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Theory and Decision

Erschienen in:

01.02.2014

Entitlement and the efficiency-equality trade-off: an experimental study

verfasst von: Agnes Bäker, Werner Güth, Kerstin Pull, Manfred Stadler

Erschienen in: Theory and Decision | Ausgabe 2/2014

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Abstract

When randomly assigning participants to experimental roles and the according payment prospects, participants seem to receive “manna from heaven.” In our view, this seriously questions the validity of laboratory findings. We depart from this by auctioning off player roles via the incentive compatible random price mechanism thus avoiding the selection effect of competitive second price auctions. Our experiment employs the generosity game where the proposer chooses the size of the pie, facing an exogenously given own agreement payoff, and the responder is the residual claimant. We find that entitlement crowds out equality seeking and strengthens efficiency seeking. More generally, we find that inducing entitlement for the roles in which participants find themselves makes a difference. Interpreting participants’ willingness to pay for their role as their aspiration level further allows to test satisficing and explore “mutual satisficing.” We find that responder participants apparently do not anticipate proposer generosity in aspiration formation.

Vorheriger Artikel Use of data on planned contributions and stated beliefs in the measurement of social preferences

Nächster Artikel Motivation and mission in the public sector: evidence from the World Values Survey

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Nur mit Berechtigung zugänglich

For a theoretical and experimental study of three-person generosity games in which either the responder or a third “dummy” player is the residual claimant, see Güth et al. (2010).

See for opposite results Cherry et al. (2005) who find no entitlement effect in public good experiments and Ruffle (1998) whose experimental workhorse is the ultimatum game.

According to the findings by Güth et al. (2012) from their “manna from heaven” experiment, this risk is negligible for pie sizes \(p\ge 2x\).

As there might not have been an equal number of \(X\)- and \(Y\)-participants acquiring the \(X\)- and the \(Y\)-role in each session, we used the decision of some participants repeatedly but, of course, paid them only once, according to one randomly selected partner. Since there is no feedback information, the fact that one participant affects the payoffs of several others (without knowing this) is unproblematic.

The costs \(r_{i}\) for acquiring role \(i=X,Y\), may exceed what was subsequently earned in the generosity game, e.g., due to \(\delta \left( p\right) =0\). Possible losses were subtracted from the show-up fee or could be paid out of pocket when exceeding the show-up fee. Otherwise, participants had to fulfill an additional task at the end of the experiment to cover their losses. This occurred only twice, and as we had participants register for a long enough time interval to cover potential losses, none of the participants left the experiment with negative earnings. The instructions clearly stated that payoffs amount to the earnings from the generosity game minus the role price. One of the provided examples in the instructions (see Appendix 3, example 2) showed that negative payoffs were possible.

Exogenously induced true values avoid the problem that the true value may depend on the random price (see Horowitz 2006).

We cannot use the a posteriori-aspirations because they might be biased when the actual price is much lower than the bid.

To explore whether or not participants have rational expectations concerning the behavior of the other player in the subsequent generosity game, we asked participants what they expect their counterparts to choose. Specifically, we asked proposers \(X\) which responder choice \(\widehat{\delta }\left( p\right) \) for their chosen \(p\)-value they expect. Responders \(Y\) were asked: “Which \(p\)-choice by \(X\) do you expect (\( \widehat{p}_{y}\))?” Of course, also the bids \({b}_{i}\) are informing about such expectations.

Such reasoning may, of course, be a false consensus when behavior is heterogeneous.

These questions (including the ones on proposer and responder expectations, see footnote 8) were asked in each round. Although one might be concerned that participants would not answer them carefully and although hedging confounds have been shown not to be a major problem (see Blanco et al. 2009), we refrained from incentivizing these questions to not cognitively overburden participants. Answering the questions regarding hypothetical behavior and expected behavior of one’s counterpart might be considered as a “mental preparation” for own decisions.

For \(X\)-participants there are no monotonic aggregate dynamics (see Fig. 6 in Appendix 2). The distribution of bids \(b_{x}\left( t\right) \) does not differ significantly across rounds \(t=1,\ldots 12\) according to a Mann–Whitney \(U\) test comparing pairs of rounds (significance levels \(>0.1\) for all \(t=1,\ldots ,12\)).

Note that responders did not learn to anticipate the strong efficiency concerns of proposers due to not receiving feedback information.

We have decided for such a “recommendation” rather than proving why this is the only dominant strategy and then testing the acceptance of this proof by a pretest (see Güth and Tietz 1986).

Becker, G. M., DeGroot, M. H., & Marshak, J. (1964). Measuring utility by a single-response sequential method. Behavioral Science, 9, 226–232.CrossRef

Blanco, M., Engelmann, D., Koch, A. K., & Normann, H.-T. (2009). Preferences and beliefs in a sequential social dilemma: A within-subjects analysis. IZA discussion papers 4624. Institute for the Study of Labor (IZA).

Bosman, R., & van Winden, F. (2002). Emotional hazard in a power-to-take experiment. Economic Journal, 112, 147–169.CrossRef

Cappelen, A., Hole, A., Srensen, E., & Tungodden, B. (2007). The pluralism of fairness ideals: An experimental approach. American Economic Review, 97, 818–827.CrossRef

Cherry, T. L., Kroll, S., & Shogren, J. F. (2005). The impact of endowment heterogeneity and origin on public good contributions. Journal of Economic Behavior and Organization, 57, 357–365.CrossRef

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Güth, W., Kliemt, H. Local equity—(L)abstraction does not guarantee generality. CESifo Economic Studies. forthcoming.

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Güth, W., & Schwarze, B. (1983). Auctioning strategic roles to observe aspiration levels for conflict situations. In R. Tietz (Ed.), Aspiration levels in bargaining and economic decisions. Berlin: Springer.

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Titel: Entitlement and the efficiency-equality trade-off: an experimental study
verfasst von: Agnes Bäker
Werner Güth
Kerstin Pull
Manfred Stadler
Publikationsdatum: 01.02.2014
Verlag: Springer US
Erschienen in: Theory and Decision / Ausgabe 2/2014
Print ISSN: 0040-5833
Elektronische ISSN: 1573-7187
DOI: https://doi.org/10.1007/s11238-013-9364-5

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