Search

The literature in experimental economics has linked the laboratory measurement of preferences for competition with labor market outcomes and educational choices, such as wages and career choices. If preferences for competition are an important determinant of behavior, it is crucial to develop an accurate approach to measure them. In this study, we test whether preferences for competition can be rationalized by a utility function and develop a framework for the joint treatment of preferences for competition and risk. Our design improves on previous work in that it generates a rich data set of individual-level choices, accounts structurally for the relation between risk and competition preferences, and controls carefully for overconfidence. This allows us to test whether choices to enter tournaments are consistent with GARP and to estimate with a high degree of certainty the extent to which these choices are explained by a preference for competition and not by other confounding factors present in the environment. Our findings provide strong evidence for a preference for competition at the individual level that largely satisfies GARP, and that is conceptualized by two terms in the utility function of income obtained in a competitive environment. The first term assumes that preferences for competition affect utility directly through payoffs and the second term allows preferences for competition to influence utility through risk preferences. We discuss the economic implications of both interpretations of preferences for competition and discuss their relation with risk preferences.

We investigate the intrinsic motivation of individuals to report, and thereby sanction, fellow group members who lie for personal gain. We further explore the changes in lying and reporting behavior that result from giving individuals a say in who joins their group. We find that enough individuals are willing to report lies such that in fixed groups lying is unprofitable. However, we also find that when groups can select their members, individuals who report lies are generally shunned, even by groups where lying is absent. This facilitates the formation of dishonest groups where lying is prevalent and reporting is nonexistent.

We investigate the intrinsic motivation of individuals to report, and thereby sanction, fellow group members who lie for personal gain. We further explore the changes in lying and reporting behavior that result from giving individuals a say in who joins their group. We find that enough individuals are willing to report lies such that in fixed groups lying is unprofitable. However, we also find that when groups can select their members, individuals who report lies are generally shunned, even by groups where lying is absent. This facilitates the formation of dishonest groups where lying is prevalent and reporting is nonexistent.

We experimentally study the common wisdom that money buys political influence. In the game, one lobbyist has the opportunity to influence redistributive tax policies in her favor by transferring money to two competing candidates. The success of the lobbying investment depends on whether or not the candidates are willing to respond and able to collude on low-tax policies that do not harm their relative chances in the elections. In the experiment, we find that lobbying is never successful when the lobbyist and candidates interact just once. By contrast, it yields substantially lower redistribution in about 40% of societies with finitely-repeated encounters. However, lobbying investments are not always profitable, and profit-sharing between the lobbyist and candidates depends on prominent equity norms. Our experimental results shed new light on the complex process of buying political influence in everyday politics and help explain why only relatively few corporate firms do actually lobby.

There is a large body of literature documenting both a preference for immediacy and a tendency to procrastinate. O'Donoghue and Rabin (1999a,b, 2001) and Choi et al. (2005) model these behaviours as two faces of the same phenomenon. In this paper, we use a combination of lab, field, and survey evidence to study whether these two types of behaviour are indeed linked. To measure immediacy we had subjects choose between a series of smaller-sooner and larger-later rewards. Both rewards were paid with a check in order to control for transaction costs. To measure procrastination we use the subjects' actual behaviour in cashing the check and completing tasks on time. Our results lend support to the hypothesis that subjects who have a preference for immediacy are indeed more likely to procrastinate.

In public good provision, privileged groups enjoy the advantage that some of its members find it optimal to supply a positive amount of the public good. However, their inherent asymmetric nature may make the enforcement of cooperative behavior through informal sanctioning harder to accomplish. In this paper we experimentally investigate public good provision in normal and privileged groups with and without decentralized punishment. We find that compared to normal groups, privileged groups are relatively ineffective in using costly sanctions to increase everyone''s contributions. Punishment is less targeted towards strong free-riders and they exhibit a weaker increase in contributions after being punished. Thus, we show that privileged groups are not as privileged as they initially seem.