictator game with his or her endowment plus three times the amount the proposer sent). The unique subgame-perfect Nash equilibrium is for the proposer to send no money and for the responder to return none. For U.S. subjects, Berg et al. found that 30 of 32 proposers deviated from this economic equilibrium and sent some money to their partners (the average amount sent was $5.16). In
Environments with public goods are a wonderful playground for those interested in delicate experimental problems, serious theoretical challenges, and difficult mechanism design issues. In this chapter I will look at one small but fundamental part of the rapidly expanding experimental research. In Section 1, I describe a very simple public good experiment - what it is, what some theories predict, what usually happens, and why we should care - and then provide a methodological and theoretical background for the rest of the chapter. In Section 2, I look at the fundamental question: are people selfish or cooperative in volunteering to contribute to public good production? We look at five important early experiments that have laid the foundations for much that has followed. In Section 3, I look at the range of experimental research which tries to identify and study those factors which increase cooperation. In order to help those new to experimental work I have tried to focus on specific experimental designs in Section 2 and on general results and knowledge in Section 3. The reader will find that the public goods environment is a very sensitive one with much that can affect outcomes but are difficult to control. The many factors interact with each other in unknown ways. Nothing is known for sure. Environments with public goods present a serious challenge even to skilled experimentalists and many opportunities for imaginative work.
Originally published in 1966 the author challenges the accepted theories of group conflict of the time, such as frustration and maladjustment. For him conflict and its accompanying aggressiveness are features of interaction between groups and he supports this theory with a detailed experimental study of controlled groups. At the time of publication, Dr Otto Klineberg, Director of the International Centre for Intergroup Relations at the Sorbonne wrote: 'Social scientists everywhere owe a great debt of gratitude to Professor Sherif. The distinguished series of publications for which he and his co-workers are responsible have an honoured place in our libraries. In particular, his contributions to the field of intergroup relations are outstanding; his concept of "superordinate goals", based on a combination of theoretical insight and brilliant experimentation, has become a household word for those concerned with this significant problem. In his new volume, Group Conflict and Co-operation, he carries his analysis much further, not only describing the results of several original investigations, but also building a theoretical appraisal of an extensive research literature. The author has made still another significant contribution toward a better understanding of one of the most complex and disturbing phenomena of our time.'
The hypothesis that a cross-national interaction increases ethnic role salience was investigated in a laboratory setting. Subjects and confederates engaged in free social interaction, and sub-sequently Ss were required to describe the other person, how they thought the other person perceived them, and how they saw themselves. The experiment was run under three conditions: a) Australian Ss interacting with an Australian confederate (C); b) Australian Ss interacting with an Asian C; and c) Asian Ss interacting with an Australian C. The frequency of ethnic or racial references in the three response categories constituted the dependent variable. More ethnic responses occurred in the two cross-national conditions than in the nationally homogeneous group; and in the cross-national conditions, Asian Ss gave more ethnic responses than Australian Ss, this effect being mainly accounted for by differences in perceived ethnic role attribution. The implications of heightened national role awareness on race relations were briefly discussed.
Hawaiian-Japanese, Japanese, and Australian subjects were presented with a slide depicting either a Japanese or a Caucasian couple, and asked to describe three ways in which the two persons in the picture were similar. The dependent variable was ethnic role salience, measured in terms of the frequency and rank order of ethnic trait references appearing spontaneously in the descriptions. Contrary to orthodox role theory, but as predicted by McGuire's distinctiveness theory of selective perception, the Japanese described the Caucasian but not the Japanese couple in ethnic terms, the Australians described the Japanese but not the Caucasian couple in ethnic terms, and the Hawaiian-Japanese described both the Japanese and the Caucasian couple in ethnic terms.
