We demonstrate that a simple model, constructed on the premise that people are motivated by both their pecuniary payoff and their relative payoff standing, organizes a large and seemingly disparate set of laboratory observations as one consistent pattern The model is incomplete information but nevertheless posed entirely in terms of directly observable variables The model explains observations from games where equity is thought to be a factor, such as ultimatum and dictator, games where reciprocity is thought to play a role, such as the prisoner's dilemma and gift exchange, and games where competitive behavior is observed, such as Bertrand markets (JEL C78, C90, D63, D64, H41)

/pdf/erc-a-theory-of-equity-reciprocity-and-competition-9lhkqwqjzg.pdf

ERC: A Theory of Equity, Reciprocity, and Competition

With the publication of The Logic of Collective Action in 1965, Mancur Olson challenged a cherished foundation of modern democratic thought that groups would tend to form and take collective action...

/pdf/collective-action-and-the-evolution-of-social-norms-39il4hoxmh.pdf

Collective Action and the Evolution of Social Norms

This article discusses the economic implications of reciprocity. A long-standing tradition in economics views human beings as exclusively self-interested. In most economic accounts of individual behavior and aggregate social phenomena, the vast forces of greed are put at the center of the explanation. However, many people deviate from purely self-interested behavior in a reciprocal manner. Reciprocity means that in response to friendly actions, people are frequently much nicer and much more cooperative than predicted by the self-interest model; conversely, in response to hostile actions they are frequently much more nasty and even brutal. There is considerable evidence that a substantial fraction of people behave according to this dictum: People repay gifts and take revenge even in interactions with complete strangers and even if it is costly for them and yields neither present nor future material rewards. This notion of reciprocity is thus very different from kind or hostile responses in repeated interactions that are solely motivated by future material gains.

/pdf/fairness-and-retaliation-the-economics-of-reciprocity-3kli7g3xjv.pdf

Fairness and Retaliation: The Economics of Reciprocity

In recent years, there has been a steadily increasing interest on the part of economists in happiness research. We argue that reported subjective well-being is a satisfactory empirical approximation to individual utility and that happiness research is able to contribute important insights for economics. We report how the economic variables income, unemployment and inflation affect happiness as well as how institutional factors, in particular the type of democracy and the extent of government decentralization, systematically influence how satisfied individuals are with their life. We discuss some of the consequences for economic policy and for economic theory.

/pdf/what-can-economists-learn-from-happiness-research-tp056e628i.pdf

What can economists learn from happiness research

https://www.econ.uzh.ch/dam/jcr:ffffffff-9758-127f-0000-00003449356a/ArePeopleCondCooperative.pdf

Are people conditionally cooperative? Evidence from a public goods experiment

Is there a way of matching donations that avoids crowding out? We introduce a novel matching method where the matched amount is allocated to a different project, present some simple theoretical considerations that predict reduced crowding out or crowding in (depending on the degree of substitutability between the two projects) and present evidence from a large-scale natural field experiment and a laboratory experiment. Similar to findings in the literature, conventional matching for the same project results in partial crowding out in the field experiment and, as predicted, crowding out is reduced under the novel matching scheme. The lab experiment provides more fine-tuned evidence for the change in crowding and yields further support for the theory: the novel matching method works best when the two projects are complements rather than substitutes.

Matching Donations Without Crowding Out

Do donors examine a single ask to donate in isolation or do they consider that other and future asks may come along? In the first year of our field experiment, we vary whether or not potential donors are informed that the ask will be repeated in the following year. This information has dramatic effects on the amount given: if present, donations fall by around 40%. This indicates strong support for the prevalence of narrow framing which benefits the fundraiser. In the second year of our experiment we show that previous non-donors behave as if expecting future calls, regardless of whether they have been explicitly told or have simply observed two subsequent asks, that is, they are de-biased through learning. Finally, we document that donors from year 1 tend to give the same amount again in year 2 which generates a long-run effect of initial narrow framing on donation amounts.

Giving Once, Giving Twice: A Two-Period Field Experiment on Narrow Framing in Charitable Giving

Human cooperation has been explained through rationality as well as heuristics-based models. Both model classes share the feature that knowledge of payoff functions is weakly beneficial for the emergence of cooperation. Here, we present experimental evidence to the contrary. We let human subjects interact in a competitive environment and find that, in the long run, access to information about own payoffs leads to less cooperative behaviour. In the short run subjects use naive learning heuristics that get replaced by better adapted heuristics in the long run. With more payoff information subjects are less likely to switch to pro-cooperative heuristics. The results call for the development of two-tier models for the evolution of cooperation.

Payoff information hampers the evolution of cooperation

/pdf/payoff-information-hampers-the-evolution-of-cooperation-3wikkrjw5n.pdf

Payoff information hampers the evolution of cooperation.

Some companies engage in mass fundraising - where thousands of recipients are asked to make small donations - in addition to their core business. Via a corpo-rate social responsibility (CSR) channel this may increase sales. However, recent research uncovered significant "ask avoidance" which, if present, could imply that fundraising activities may harm a company's core business. Here we examine how asking for donations affects ticket sales of a publically owned leading opera company. In two large-scale randomized controlled trials with a total of over 50,000 opera visitors, who are asked to donate for a social youth project, we find that donations can crowd out ticket expenditure during a campaign. But for the longer run we observe a precisely estimated null effect.

https://www.econstor.eu/bitstream/10419/242285/1/ii19-304r.pdf

Steffen Huck

Papers

Matching Donations Without Crowding Out

Giving Once, Giving Twice: A Two-Period Field Experiment on Narrow Framing in Charitable Giving

Payoff information hampers the evolution of cooperation

Payoff information hampers the evolution of cooperation.

Can mass fundraising harm your core business? A field experiment on how fundraising affects ticket sales