Reciprocity and Social Norms: Short- and Long-Run Crowding Out Effects of Financial Incentives

2021 ◽  
Vol 16 (2) ◽  
pp. 177-213
Author(s):  
Jinhua Zhao ◽  
◽  
John M. Kerr ◽  
Maria Knight Lapinski ◽  
Robert Shupp ◽  
...  
Keyword(s):  
Social Behavior ◽  
Social Norms ◽  
Public Goods ◽  
Intrinsic Motivation ◽  
Strong Evidence ◽  
Financial Incentives ◽  
Crowding Out ◽  
Public Goods Game ◽  
Long Run ◽  
Using Data

We link the reciprocity model of Falk and Fischbacher (2006) with the theory of normative social behavior to study how financial incentives crowd out intrinsic motivation in both the short and long runs. Using data from a lab-based repeated public goods game, we find strong evidence in support of the reciprocity model and crowding out effects both when the payment is in place and after it stops. When the payment program is in place, subjects become less sensitive to reciprocity, perceive less kindness in others’ contributions, and care less about others’ welfare. The overall decrease in motivation to reciprocate reduces the effectiveness of the payment program by almost 50%. About 20% of the crowding out effect persists after the payment stops, and the reciprocity mechanism explains over three quarters of the long-run crowding out effect.

scholarly journals Punishment Strategies across Societies: Conventional Wisdoms Reconsidered

Games ◽  
2021 ◽  
Vol 12 (3) ◽  
pp. 63
Author(s):  
Ramzi Suleiman ◽  
Yuval Samid
Keyword(s):  
Public Goods ◽  
Strong Predictor ◽  
Social Environments ◽  
Public Goods Game ◽  
The Public ◽  
Free Riders ◽  
The World ◽  
Emergence Of Cooperation ◽  
Using Data ◽  
The Cost

Experiments using the public goods game have repeatedly shown that in cooperative social environments, punishment makes cooperation flourish, and withholding punishment makes cooperation collapse. In less cooperative social environments, where antisocial punishment has been detected, punishment was detrimental to cooperation. The success of punishment in enhancing cooperation was explained as deterrence of free riders by cooperative strong reciprocators, who were willing to pay the cost of punishing them, whereas in environments in which punishment diminished cooperation, antisocial punishment was explained as revenge by low cooperators against high cooperators suspected of punishing them in previous rounds. The present paper reconsiders the generality of both explanations. Using data from a public goods experiment with punishment, conducted by the authors on Israeli subjects (Study 1), and from a study published in Science using sixteen participant pools from cities around the world (Study 2), we found that: 1. The effect of punishment on the emergence of cooperation was mainly due to contributors increasing their cooperation, rather than from free riders being deterred. 2. Participants adhered to different contribution and punishment strategies. Some cooperated and did not punish (‘cooperators’); others cooperated and punished free riders (‘strong reciprocators’); a third subgroup punished upward and downward relative to their own contribution (‘norm-keepers’); and a small sub-group punished only cooperators (‘antisocial punishers’). 3. Clear societal differences emerged in the mix of the four participant types, with high-contributing pools characterized by higher ratios of ‘strong reciprocators’, and ‘cooperators’, and low-contributing pools characterized by a higher ratio of ‘norm keepers’. 4. The fraction of ‘strong reciprocators’ out of the total punishers emerged as a strong predictor of the groups’ level of cooperation and success in providing the public goods.

Climate, insurance and innovation: the case of drought and innovations in drought-tolerant traits in US agriculture

2020 ◽  
Vol 47 (5) ◽  
pp. 1826-1860 ◽  
Author(s):  
Ruiqing Miao
Keyword(s):  
Climate Change ◽  
Agricultural Sector ◽  
Crop Insurance ◽  
Crowding Out ◽  
Innovation Activities ◽  
Drought Tolerant ◽  
Long Run ◽  
The Us ◽  
Using Data ◽  
Agricultural Innovations

Abstract This paper investigates the effects of crop insurance on agricultural innovation (namely, drought-tolerant traits) in the context of climate change. A conceptual framework is developed to model the market equilibrium of agricultural innovations. Hypotheses derived are then tested by using data for US agriculture. We find that the US agricultural sector responds to climate variation by increasing innovation activities, but this response is weakened by subsidised crop insurance by about 23 per cent. This indicates that crop insurance may have an unintended crowding-out effect as an option of risk management and may inhibit societies’ long-run capacity to adapt to climate change.

