Giovanni Ponti

Altruism and Social Integration

We report on a two-stage experiment in which i) we first elicit the social network within a section of undergraduate students and ii) we then measure their altruistic attitudes by means of a standard Dictator game. We observe that more socially integrated subjects are also more altruistic, as betweenness centrality and reciprocal degree are positively correlated with the level of giving, even after controlling for framing and social distance, which have been shown to significantly affect giving in previous studies. Our findings suggest that social distance and social integration are complementary determinants of altruistic behavior.

Error cascades in observational learning: An experiment on the Chinos game

The paper reports an experimental study based on a variant of the popular Chinos game, which is used as a simple but paradigmatic instance of observational learning. There are three players, arranged in sequence, each of whom wins a fixed price if she manages to guess the total number of coins lying in everybody’s hands. Our evidence shows that, despite the remarkable frequency of equilibrium outcomes, deviations from optimal play are also significant. And when such deviations occur, we find that, for any given player position, the probability of a mistake is increasing in the probability of a mistake of her predecessors. This is what we call an error cascade, which we rationalize by way of a simple model of “noisy equilibrium”.

Framing Effects in Public Goods: Prospect Theory and Experimental Evidence

This paper studies, both theoretically and experimentally, frame effects in the context of a public good game in which players have to make a costly contribution either i) to achieve or ii) not to lose a non excludable monetary prize. Our protocol leads to public good provision (not deterioration) only if a certain contribution level is achieved. Since both frames differ with respect to the reference point, we use Prospect Theory to derive testable predictions. In particular, Prospect Theory predicts more contribution in the second frame. Our evidence suggests that a) subjects? behavior is highly sensitive to frames and b) the theoretical prediction is confirmed except when the threshold is low. We also estimate the parameters which better suit our experimental evidence, partly confirming previous results in the literature.

On the adjudication of conflicting claims: an experimental study

This paper reports an experimental study on three well-known solutions for problems of adjudicating conflicting claims: the constrained equal awards, the proportional, and the constrained equal losses rules. We first let subjects play three games designed such that the unique equilibrium allocation coincides with the recommendation of one of these three rules. In addition, we let subjects play an additional game that has the property that all (and only) strategy profiles in which players coordinate on the same rule constitute a strict Nash equilibrium. While in the first three games subjects’ play easily converges to the unique equilibrium rule, in the last game the proportional rule overwhelmingly prevails as a coordination device, especially when we frame the game as an hypothetical bankruptcy situation. We also administered a questionnaire to a different group of students, asking them to act as impartial arbitrators to solve (among others) the same problems played in the lab. Also in this case, respondents were sensitive to the framing of the questions, but the proportional rule was selected by the vast majority of respondents.

Gender Differences in Sleep Deprivation Effects on Risk and Inequality Aversion: Evidence from an Economic Experiment

Excessive working hours—even at night—are becoming increasingly common in our modern 24/7 society. The prefrontal cortex (PFC) is particularly vulnerable to the effects of sleep loss and, consequently, the specific behaviors subserved by the functional integrity of the PFC, such as risk-taking and pro-social behavior, may be affected significantly. This paper seeks to assess the effects of one night of sleep deprivation on subjects’ risk and social preferences, which are probably the most explored behavioral domains in the tradition of Experimental Economics. This novel cross-over study employs thirty-two university students (gender-balanced) participating to 2 counterbalanced laboratory sessions in which they perform standard risk and social preference elicitation protocols. One session was after one night of undisturbed sleep at home, and the other was after one night of sleep deprivation in the laboratory. Sleep deprivation causes increased sleepiness and decreased alertness in all subjects. After sleep loss males make riskier decisions compared to the rested condition, while females do the opposite. Females likewise show decreased inequity aversion after sleep deprivation. As for the relationship between cognitive ability and economic decisions, sleep deprived individuals with higher cognitive reflection show lower risk aversion and more altruistic behavior. These results show that one night of sleep deprivation alters economic behavior in a gender-sensitive way. Females’ reaction to sleep deprivation, characterized by reduced risky choices and increased egoism compared to males, may be related to intrinsic psychological gender differences, such as in the way men and women weigh up probabilities in their decision-making, and/or to the different neurofunctional substrate of their decision-making.