Similarity breeds connection. This principle - the homophily principle - structures network ties of every type, including marriage, friendship, work, advice, support, information transfer, exchange, comembership, and other types of relationship. The result is that people's personal networks are homogeneous with regard to many sociodemographic, behavioral, and intrapersonal characteristics. Homophily limits people's social worlds in a way that has powerful implications for the information they receive, the attitudes they form, and the interactions they experience. Homophily in race and ethnicity creates the strongest divides in our personal environments, with age, religion, education, occupation, and gender following in roughly that order. Geographic propinquity, families, organizations, and isomorphic positions in social systems all create contexts in which homophilous relations form. Ties between nonsimilar individuals also dissolve at a higher rate, which sets the stage for the formation of niches (localized positions) within social space. We argue for more research on: (a) the basic ecological processes that link organizations, associations, cultural communities, social movements, and many other social forms; (b) the impact of multiplex ties on the patterns of homophily; and (c) the dynamics of network change over time through which networks and other social entities co-evolve.
This paper presents the results of experiments carried out in two countries, Bulgaria and Germany, with different allocation rules (first- vs. second-price - auction vs. fair division game). The data analysis of the sealed-bid, private value-contests compares the bid functions, some features of the bidding behavior as well as the efficiency rates and the price expectations in both countries. The main results obtained in Germany were replicated by the Bulgarian participants.1
We compare tax evasive behavior in a country in transition from communism to that in a developed economy by running an experiment across distinct social groups in Albania and the Netherlands. Aside from the tax compliance decision, subjects choose a source of income, where one type enables subsequent tax evasion. We show that they take the possibility of evasion into account when deciding on the income source. This yields potential allocative inefficiency in the labor market. In addition, Dutch subjects evade more than the Albanians. We argue that the different levels of tax evasion outside of the laboratory in the two types of countries can be attributed to distinct formal tax institutions.
In this paper cultural factors are incorporated into a behavioral model of economic growth and development and the circumstances under which culture can make a difference are articulated. In this context, the question of the long run survival, in a competitive environment, of firms and societies imbued with cultural precepts that are not conducive to growth and development, is addressed. This discussion attempts to redress a gap in economic theory, which does not well incorporate cultural factors as independent and causally substantive variables.
In a study of public good and solidarity experiments conducted in eastern and western Germany, we found in both games that eastern subjects behave in a significantly more selfish manner than do western subjects. Besides that we found that many qualitative results of both data sets are similar. Since our experiments were conducted in two parts of one nation, we present an unusually well controlled cross-cultural study by avoiding difficulties that usually arise in multinational settings. We conclude that cooperation and solidarity behavior seem to depend strongly on different culture-specific norms resulting from opposing economic and social histories in the two parts of Germany.
We compare the results of a one-shot investment game, studied earlier by Berg et al. [Games and Economic Behavior 10 (1995) 122], for France and Germany. In this game, player A is the trustor and player B the trustee. The average level of investment is significantly larger in Germany, but the level of reciprocity is not significantly different between the two countries. This implies that German B-players earned significantly more than French B-players. Furthermore, in both countries B-players earned significantly more than A-players. Our results support Fukuyama’s conjecture that the level of trust is higher in Germany than in France, a situation which can explain a higher rate of investment and a higher level of performance. However, our results also show that the increased revenue which is attributable to the higher level of trust, is not shared in a more equitable way, but essentially increases B-players’ payoffs. Finally, based on an intercultural trust experiment, we show that French A subjects did not find German B subjects less trustworthy and German A subjects did not find French B subjects less trustworthy.
This paper presents a parameter covariance matrix estimator which is consistent even when the disturbances of a linear regression model are heteroskedastic. This estimator does not depend on a formal model of the structure of the heteroskedasticity. By comparing the elements of the new estimator to those of the usual covariance estimator, one obtains a direct test for heteroskedasticity, since in the absence of heteroskedasticity, the two estimators will be approximately equal, but will generally diverge otherwise. The test has an appealing least squares interpretation.
People deviate from the predictions of game theory in two systematic ways. They are not purely self-interested (they care about fairness and try to cooperate with others), and they do not always consider what other players will do before making choices. However, with experience, these deviations sometimes disappear. People learn when they can afford to be unfair and what others will do; their behavior often converges to a game-theoretic equilibrium. A behavioral game theory that explains the initial deviations (and their disappearance) could be useful, especially if the learning process is modeled carefully and better data are gathered.
