This paper reports the results of a ‘probabilistic dictator game’ experiment in which subjects were given an option to share chances to win a prize with a dummy player. Using a within-subject design we manipulated two aspects of the decision, the relative cost of sharing and the nature of the lottery: the draws were either independent for the two players (‘noncompetitive’ condition) or one's success meant other's failure (‘competitive’ condition). We also asked for decisions in a standard, non-probabilistic, setting. The main results can be summarized as follows: first, a substantial fraction of subjects do share chances to win, also in the competitive treatments, thus showing concern for the other player that cannot be explained by outcome-based models. Second, subjects share less in the competitive treatment than in other treatments, indicating that procedural fairness alone cannot explain the data. Overall, these results suggest that models aiming at generalizing social concerns to risky environments will have to rely on a mix of distributive and procedural fairness.

The gift-exchange game is a form of sequential prisoner's dilemma, developed by Fehr et al. (1993), and popularized in a series of papers by Ernst Fehr and co-authors. While the European studies typically feature a high degree of gift exchange, the few U.S. studies provide some conflicting results. We find that the degree of gift exchange is surprisingly sensitive to an apparently innocuous change—whether or not a comprehensive payoff table is provided in the instructions. We also find significant and substantial time trends in responder behavior.

We use different incentive schemes to study truth-telling in a die-roll task when people are asked to reveal the number rolled privately. We find no significant evidence of cheating when there are no financial incentives associated with the reports, but do find evidence of such when the reports determine financial gains or losses (in different treatments). We find no evidence of loss aversion in the standard case in which subjects receive their earnings in a sealed envelope at the end of the session. When subjects manipulate the possible earnings, we find evidence of less cheating, particularly in the loss setting; in fact, there is no significant difference in behavior between the non-incentivized case and the loss setting with money manipulation. We interpret our findings in terms of the moral cost of cheating and differences in the perceived trust and beliefs in the gain and the loss frames.

We examine the interplay between unethical behaviour and competition with a lab experiment. Subjects play the role of firms in monopoly, weak competition (Bertrand–Edgeworth duopoly) or strong competition (Bertrand duopoly). Costs are determined either by a computer draw or a self-reported die roll, and pricing decisions are made with knowledge of one’s own costs and—in duopoly—the rival firm’s costs. Under self-reporting, lying is profitable and undetectable except statistically. We find that competition and lying are mutually reinforcing. We observe strong evidence that (behavioural) competition in both duopoly treatments is more intense when lying is possible: prices are significantly lower than when lying is impossible, even controlling for differences in costs. We also observe more lying under duopoly than monopoly—despite the greater monetary incentives to lie in the monopoly case—though these differences are not always significant.

Charitable donations provide positive externalities and can potentially be increased with an understanding of donor preferences. We obtain a uniquely comprehensive characterization of donation motives using an experiment that varies treatments between and within subjects. Donations are increasing in peers’ donations and past subjects’ donations. These and other results suggest a model of heterogeneous beliefs about the social norm for giving. Estimation of such a model reveals substantial heterogeneity in subjects’ beliefs about and adherence to the norm. A simple fundraising strategy increases donations by an estimated 30% by exploiting previously unstudied correlations between dimensions of donor preferences.

We examine strategic sophistication using eight two-person 3 × 3 one-shot games. To facilitate strategic thinking, we design a ‘structured’ environment where subjects first assign subjective values to the payoff pairs and state their beliefs about their counterparts’ probable strategies, before selecting their own strategies in light of those deliberations. Our results show that a majority of strategy choices are inconsistent with the equilibrium prediction, and that only just over half of strategy choices constitute best responses to subjects’ stated beliefs. Allowing for other-regarding considerations increases best responding significantly, but the increase is rather small. We further compare patterns of strategies with those made in an ‘unstructured’ environment in which subjects are not specifically directed to think strategically. Our data suggest that structuring the pre-decision deliberation process does not affect strategic sophistication.