Splitting the baby in two: solving Solomon's dilemma with boundedly rational agents

Abstract. We study the dynamic implementation of the first-best forKing Solomons Dilemma, on the assumption that boundedly rational players find their way to equilibrium using monotonic evolutionary dynamics. We find that all the mechanisms proposed by the literature fail to implement the first best dynamically and provide an alternative solution.

EVOLUTIONARY STABILITY OF INEQUALITY STRUCTURES

This paper studies the evolution of a population whose members compare their relative income to coordinate actions in a simple bargaining game. Two alternative customs are considered: one in which difference in income (i.e. difference in social class) is large enough to justify difference in behavior, and another in which difference in income is perceived as not sufficient to justify a difference in behavior. Although we constrain agents to these bargaining strategies, reference class boundaries are subjectively determined. Our model yields the following conclusions. If individuals form fixed, unambiguous images of their position in the social structure, then social inequality will eventually disappear, as the income of each individual converges to a uniform level. On the other hand, if social images vary from individual to individual (and evolve through some learning process), then social inequality may persist, with class consciousness (i.e. narrower subjective class boundaries) being most pronounced in those who occupy the extreme positions (either very rich or very poor) of the social ranking.

Social vs. Risk Preferences under the Veil of Ignorance

This paper reports experimental evidence from a Dictator Game experiment in which subjects choose repeatedly one out of four options involving a pair of fixed monetary prizes, one for them, one for another anonymously matched subject. In some sessions, player position (i.e. the identity of the best paid agent, constant across all options) is known in advance before subjects have to make their decision; in other sessions subjects choose “under the veil of ignorance”, not knowing to which player position they will be eventually assigned. We also collect evidence from additional sessions in which the same options correspond to binary lotteries, in which subjects may win the high or the low prize, but their decisions do not affect other participants. We frame subjects’ decisions within the realm of a simple mean-variance utility maximization problem, where the parameter associated to the variance is interpreted, depending on the treatment conditions, as a measure of pure risk aversion, pure inequality aversion, or some combination of the two. We also condition our estimates to subjects’ individual socio-demographic characteristics.

Ultimatum Concession Bargaining: an Experimental Study

We collect experimental evidence on a modified version of the standard ultimatum game in which the responder states an acceptance threshold below which the offer is rejected and both players, proposer and responder, are allowed several attempts to reach an agreement by conceding. Proposers concede by increasing offers and responders concede by decreasing acceptance thresholds. Treatments differ in whether a further attempt requires that at least one party should have conceded. A further condition varies the number of possible negotiating attempts, namely, 3 versus 5. Behavior in the lab diverges significantly from the theoretical solution in which the proposer is expected to get nearly the whole pie in each treatment. Proposers (responders) initially offer less (ask more) and concede more across negotiation attempts in the treatment in which concessions are required. Moreover, compulsory concessions weaken the bargaining position of the proposer, who eventually gets significantly less. Finally, although concessions significantly improve the likelihood of an agreement compared to standard ultimatum game experiments, the longer negotiation horizon (five attempts instead of three) delays the agreement without enhancing it, even when no concessions are needed.

Social motives vs social influence: An experiment on interdependent time preferences

We design an intertemporal Dictator Game to test whether Dictators modify their discounting behavior when their own decision is imposed on their matched Recipients. We run four different treatments to identify the effect of payoffs externalities from those related to information and beliefs. Our descriptive statistics show that Dictators display a marked propensity to account for the intertemporal preferences of Recipients, both in the presence of externalities (social motives) and/or when they know about the decisions of their matched partners (social influence). We also perform a structural estimation exercise to control for heterogeneity in risk attitudes. As for individual behavior, our estimates confirm previous studies in that high risk aversion is associated with low discounting. As for social behavior, we find that social motives outweigh social influence, especially when we restrict our sample to pairs of Dictators and Recipients who satisfy minimal consistency conditions.