Instruction length and content: Effects on punishment behaviour in public goods games

Date: 2015-12-07
By: Abhijit Ramalingam (University of East Anglia)
Antonio J. Morales (Universidad de Malaga)
James M. Walker (Indiana University)
Instruction length and content have been shown to affect comprehension levels and decision times of experimental subjects in public goods games. However, to date, there is no evidence of a significant impact on behaviour. We investigate the effects of instruction length and content on comprehension and behaviour in a more complicated setting - a public goods game with punishment. We find that longer instructions, that include examples that highlight the positive externality associated with public goods contributions, increase the comprehension levels of subjects, significantly lowering the time taken to answer the pre-experiment quiz and make decisions. Importantly, the differences in instructions are also associated with significant differences in behaviour. On average, groups that receive shorter instructions fail to use punishment effectively to raise contribution levels while those that receive longer instructions sustain higher contribution levels over time. In the former case, groups target low contributors less frequently than appears necessary to induce greater cooperation.
Keywords: public goods, punishment, instruction length, decision times, contributions, punishment
JEL: C72 C91 C92 H41

The impact of group identity on coalition formation

Date: 2015-09-03
By: Denise Laroze (University of Essex)
David Hugh-Jones (University of East Anglia)
Arndt Leininger (Hertie School of Governance)
Bargaining and coalition building is a central part of modern politics. Typically, game-theoretic models cannot predict a unique equilibrium. One possibility is that coalitions are formed on the basis of social identity loyalty to a gender, ethnic or political in-group. We test the effect of gender, race and ideological distance on coalition formation in a majority-rule bargaining experiment. Despite the absence of any incentives to do so, we find that ideological distance significantly affects offers made to potential coalition partners. As a result, coalitions tend to be ideologically coherent, even though there is no ideological policy output. We conclude that social identity considerations can determine equilibria in coalition formation.
Keywords: coalition formation, laboratory experiments, Baron and Ferejon model, legislative bargaining, social identity

Emergence of networks and market institutions in a large virtual economy

Date: 2015
By: Kephart, Curtis
Friedman, Daniel
Baumer, Matt
A complete set of transactions, more than 40 million within a 1.8 year span, allows us to track the evolution of the trader network and the goods network in an on-line trading community. The computer platform was designed to make barter exchange as attractive as possible; money was not part of the design and all players were created equal. Yet, within weeks, several specific goods began to emerge as media of exchange, and not long after that various sorts of specialized traders began to appear. We track their progress using network-theoretic metrics such as node strength, assortativity, betweenness and closeness. By the end of our sample, virtually all trade was money-mediated and market makers played a major role.
Keywords: Multiple Money as Medium of Exchange,Market Makers,Virtual Economy,Market Efficiency,Network Analysis
JEL: B41 C45 D49 E42

Privacy, trust and social network formation

Date: 2015
By: Gaudeul, Alexia
Giannetti, Caterina
We study in the laboratory the impact of private information revelation on the selection of partners when forming individual networks. Our experiment combines a “network game" and a “public-good game". In the network game, individuals decide with whom to form a link with, while in the public-good game they decide whether or not to contribute. The variations in our treatments allow us to identify the effect of revealing one´s name on the probability of link formation. Our main result suggests that privacy mechanisms affect partner selection and the consequent structure of the network: when individuals reveal their real name, their individual networks are smaller but their profits are higher. This indicates that the privacy costs of revealing personal information are compensated by more productive links.
Keywords: privacy,social networks,public goods,trust
JEL: D12 D85

An experimental study of sorting in group contests

Date: 2015-12
By: Philip Brookins (Department of Economics, Florida State University)
John P. Lightle (Department of Economics, Virginia Commonwealth University)
Dmitry Ryvkin (Department of Economics, Florida State University)
We experimentally explore the effects of sorting and communication in lottery contests between groups of heterogeneous players whose within-group efforts are perfect complements. Subjects are assigned a type — A, B, C or D — that determines their cost of effort, with A having the lowest cost and D the highest cost, and are then assigned to one of the two two-player groups competing in the contest. Theory predicts that aggregate contest output increases in the variation in abilities between groups, i.e., the output is maximized by the most unbalanced sorting of players into groups — (A,B) vs. (C,D) — and minimized by the most balanced sorting — (A,D) vs. (B,C). That is, the equilibrium prediction goes against the “competitive balance" heuristic. In the absence of communication, this prediction is directionally confirmed, although the effect is not statistically significant. In the presence of within-group communication, however, we find that total output is 33% higher under the balanced sorting as compared to the unbalanced sorting — a reversal of the prediction, but in line with the heuristic. This result is driven by an increase in output by (B,C) groups under the balanced sorting and a strong decrease in output by the underdog (C,D) groups under the unbalanced sorting, relative to no communication. These results are at odds with previous studies that find that within-group communication always increases output, and suggest that the effect of communication depends strongly on the configuration of heterogeneity between and within groups. Competitive balance is confirmed as a robust sorting heuristic for sustaining competition and high effort provision in group contests.
Keywords: group contest, sorting, complementarity, heterogeneous players, experiment
JEL: C72 C91 D72 M54