Behavioural Game Theory and Social Preferences

Question 1

Kagel & Wolfe (1999)

Answer 1

Questions inequality in Pareto damaging behaviour

Question 2

Kube et. al (2012)

Answer 2

Non-Monetary gifts more powerful Currency of reciprocity has an impact Examples include bottle and origami of cash notes to highlight effort

Cash =+5% effort, insignificant

Bottle = +15% effort, significant

Choice = Bottle Equivalent despite chooisng cash

Origami = +20% effort, significant

Question 3

Andreoni & Miller (2000)

Answer 3

Inequality increasing sacrifices to help others

Question 4

Fehr and Schmidt (1999)

Answer 4

Show difference aversion in Public Goods and Ultimatum games We dislike unfairness but more so when we are behind, kinked Utility curve as a function of xj Steeper if xj > xi

Key for use in making a distinction between Ultimatum and Dictator games, removes the positive offers in fear of rejection.

Question 5

Conlin, Lynn & O’Donoghue (2003)

Answer 5

Tipping increase if business setting or 1st Date

Question 6

List et. al (2004)

Answer 6

Anonymity decreases cooperation

Question 7

Gneezy, Haruvy & Yafe (2004)

Answer 7

Reluctant to impose negative externalises on others

Question 8

Haley and Fessler (2005)

Answer 8

Images of eyes increase generosity, eg. Checkouts and Church Collection Baskets

Question 9

Andreoni & Bernheim (2009)

Answer 9

Scrutiny increases fairness

Question 10

Falk, Fehr & Firschbacher (2003)

Answer 10

Choice set matters, ultimatum games see a variety of rejection rates

Idential outcomes are rejcted at different rates in the ultimatum game, depends upon the choice set that was available and provides evidence of reciprocity.

£8, £2 vs. £5, £5 (Rejected) but £10, £0 (Accepted)

Question 11

DellaVigna, List & Malmendier (2012)

Answer 11

Charity contributions increasing utility….or do we just dislike saying no? Social pressure is a key factor

Question 12

Camerer, Ho & Weigelt (1998)

Answer 12

Choices converge after learning

Question 13

Bandiera et. al (2005)

Answer 13

Relative incentives decrease productivity, workers partially internalise the externality - not wanting to hurt others UK fruit farm: productivity increases under piece rate despite lower pay of 70-80%, presence of friends also increases productivity particularly among small groups Impacts disappear when they can not monitor each other, reciprocity more prevalent here

Question 14

Vanberg (2008)

Answer 14

People like to stick to their word, don’t like to break promises Guilt Aversion + Lying Aversion…greater evidence for lying aversion

Mini dictator game but with random dictatorship

Question 15

Goeree & Holt (2001)

Answer 15

Traveller’s dilemma: pick an integer from 180-300, paid the lowest plus some transfer R from the higher to lower. NE consistent when R is high…despite irrelevance strategically Minimum effort coordination game, pick an effort level between 110-170; effort is not independent of costs! Higher costs lead to lower efforts despite NE predictions

Question 16

Ross & Ward (1996)

Answer 16

Language can swing the % of deviations in Prisoner’s Dilemma despite strictly dominant strategy, context matters

Question 17

Levitt & List (2007)

Answer 17

Actions are influenced by: i. Morals ii. Scrutiny iii. Stakes iv. Context v. Self-Selection

Question 18

Charness & Rabin (2002)

Answer 18

Construct formal games to test Self Interest Social Preferences Difference Aversion Competitive Preferences Reciprocity (+ and -)

• 1 in 3 subjects opt for the inquity averse choice even when completely costless
• 1 in 2 opt to sacrifice even when behind and increasing inequality

Question 19

Wilkinson & Klaes (2012)

Answer 19

Are humans able to randomise effectively..playing a MSNE? Significant MSNE departures, particularly for inexperienced players - too much alternation, too much balance and too many runs

We tend to recognise only 2-4 rounds of iteration

Centipede Game:

4 Rounds -> 6-8% take at Round 1

6 Rounds -> 1 % take at Round 1

Question 20

Camerer (2003)

Answer 20

One-shot, no reputation games: Ultimatum and Dictator games: 40-50% offers of splitting rarely rejected Average around 30-40% Hardly any >50%, 1 in 10 offer 0% Offers <20% rejected half the time

Question 21

Blount (1995)

Answer 21

Less likely to reject computer based outcomes over human choices

Question 22

Levine (2012)

Answer 22

Altruism is very small in magnitude, social preferences result in externalities

Question 23

Charness & Dufwnberg (2006)

Answer 23

“Guilt aversion” - people may act honestly to try and live up to expectations Importance of “second order beliefs” in sequential games even with hidden actions and equality

Question 24

Gino et al. (2011)

Answer 24

Impulsive cheating increases when depleted of self control or moral awareness - unhealthy food choices

Question 25

Axelrod (1984; 2006)

Answer 25

Repeated game prisoners dilemma has no pure strategy stable Equilibria Quick learning

Question 26

Reversed:

Questions inequality in Pareto damaging behaviour

Answer 26

Kagel & Wolfe (1999)

Question 27

Reversed:

Non-Monetary gifts more powerful Currency of reciprocity has an impact Examples include bottle and origami of cash notes to highlight effort

Cash =+5% effort, insignificant

Bottle = +15% effort, significant

Choice = Bottle Equivalent despite chooisng cash

Origami = +20% effort, significant

Answer 27

Kube et. al (2012)

Question 28

Reversed:

Inequality increasing sacrifices to help others

Answer 28

Andreoni & Miller (2000)

Question 29

Reversed:

Show difference aversion in Public Goods and Ultimatum games We dislike unfairness but more so when we are behind, kinked Utility curve as a function of xj Steeper if xj > xi

Key for use in making a distinction between Ultimatum and Dictator games, removes the positive offers in fear of rejection.