Social Emotions

2011 ◽  
Author(s):  
Samuel Bowles ◽  
Herbert Gintis
Keyword(s):  
Social Behavior ◽  
Public Goods ◽  
Public Goods Game ◽  
Social Emotions ◽  
Distant Future ◽  
Costly Punishment ◽  
Shame And Guilt ◽  
The Individual ◽  
Future Consequences

This chapter examines the role of social emotions such as guilt and shame in supporting human cooperation, and how these could have evolved. It first models the process by which an emotion such as shame may affect social behavior in a simple public goods game before discussing how shame and guilt along with internalized ethical norms foster cooperation to be sustained with minimal levels of costly punishment, resulting in mutually beneficial interactions at limited cost. It also explains how the internalization of norms and the expression of these norms in a social emotion such as guilt and shame induce the individual to place a contemporaneous value on the future consequences of present behavior, rather than relying upon an appropriately discounted accounting of its probable payoffs in the distant future. The chapter suggests that shame, guilt, and other social emotions may function like pain by providing personally beneficial guides for action that bypass the explicit cognitive optimizing process.

scholarly journals Reputation and punishment sustain cooperation in the optional public goods game

2021 ◽  
Vol 376 (1838) ◽  
Author(s):  
Shirsendu Podder ◽  
Simone Righi ◽  
Francesca Pancotto
Keyword(s):  
Social Norms ◽  
Public Goods ◽  
Social Norm ◽  
Theoretical Studies ◽  
Public Goods Game ◽  
Theme Issue ◽  
Honest Signalling ◽  
Opting Out ◽  
Set Up ◽  
Experimental And Theoretical Studies

Cooperative behaviour has been extensively studied as a choice between cooperation and defection. However, the possibility to not participate is also frequently available. This type of problem can be studied through the optional public goods game. The introduction of the ‘Loner’ strategy' allows players to withdraw from the game, which leads to a cooperator–defector–loner cycle. While pro-social punishment can help increase cooperation, anti-social punishment—where defectors punish cooperators—causes its downfall in both experimental and theoretical studies. In this paper, we introduce social norms that allow agents to condition their behaviour to the reputation of their peers. We benchmark this with respect both to the standard optional public goods game and to the variant where all types of punishment are allowed. We find that a social norm imposing a more moderate reputational penalty for opting out than for defecting increases cooperation. When, besides reputation, punishment is also possible, the two mechanisms work synergically under all social norms that do not assign to loners a strictly worse reputation than to defectors. Under this latter set-up, the high levels of cooperation are sustained by conditional strategies, which largely reduce the use of pro-social punishment and almost completely eliminate anti-social punishment. This article is part of the theme issue ‘The language of cooperation: reputation and honest signalling’.

The Sustainable Debts of Philip II

2017 ◽  
Author(s):  
Mauricio Drelichman ◽  
Hans-Joachim Voth
Keyword(s):  
Sixteenth Century ◽  
Strong Evidence ◽  
Military Expenditure ◽  
Debt Service ◽  
Fiscal Sustainability ◽  
Short Term ◽  
Systematic Analysis ◽  
Philip Ii ◽  
Long Run

This chapter addresses the sustainability of debt. A systematic analysis based on the International Monetary Fund's (IMF) methodology to evaluate fiscal sustainability shows that Castile was able to service its debts in the long run. While liquidity was scarce during periods of intense warfare, years of relative peace brought large surpluses. The data collected from Castile's annual fiscal accounts produced new yearly series of revenue, military expenditure, short-term debt issues, and short-term debt service. The resulting database spans a full 31-year period—enough to employ modern quantitative techniques. This analysis provides strong evidence that Castile's fiscal position in the second half of the sixteenth century was on a solid footing. The chapter then assesses whether the events that led to major downturns in Castile's financial fortunes could have been anticipated.

Electricity consumption and economic growth in ASEAN

2017 ◽  
Vol 5 (2) ◽  
pp. 16
Author(s):  
Ahmad Ghazali Ismail ◽  
Arlinah Abd Rashid ◽  
Azlina Hanif
Keyword(s):  
Economic Growth ◽  
Energy Use ◽  
Electricity Consumption ◽  
Panel Estimation ◽  
Real Gdp ◽  
Long Run ◽  
Bidirectional Relationship ◽  
Short Run ◽  
Using Data ◽  
The Relationship

The relationship and causality direction between electricity consumption and economic growth is an important issue in the fields of energy economics and policies towards energy use. Extensive literatures has discussed the issue, but the array of findings provides anything but consensus on either the existence of relations or direction of causality between the variables. This study extends research in this area by studying the long-run and causal relations between economic growth, electricity consumption, labour and capital based on the neo-classical one sector aggregate production technology mode using data of electricity consumption and real GDP for ASEAN from the year 1983 to 2012. The analysis is conducted using advanced panel estimation approaches and found no causality in the short run while in the long-run, the results indicate that there are bidirectional relationship among variables. This study provides supplementary evidences of relationship between electricity consumption and economic growth in ASEAN.

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