Optimal Altruism in Public Good Provision

 

Date: 2014-01-29
By: Robert Hahn
Robert Ritz
URL: http://d.repec.org/n?u=RePEc:cam:camdae:1403&r=net
We present a model of altruistically-minded-yet rational-players contributing to a public good. A key feature is the tension between altruism and “crowding-out" effects (players’ efforts are strategic substitutes). We find that more altruistic behaviour can raise or reduce welfare, depending on the fine details of the environment. It is almost always optimal for a player to act more selfishly than her true preference. We discuss applications to a range of public good problems, including global climate policy. Our results highlight that it may be difficult to infer social preferences from observed behaviour.
Keywords: Altruism, climate policy, crowding out, public goods
JEL: D03 H23 H41 Q58
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Accepting Zero in the Ultimatum Game: Selfish Nash Response?

Date: 2012-01
By: Gianandrea Staffiero (Universitat Pompeu Fabra)
Filippos Exadaktylos (BELIS, Murat Sertel Center for Advanced Economic Studies,Istanbul Bilgi University)
Antonio M. Espín
URL: http://d.repec.org/n?u=RePEc:msc:wpaper:201203&r=net
The rejection of unfair proposals in ultimatum games is often quoted as evidence of other-regarding preferences. In this paper we focus on those responders who accept any proposals, setting the minimum acceptable offer (MAO) at zero. While this behavior could result from the randomization between the two payoff-maximizing strategies (i.e. setting MAO at zero or at the smallest positive amount), it also implies that the opponent’s payoff is maximized and the “pie†remains intact. We match subjects’ behavior as ultimatum responders with their choices in the dictator game, in two large-scale experiments. We find that those who set MAO at zero are the most generous dictators. Moreover, they differ substantially from responders whose MAO is the smallest positive offer, who are the greediest dictators. Thus, an interpretation of zero MAOs in terms of selfish, payoff-maximizing behavior could be misleading. Our evidence indicates that the restraint from punishing others can be driven by altruism and by the desire to maximize social welfare.
Keywords: ultimatum game, dictator game, altruism, social welfare, costly punishment, selfishness, social preferences
JEL: C93

Experimental Departures from Self-Interest when Competing Partnerships Share Output

 

Date: 2013-03-14
By: Cherry, Josh
Salant, Stephen
Uler, Neslihan
URL: http://d.repec.org/n?u=RePEc:rff:dpaper:dp-13-07&r=net
When every individual’s effort imposes negative externalities, self-interested behavior leads to socially excessive effort. To curb these excesses when effort cannot be monitored, competing output-sharing partnerships can form. With the right-sized groups, aggregate effort falls to the socially optimal level. We investigate this theory experimentally and find it makes correct qualitative predictions but there are systematic quantitative deviations, always in the direction of the socially optimal investment. By using data on subjects’ conjectures of each other’s behavior we show that deviations are consistent with both altruism and conformity (but not extremeness aversion).
Keywords: output-sharing, partnership solution, laboratory experiment, altruism, conformity

Is Giving Equivalent to Not Taking in Dictator Games?

Date: 2013-04
By: Korenok Oleg (Department of Economics, VCU School of Business)
Edward L. Millner (Department of Economics, VCU School of Business)
Laura Razzolini (Department of Economics, VCU School of Business)
URL: http://d.repec.org/n?u=RePEc:vcu:wpaper:1301&r=net
We answer the question: Is giving equivalent to not taking? We show that, if giving is equivalent to not taking, impure altruism could account for List’s (2007) finding that the payoff to recipients in a dictator game decreases when the dictator has the option to take. We examine behavior in dictator games with different taking options but equivalent final payoffs. We find that the recipients tend to earn more as the amount the dictator must take to achieve a given final payoff increases. We conclude that not taking is not equivalent to giving and agree with List (2007) that the current social preference models fail to rationalize the observed data.
Keywords: Dictator Game; Impure Altruism; Taking
JEL: C91