Answer 29

Fehr and Schmidt (1999)

Question 30

Reversed:

Tipping increase if business setting or 1st Date

Answer 30

Conlin, Lynn & O’Donoghue (2003)

Question 31

Reversed:

Anonymity decreases cooperation

Answer 31

List et. al (2004)

Question 32

Reversed:

Reluctant to impose negative externalises on others

Answer 32

Gneezy, Haruvy & Yafe (2004)

Question 33

Reversed:

Images of eyes increase generosity, eg. Checkouts and Church Collection Baskets

Answer 33

Haley and Fessler (2005)

Question 34

Reversed:

Scrutiny increases fairness

Answer 34

Andreoni & Bernheim (2009)

Question 35

Reversed:

Choice set matters, ultimatum games see a variety of rejection rates

Idential outcomes are rejcted at different rates in the ultimatum game, depends upon the choice set that was available and provides evidence of reciprocity.

£8, £2 vs. £5, £5 (Rejected) but £10, £0 (Accepted)

Answer 35

Falk, Fehr & FIrschbacher (2003)

Question 36

Reversed:

Charity contributions increasing utility….or do we just dislike saying no? Social pressure is a key factor

Answer 36

DellaVigna, List & Malmendier (2012)

Question 37

Reversed:

Choices converge after learning

Answer 37

Camerer, Ho & Weigelt (1998)

Question 38

Reversed:

Relative incentives decrease productivity, workers partially internalise the externality - not wanting to hurt others UK fruit farm: productivity increases under piece rate despite lower pay of 70-80%, presence of friends also increases productivity particularly among small groups Impacts disappear when they can not monitor each other, reciprocity more prevalent here

Answer 38

Bandiera et. al (2005)

Question 39

Reversed:

People like to stick to their word, don’t like to break promises Guilt Aversion + Lying Aversion…greater evidence for lying aversion

Mini dictator game but with random dictatorship

Answer 39

Vanberg (2008)

Question 40

Reversed:

Traveller’s dilemma: pick an integer from 180-300, paid the lowest plus some transfer R from the higher to lower. NE consistent when R is high…despite irrelevance strategically Minimum effort coordination game, pick an effort level between 110-170; effort is not independent of costs! Higher costs lead to lower efforts despite NE predictions

Answer 40

Goeree & Holt (2001)

Question 41

Reversed:

Language can swing the % of deviations in Prisoner’s Dilemma despite strictly dominant strategy, context matters

Answer 41

Ross & Ward (1996)

Question 42

Reversed:

Actions are influenced by: i. Morals ii. Scrutiny iii. Stakes iv. Context v. Self-Selection

Answer 42

Levitt & List (2007)

Question 43

Reversed:

Construct formal games to test Self Interest Social Preferences Difference Aversion Competitive Preferences Reciprocity (+ and -)

• 1 in 3 subjects opt for the inquity averse choice even when completely costless
• 1 in 2 opt to sacrifice even when behind and increasing inequality

Answer 43

Charness & Rabin (2002)

Question 44

Reversed:

Are humans able to randomise effectively..playing a MSNE? Significant MSNE departures, particularly for inexperienced players - too much alternation, too much balance and too many runs

We tend to recognise only 2-4 rounds of iteration

Centipede Game:

4 Rounds -> 6-8% take at Round 1

6 Rounds -> 1 % take at Round 1

Answer 44

Wilkinson & Klaes (2012)

Question 45

Reversed:

One-shot, no reputation games: Ultimatum and Dictator games: 40-50% offers of splitting rarely rejected Average around 30-40% Hardly any >50%, 1 in 10 offer 0% Offers <20% rejected half the time

Answer 45

Camerer (2003)

Question 46

Reversed:

Less likely to reject computer based outcomes over human choices

Answer 46

Blount (1995)

Question 47

Reversed:

Altruism is very small in magnitude, social preferences result in externalities

Answer 47

Levine (2012)

Question 48

Reversed:

“Guilt aversion” - people may act honestly to try and live up to expectations Importance of “second order beliefs” in sequential games even with hidden actions and equality

Answer 48

Charness & Dufwnberg (2006)

Question 49

Reversed:

Impulsive cheating increases when depleted of self control or moral awareness - unhealthy food choices

Answer 49

Gino et al. (2011)

Question 50

Reversed:

Repeated game prisoners dilemma has no pure strategy stable Equilibria Quick learning

Answer 50

Axelrod (1984; 2006)

Question 51

List (2006)

Answer 51

Gift exchange experiments, look at sports card fairs with local vs. non-local buyers who have subective values

People exhibit “reputational concerns” as prices are only compenstated with quality in local markets

Question 52

Reversed:

Gift exchange experiments, look at sports card fairs with local vs. non-local buyers who have subective values

People exhibit “reputational concerns” as prices are only compenstated with quality in local markets

Answer 52

List (2006)

Question 53

Henrich et. al (2004)

Answer 53

Average offer in ultimatum game varies significantly, can be due to

1. ) Market Integration, Social Cooperation
2. ) Cooperation Importance, frequency of local engagemtn and settlement size

Question 54

Reversed:

Average offer in ultimatum game varies significantly, can be due to

1. ) Market Integration, Social Cooperation
2. ) Cooperation Importance, frequency of local engagemtn and settlement size

Answer 54

Henrich et. al (2004)