We devise an experiment to explore the effect of different degrees of bargaining power on the design and the selection of contracts in a hidden-information context. In our benchmark case, each principal is matched with one agent of unknown type. In our second treatment, a principal can select one of three agents, while in a third treatment an agent may choose between the contract menus offered by two principals. We first show theoretically how different ratios of principals and agents affect outcomes and efficiency. Informational asymmetries generate inefficiency. In an environment where principals compete against each other to hire agents, these inefficiencies may disappear, but they are insensitive to the number of principals. In contrast, when agents compete to be hired, efficiency improves dramatically, and it increases in the relative number of agents because competition reduces the agents’ informational monopoly power. However, this environment also generates a high inequality level and is characterized by multiple equilibria. In general, there is a fairly high degree of correspondence between the theoretical predictions and the contract menus actually chosen in each treatment. There is, however, a tendency to choose more ‘generous’ (and more efficient) contract menus over time. We find that competition leads to a substantially higher probability of trade, and that, overall, competition between agents generates the most efficient outcomes.

The presence of implicit observation cues, such as picture of eyes, has been shown to increase generosity in dictator games, and cooperative behavior in field settings. I combine these approaches, by testing if a picture of watching eyes affects unconditional giving in a natural environment, where the recipient is a charity organization. Taken together, this study reduces the influence of three potential confounding factors in previous experiments: (i) experimenter demand effects, (ii) that the facial cue reminds subjects of a human counterpart, and (iii) a social multiplier effect. Specifically, the paper reports results from an experiment, conducted in a Swedish supermarket chain, where customers face a naturally occurring decision problem. People who recycle cans and bottles have to choose whether to keep the recycled amount or donate it to a charity organization. By posting a picture of human eyes on recycling machines, I am able to test whether this causes an increase in donations to the charity. Based on a sample covering a 12-day period, 38 stores and 16775 individual choices, I find no general effect. However, when controlling for store and day fixed effects, and using a proxy for store attendance, the picture of eyes increased donated amount by 30 percent during days when relatively few other people visited the store. This result gives further support to the conclusion that subtle social cues can invoke reputation concerns in humans, although the relatively small effect suggests that previous estimates could be biased upward, or at least that the influence of observational cues is context dependent.

Psychological games of guilt aversion assume that preferences depend on (beliefs about) beliefs and on the guilt sensitivity of the decision-maker. We present an experiment designed to measure guilt sensitivities at the individual level for various stake sizes. We use the data to estimate a structural choice model that allows for heterogeneity, and permits that guilt sensitivities depend on stake size. We find substantial heterogeneity of guilt sensitivities in our population, with 60% of decision makers displaying stake-dependent guilt sensitivity. For these decision makers, we find that average guilt sensitivities are significantly different from zero for all stakes considered, while significantly decreasing with the level of stakes.

This paper investigates a novel public goods game where contributions to the public goods require effort that is observable. When the players are observed, they exert more effort to contribute to the public goods, and free-riding diminishes significantly compared to the no observer case. These effects are absent when no effort is required in order to contribute to the public goods. Furthermore, in the presence of an audience, the contributions to the public goods do not diminish when the game is repeated in the effort-required environment. Being observed does not affect the performance of the players if there is no strategic aspect of the game, in other words, when they play a private goods game. These results indicate that an individual wants to avoid appearing lazy when her effort helps the society.

Decisions under risk are often embedded in a social context that we usually abstract from when studying decision-making in the laboratory. In contrast to that practice, our experiment investigates whether risk-taking is affected by social comparisons. In particular, we focus on situations where some amount of money has to be allocated to two parties: either the amount can be shared, or a random device allocates the entire amount to one of the parties. We find that the social context of the decision matters strongly: When participants are in a disadvantageous initial position compared to the other party, they select the risky option much more often than in a purely individual decision, identical in all other respects. Overall, we find that individuals are relatively more risk-seeking in the socially unfavorable domain than in isolation, in contrast to the favorable one, where we find no or little change in elicited risk attitudes in comparison to an isolated decision.

Some of the earliest work on heterogeneity in social preferences focuses on gender differences in behavior. The source of these gender differences is the main interest of this paper. We report on dictator game experiments designed to identify heterogeneity of other-regarding preferences according to personality, gender, status, and whether the choice is framed as giving or taking. We find that the effect of gender on giving is more subtle than previously understood, and is explained collectively by various personality factors. We also find that women, high status treatment individuals, and individuals in the giving language treatment give less, and are also less sensitive to the price of giving.

Expectations-based reference dependence has been shown to be important across a variety of contexts in Psychology and Economics. Do expectations play a role in moral judgment? The higher our beliefs are relative to an outcome, do we punish more harshly? This paper reports a series of experiments investigating the hypothesis that expectations as reference points per se affect punishment. The experimental design varies the expectation the Punisher holds just before she learns what actually occurred. In tandem with the manipulation, expectations are shown to vary significantly and substantially. However, punishment does not respond to these exogenous changes in expectations. After 17 sessions, 295 Punishers, and six experimental setups, expectations are shown not to affect punishment in any systematic way.

