13 - punishment and the grimmer side Flashcards
peoples contributions in public good games are motivated by 3 things
error
strategic considerations
other-regarding preferences
what are other regarding preferences
makes them want to contribute to help others
also willing to harm others
what is reciprocity
desire to reciprocate
- be kind to people that are kind
- harm people that harm
what is the reciprocity model preseneted by Dufwenberg and Kirchsteiger
- overall utility is weighted sum of 2 components: material payoffs + reciprocation payoff
- people make tradeoffs between these 2 payoffs
> utility depends on perceived intentions
what is the reciprocation payoff in
Dufwenberg
- if j is kind to i - i’s payoff is higher - and she is kinder in return
- if j is unkind - i’s payoff higher the unkinder she is
> increased payoff when you recirpocate
* willing to harm others at a cost - makes you happier
what is aversion to inequality
Fehr Schmidt preferences
- aversion to both directions of inequality, but especially towards unfavourable inequality
- get disutility from the inequality
what are Fehr Schmidt preferences
suggests that peoples utility from outcomes is influenced not only by material payoffs but also by fairness considerations and the distribution of payoffs amongst others
- more money for yourself and other person is good - if you are better off than them
- more money for them is bad if they are better off than me
- utility function depends material payoff + whether there is inequality + who is better off than who
what 2 reasons explain why people might be willing to sacrifice personal gains to enforce fairness or punish
- inequality aversion
- reciprocity
when do you get disutility in Fehr Schmidt preferences
- disutility if you are better off than others, and if others are better off than you
- especially averse to being worse off than others
explain the indifference curves
Fehr Schmidt preferences
triangle
- above the equality line = upward sloping
- below the equality line = downward sloping
- if you hurt xj enough - it will increase the utility of me
what do the ICs show about harm
I is willing to face a small cost, making both people worse off
- if j is hurt enough relative to i
* would be on a higher utility curve
- get increased utility from seeing j get hurt if j is advantaged
how could you prevent free riding problem and prevent the decay of contributions
punishment opportunities to VCM
what is the main paper
Fehr and Gachter 2000
Fehr and Gachter 2000
experimental design
VCM game
- conditions with and without punishment opportunities (punishment + no punishment phases)
- treatments = partners + strangers
what was the punishment conditions
- play a round - get stage 1 payoffs
- after the round players are told the contributions of others and can assign punishment points to them anonymously
- punishment costs both
- for each punishment point received - players points from first stage are reduced by 10%
- after players told how many punishement points they have been given