This paper proposes an experimental approach to studying different aspects of discrimination. We let participants play various
games with opponents of distinct ethnic affiliation. Strategies based upon such ethnic affiliation provide direct evidence
of ethnic discrimination. This approach was utilized to study ethnic discrimination in Israeli Jewish society. Using the “trust
game,” we detected a systematic mistrust toward men of Eastern origin. A “dictator game” experiment indicated that this discrimination
was due to (mistaken) ethnic stereotypes and not to a “taste for discrimination.” The “ultimatum game” enabled us to trace
another ethnic stereotype that reversed the discrimination's direction. One of the surprising results is that this ethnic
discrimination is an entirely male phenomenon.
This paper presents evidence that “social capital” matters for measurable economic performance, using indicators of trust
and civic norms from the World Values Surveys for a sample of 29 market economies. Memberships in formal groups—Putnam's measure
of social capital—is not associated with trust or with improved economic performance. We find trust and civic norms are stronger
in nations with higher and more equal incomes, with institutions that restrain predatory actions of chief executives, and
with better-educated and ethnically homogeneous populations.
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.
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.
This paper studies behavior in experiments with a linear voluntary contributions mechanism for public goods conducted in Japan, the Netherlands, Spain and the U.S.A. The same experimental design was used in the four countries. Our `contribution function' design allows us to obtain a view of subjects' behavior from two complementary points of view. It yields information about situations where, in purely pecuniary terms, it is a dominant strategy to contribute all the endowment and about situations where it is a dominant strategy to contribute nothing. Our results show, first, that differences in behavior across countries are minor. We find that when people play `the same game' they behave similarly. Second, for all four countries our data are inconsistent with the explanation that subjects contribute only out of confusion. A common cooperative motivation is needed to explain the data.
This paper reports the findings of a meta-analysis of 37 papers with 75 results from ultimatum game experiments. We find that on average the proposer offers 40% of the pie to the responder. This share is smaller for larger pie sizes and larger when a strategy method is used or when subjects are inexperienced. On average 16% of the offers is rejected. The rejection rate is lower for larger pie sizes and for larger shares offered. Responders are less willing to accept an offer when the strategy method is employed. As the results come from different countries, meta-analysis provides an alternative way to investigate whether bargaining behavior in ultimatum games differs across countries. We find differences in behavior of responders (and not of proposers) across geographical regions. With one exception, these differences cannot be attributed to various cultural traits on which for instance the cultural classifications of Hofstede (1991) and Inglehart (2000) are based.
This paper propose an experimental approach to studying different aspects of discrimination. Experiment participants played various games with opponents of distinct ethnic affiliation. When strategic choices depend upon this ethnic affiliation, we gain direct evidence of ethnic discrimination.
[eng] Transportation costs and monopoly location in presence of regional disparities. . This article aims at analysing the impact of the level of transportation costs on the location choice of a monopolist. We consider two asymmetric regions. The heterogeneity of space lies in both regional incomes and population sizes: the first region is endowed with wide income spreads allocated among few consumers whereas the second one is highly populated however not as wealthy. Among the results, we show that a low transportation costs induces the firm to exploit size effects through locating in the most populated region. Moreover, a small transport cost decrease may induce a net welfare loss, thus allowing for regional development policies which do not rely on inter-regional transportation infrastructures. cost decrease may induce a net welfare loss, thus allowing for regional development policies which do not rely on inter-regional transportation infrastructures. [fre] Cet article d�veloppe une statique comparative de l'impact de diff�rents sc�narios d'investissement (projet d'infrastructure conduisant � une baisse mod�r�e ou � une forte baisse du co�t de transport inter-r�gional) sur le choix de localisation d'une entreprise en situation de monopole, au sein d'un espace int�gr� compos� de deux r�gions aux populations et revenus h�t�rog�nes. La premi�re r�gion, faiblement peupl�e, pr�sente de fortes disparit�s de revenus, tandis que la seconde, plus homog�ne en termes de revenu, repr�sente un march� potentiel plus �tendu. On montre que l'h�t�rog�n�it� des revenus constitue la force dominante du mod�le lorsque le sc�nario d'investissement privil�gi� par les politiques publiques conduit � des gains substantiels du point de vue du co�t de transport entre les deux r�gions. L'effet de richesse, lorsqu'il est associ� � une forte disparit� des revenus, n'incite pas l'entreprise � exploiter son pouvoir de march� au d�triment de la r�gion l
The subjective value given to time, also known as the psychological interest rate, or the subjective price of time, is a core concept of the microeconomic choices. Individual decisions using a unique and constant subjective interest rate will refer to an exponential discounting function. However, many empirical and behavioural studies underline the idea of a non-flat term structure of subjective interest rates with a decreasing slope. Using an empirical test this paper aims at identifying in individual behaviours if agents see their psychological value of time decreasing or not. A sample of 243 individuals was questioned with regard to their time preference attitudes. We show that the subjective interest rates follow a negatively sloped term structure. It can be parameterized using two variables, one specifying the instantaneous time preference, the other characterizing the slope of the term structure. A trade-off law called “balancing pressure law” is identified between these two parameters. We show that the term structure of psychological rates depends strongly on gender, but appears not linked with life expectancy. In that sense, individual subjective time preference is not exposed to a tempus fugit effect. We also question the cross relation between risk aversion and time preference. On the theoretical ground, they stand as two different and independent dimensions of choices. However, empirically, both time preference attitude and slope seem directly influenced by the risk attitude.
