Simon Gaechter

Bio: Simon Gaechter is an academic researcher from Center for Economic Studies. The author has contributed to research in topics: Incomplete contracts & Norm of reciprocity. The author has an hindex of 4, co-authored 4 publications receiving 4630 citations. Previous affiliations of Simon Gaechter include Institute for the Study of Labor & University of Zurich.

Altruistic Punishment in Humans

Abstract: Human cooperation is an evolutionary puzzle. Unlike other creatures, people frequently cooperate with genetically unrelated strangers, often in large groups, with people they will never meet again, and when reputation gains are small or absent. These patterns of cooperation cannot be explained by the nepotistic motives associated with the evolutionary theory of kin selection and the sel®sh motives associated with signalling theory or the theory of reciprocal altruism. Here we show experimentally that the altruistic punishment of defectors is a key motive for the explanation of cooperation. Altruistic punishment means that individuals punish, although the punishment is costly for them and yields no material gain. We show that cooperation ¯ourishes if altruistic punishment is possible, and breaks down if it is ruled out. The evidence indicates that negative emotions towards defectors are the proximate mechanism behind altruistic punishment. These results suggest that future study of the evolution of human cooperation should include a strong focus on explaining altruistic punishment.

Fairness and Retaliation

Abstract: In this chapter we examine evidence from different social sciences and argue that considerations of fairness and retaliation shape human behaviour to a very large degree. We contend that the importance of fairness and retaliation also extends to many important economic decisions. The incorporation of these motivations therefore helps us to understand economic outcomes in many different institutional environments.

Do Incentive Contracts Crowd out Voluntary Cooperation

Abstract: In this paper we provide experimental evidence indicating that incentive contracts may cause a strong crowding out of reciprocity-driven voluntary cooperation. This crowding out effect constitutes costs of incentive provision that have been largely neglected by economists. In our experiments the crowding out effect is so strong that the incentive contracts are less efficient than contracts without any incentives. Principals, nonetheless, prefer the incentive contracts because they allow them to appropriate a much larger share of the (smaller) total surplus and are, hence, more profitable for them.

Fairness in the Labour Market - A Survey of Experimental Results

Abstract: In this chapter we provide a selective survey of experiments to investigate the potential of social motivations in explaining labour market phenomena. We argue that laboratory experiments are a useful instrument to explore issues in labour market theory and personnel economics. Our starting point is the observation that employment relations are frequently governed by incomplete contracts. We show that the norm of reciprocity that leads to gift exchanges is an effective contract enforcement device under conditions of contractual incompleteness. We then present evidence that gift exchange can explain various labour market phenomena that are puzzles from the viewpoint of standard economic theory. Further issues in the related field of personnel economics that have by now been subjected to an experimental scrutiny concern characteristics of the employment relation and the issues of motivation and incentives systems. We conclude by pointing out the complementary nature of experiments to more conventional methods of data gathering.

A Theory of Fairness, Competition and Cooperation

Abstract: There is strong evidence that people exploit their bargaining power in competitive markets but not in bilateral bargaining situations. There is also strong evidence that people exploit free-riding opportunities in voluntary cooperation games. Yet, when they are given the opportunity to punish free riders, stable cooperation is maintained although punishment is costly for those who punish. This paper asks whether there is a simple common principle that can explain this puzzling evidence. We show that if a fraction of the people exhibits inequality aversion the puzzles can be resolved.

The WEIRDest People in the World

Abstract: Behavioral scientists routinely publish broad claims about human psychology and behavior in the world's top journals based on samples drawn entirely from Western, Educated, Industrialized, Rich, and Democratic (WEIRD) societies. Researchers - often implicitly - assume that either there is little variation across human populations, or that these "standard subjects" are as representative of the species as any other population. Are these assumptions justified? Here, our review of the comparative database from across the behavioral sciences suggests both that there is substantial variability in experimental results across populations and that WEIRD subjects are particularly unusual compared with the rest of the species - frequent outliers. The domains reviewed include visual perception, fairness, cooperation, spatial reasoning, categorization and inferential induction, moral reasoning, reasoning styles, self-concepts and related motivations, and the heritability of IQ. The findings suggest that members of WEIRD societies, including young children, are among the least representative populations one could find for generalizing about humans. Many of these findings involve domains that are associated with fundamental aspects of psychology, motivation, and behavior - hence, there are no obvious a priori grounds for claiming that a particular behavioral phenomenon is universal based on sampling from a single subpopulation. Overall, these empirical patterns suggests that we need to be less cavalier in addressing questions of human nature on the basis of data drawn from this particularly thin, and rather unusual, slice of humanity. We close by proposing ways to structurally re-organize the behavioral sciences to best tackle these challenges.

Five Rules for the Evolution of Cooperation

Abstract: Cooperation is needed for evolution to construct new levels of organization. Genomes, cells, multicellular organisms, social insects, and human society are all based on cooperation. Cooperation means that selfish replicators forgo some of their reproductive potential to help one another. But natural selection implies competition and therefore opposes cooperation unless a specific mechanism is at work. Here I discuss five mechanisms for the evolution of cooperation: kin selection, direct reciprocity, indirect reciprocity, network reciprocity, and group selection. For each mechanism, a simple rule is derived that specifies whether natural selection can lead to cooperation.

Understanding and sharing intentions: The origins of cultural cognition

Abstract: We propose that the crucial difference between human cognition and that of other species is the ability to participate with others in collaborative activities with shared goals and intentions: shared intentionality. Participation in such activities requires not only especially powerful forms of intention reading and cultural learning, but also a unique motivation to share psychological states with oth- ers and unique forms of cognitive representation for doing so. The result of participating in these activities is species-unique forms of cultural cognition and evolution, enabling everything from the creation and use of linguistic symbols to the construction of social norms and individual beliefs to the establishment of social institutions. In support of this proposal we argue and present evidence that great apes (and some children with autism) understand the basics of intentional action, but they still do not participate in activities involving joint intentions and attention (shared intentionality). Human children's skills of shared intentionality develop gradually during the first 14 months of life as two ontogenetic pathways intertwine: (1) the general ape line of understanding others as animate, goal-directed, and intentional agents; and (2) a species-unique motivation to share emotions, experience, and activities with other persons. The develop- mental outcome is children's ability to construct dialogic cognitive representations, which enable them to participate in earnest in the collectivity that is human cognition.