Building on a partner-switching mechanism, we experimentally test two theories that posit different reasons why promises breed trust and cooperation. The expectation-based explanation (EBE) operates via belief-dependent guilt aversion, while the commitment-based explanation (CBE) suggests that promises offer commitment power via a (belief-independent) preference to keep one’s word. Previous research performed a similar test, which we argue should be interpreted as concerning informal agreements rather than (unilateral) promises.

We establish whether the efficacy of mutual monitoring in fostering cooperation is dependent on the degree of approval motivation within teams. Approval motivation is defined as the desire to produce positive perceptions in others and the incentive to acquire the approval of others as well as the desire to avoid disapproval, (Martin in J Personality Assess 48(5):508–519, 1984). Contrary to the theoretical predictions, the results from the experiment suggest that mutual monitoring was not effective in fostering cooperation in teams. Furthermore, the efficacy of mutual monitoring in fostering cooperation was not correlated with the degree of approval motivation within teams.

The strategy method (SM) is, in practice, subject to a possibly severe economic-theoretical bias. Although many studies utilize SM to examine responses to rare or off-equilibrium behaviors unattainable through direct elicitation (DE), they ignore the fact that the strategic equivalence between SM and DE holds for the monetary payoff game but not the game participants actually play, which is in terms of utilities. We report three results. First, failing to account for estimation bias when decisions at one information set can influence utility at another may result in significant differences in decision-making. Second, the magnitude of this bias can be substantial, comparable to other measured treatment effects. Third, minor interventions targeting salience can amplify these differences similarly, causing treatment effects to differ significantly between SM and DE, even reversing in direction. These findings emphasize the need for reconsideration of the SM’s reliability for economic research.

This article highlights a potential and significant economic–theoretical bias in the widely used strategy method (SM) technique. Although SM is commonly employed to analyze numerous observations per subject regarding rare or off-equilibrium behaviors unattainable through direct elicitation (DE), researchers often overlook a critical distinction. The strategic equivalence between SM and DE is applicable in the context of monetary payoff games, but not in the actual utility-based games played by participants. This oversight may lead to inaccurate conclusions and demand a reevaluation of existing research in the field. We formalize the mapping from the monetary payoff game to this actual game and delineate necessary and sufficient conditions for strategic equivalence to apply.

We systematically investigate prisoner’s dilemma and dictator games with valence framing. We find that give versus take frames influence subjects’ behavior and beliefs in the prisoner’s dilemma games but not in the dictator games. We conclude that valence framing has a stronger impact on behavior in strategic interactions, i.e., in the prisoner’s dilemma game, than in allocation tasks without strategic interaction, i.e., in the dictator game.

We explore gender differences in individuals’ motivations. We focus on guilt aversion and moral commitment. Our experiment supports the idea that men are more guilt-averse than women, while moral motivations drive more women's actions in a random dictator game with pre-play communication.

Economic studies of religion tend to focus on religious affiliation and attendance at religious services to the exclusion of other dimensions of religion, including religious belief. We address this lacuna, using data from the World Values Survey to construct an index of religious beliefs based on whether an individual believes in God, heaven, hell, an immortal soul, and the afterlife. Following the approach in a seminal article, we compare the roles of religious beliefs and attendance in determining economic values related to cooperation, patriarchy, institutional trust, lawfulness, thrift, markets, and market fairness. Controlling for denominational, country and period fixed effects and a set of individual-level characteristics, we find that religious beliefs matter for six of these seven values, relative to five for attendance. In addition, beliefs are more important than attendance for promarket and patriarchal values and less important for thrift, market fairness, lawfulness, and institutional trust. We also consider the relationships between beliefs, attendance, and economic values for eight religious’ affiliations: Protestant, Catholic, Orthodox Christian, Muslim, Buddhist, Hindu, other religions, and non-religious. Taken together, beliefs and attendance are most important for patriarchal values, promarket attitudes, lawfulness, and institutional trust. Relative to attendance, beliefs matter most for patriarchal attitudes and least for institutional trust. Our results suggest that religious beliefs constitute an important dimension of religious life. An exclusive focus on attendance may understate the role of religion in economic values.