The financial crisis of 2008, which started with an initially well-defined epicenter focused on mortgage backed securities (MBS), has been cascading into a global economic recession, whose increasing severity and uncertain duration has led and is continuing to lead to massive losses and damage for billions of people. Heavy central bank interventions and government spending programs have been launched worldwide and especially in the USA and Europe, with the hope to unfreeze credit and boltster consumption. Here, we present evidence and articulate a general framework that allows one to diagnose the fundamental cause of the unfolding financial and economic crisis: the accumulation of several bubbles and their interplay and mutual reinforcement has led to an illusion of a ``perpetual money machine'' allowing financial institutions to extract wealth from an unsustainable artificial process. Taking stock of this diagnostic, we conclude that many of the interventions to address the so-called liquidity crisis and to encourage more consumption are ill-advised and even dangerous, given that precautionary reserves were not accumulated in the ``good times'' but that huge liabilities were. The most ``interesting'' present times constitute unique opportunities but also great challenges, for which we offer a few recommendations.
The in-group-out-group bias is among the most well documented and widely observed phenomenon in the social sciences. Despite its role in hiring decisions and job discrimination, negotiations, and conflict and competition between groups, economists have paid little attention to the in-group-out-group bias. We question the universality of the bias by conducting field experiments to test whether it extends to the cooperative behavior of one of the most successful and best-known modern collective societies, the Israeli kibbutz. The facts that kibbutz members have voluntarily chosen their lifestyle of cooperation and egalitarianism, the ease with which they could join the surrounding capitalist society and their disproportionate involvement in social and national causes suggest that if ever there was a society of individuals whose cooperativeness extends equally to members and non-members, the kibbutz is it. Nonetheless, our results indicate that kibbutz members display higher levels of cooperation when paired with anonymous kibbutz members than when paired with city residents. In fact, when paired with city residents, kibbutz members’ observed levels of cooperation are identical to those of the city residents. Moreover, we show that self-selection rather than kibbutz socialization largely accounts for the extent to which kibbutz members are cooperative.
Although economics is not commonly thought to be an experimental science, laboratory methods are being increasingly used as economic theories become more sophisticated. It is often possible to structure payoffs and procedures so that a theory is tested on its domain, with all structural assumptions satisfied. If the theory fails, individual components can be tested; if the theory works, it can be stressed with procedures that violate the structural assumptions in carefully chosen directions. Applications of this experimental method have been motivated by three distinct sets of issues: the relative efficiencies of alternative market institutions, the predictions and applications of game theory, and the behavioral validity of expected utility theory. This paper presents specific examples from each of these areas to highlight the usefulness of experimentation. Common objections to this methodology are also discussed, as are some of the principal lessons that have been learned, both about economic behavior, and about how to evaluate theoretic propositions in the laboratory.
:anexperimental study
- A E Roth
- V Prasnikar
- Okuno
- M Fujiwara
- S Zamir
Roth,A.E.,Prasnikar,V.,Okuno-Fujiwara,M.,Zamir,S.,1991.BargainingandmarketbehaviourinJerusalem,Ljubljana,PittsburghandTokyo:anexperimental study. American Economic Review 81 (5), 1068–1095