Astrid Matthey’s research while affiliated with Max-Planck-Institut für Ökonomik and other places

Using a laboratory experiment, we examine whether voluntary sanctions induce subjects to coordinate more efficiently in a repeated minimum-effort game. While most groups first experience Pareto inferior coordination in a baseline treatment, the level of effort increases substantially once ex post sanctioning opportunities are introduced, that is, when one can assign costly punishment points to other group members to reduce their payoffs. We compare the effect of this voluntary punishment possibility with the effect of ex post costless communication, which in contrast to the punishment treatment increases efforts only temporarily and fails to bring the players to higher payoff equilibria permanently. Our results indicate that decentralized sanctions can play an important role as a coordination device in Pareto-ranked coordination settings. They also suggest that the motivations behind voluntary sanctions may be more general than usually put forth in the literature on cooperation games.

Self-signaling models predict less selfish behavior in a probabilistic giving setting as individuals are expected to invest in a pro-social identity. However, there is also substantial evidence that people tend to exploit situational excuses for selfish choices (for instance, uncertainty) and behave more selfishly. We contrast these two motivations (identity management and self-deception) experimentally in order to test which one is more prevalent in a reciprocal giving setting. Trustees' back transfer choices are elicited for five different transfer levels of the trustor. Moreover, we ask trustees to provide their back transfer schedule for different scenarios that vary the implementation probability of the back transfer. This design allows us to identify subjects who reciprocate and analyze how these reciprocators respond when self-image relevant factors are varied. Our results indicate that self-deception is prevalent when subjects make the back transfer choice. Twice as many subjects seem to exploit situational excuses than subjects who appear to invest in a pro-social identity. JEL classifications : C72, C91, D80, D91

We conduct a modified dictator game in order to analyze the role self-image concerns play in other-regarding behavior. While we generally follow Konow (2000), a cognitive dissonance-based model of other-regarding behavior in dictator games, we relax one of its assumptions as we allow for individual heterogeneity among individuals’ standards of behavior. Subjects’ self-image, their belief regarding the average socially appropriate behavior of others and our proxies for the cognitive dissonance costs are positively correlated with the dictator game choices.We also find that subjects whose choices involve two psychologically inconsistent cognitions indeed report higher levels of experienced conflict and take more time for their decisions (our proxies for cognitive dissonance).

A central understanding in experimental economics is that subjects’ decisions in the lab are independent of history. We test whether this assumption of between-experiment independence is indeed justified. We analyze experiments with an allocation decision (like a dictator or ultimatum game) and find that participation in previous experiments tends to increase the amount subjects allocate to themselves. Hence, independence between experiments cannot be presumed if subjects participate repeatedly. The finding has implications for the interpretation of previous allocation decision results and deserves attention when running future experiments.

This paper takes a critical look at the challenges and achievements in the reform of the Russian power industry. Russian politics emphasized restructuring and pri- vatization, which are widely seen as preconditions for attracting private investment. However, progress along this line has been slow and there are is little hope that the current deadlock may be overcome anytime soon. This paper argues that the main problems of the sectors originate from the regulatory system, which is why tari reform is the key issue.

We investigate to what extent genuine social preferences can explain observed other-regarding behavior. In a dictator game variant subjects can choose whether to learn about the consequences of their choice for the receiver. We find that a majority of subjects showing other-regarding behavior when the payoffs of the receiver are known, choose to ignore these consequences if possible. This behavior is inconsistent with preferences about outcomes. Other-regarding behavior may also be explained by avoiding cognitive dissonance as in Konow (2000). Our experiment's choice data is in line with this approach. In addition, we successfully relate individual behavior to proxies for cognitive dissonance.

If resource consumption is to be reduced through economic “de-growth”, individuals in industrialized countries may have to accept a reduction in their consumption levels. In democratic societies, implementing this process requires the consent of a majority of the population. However, as long as people have high reference levels of consumption, lower consumption will induce feelings of loss, and hence evoke resistance. This paper summarizes recent experimental evidence on some of the factors that determine the utility costs involved in decreasing consumption. The results suggest that the acceptance of economic de-growth would be facilitated if people's material aspirations were moderated, and the extent to which material achievements are emphasized in our daily environment were reduced.An analysis of the financial and economic crisis that developed during 2008 suggests that it will not contribute to either of these points. Rather, by increasing the public's focus on the economic sphere even beyond pre-crisis levels, it may lead to a further decrease in the acceptance of de-growth policies in the population.

Experimental and empirical evidence shows that the utility an individual derives from a certain state depends on the reference state she compares it to. According to economic theory, the reference state is determined by past, present and future outcomes of either the individual herself or her reference group. The experiment described in this paper suggests that, in addition, reference states depend to a significant degree on environmental factors not relevant for outcomes. It indicates that reference states - and hence utility - can relatively easily be influenced without changing people’s outcomes, e.g., through priming.

Experimental and empirical evidence shows that the utility an individual de-rives from a certain state depends on the reference state she compares it to. According to economic theory, this reference state is determined by the past, present and future outcomes of either the individual herself or her reference group. The experiment described in this paper suggests that, in addition, refer-ence states depend to a significant degree on non outcome-relevant environmental factors. It shows that reference states -and hence utility -can relatively easily be manipulated without changing people's outcomes.