Ned Augenblick

To reveal or not to reveal: Privacy preferences and economic frictions

Abstract We model two agents who wish to determine if their types match, but who also desire to reveal as little information as possible to non-matching types. For example, firms considering a merger must determine the mergers profitability, but would prefer to keep their information private if the deal fails. In the model, agents with different traits reveal information to a potential partner to determine if they share the same type, but face a penalty depending on the accuracy of their partners posterior beliefs. With limited signaling, there is a universally-preferred dynamic communication protocol in which traits are sequentially revealed depending on the sensitivity of the trait. Interestingly, the rarity of an agents traits plays no role due to the balance of opposing effects: although revealing a rare trait reveals more information immediately, it also screens more partners from later learning information about other traits.

Competition and Cooperation in a Public Goods Game: A Field Experiment

We explore the effects of competitive and cooperative motivations on contributions in a field experiment. A total of 10,000 potential political donors received solicitations referencing past contribution behavior of members of the competing party (competition treatment), the same party (cooperative treatment), or no past contribution information (control). We first theoretically analyze the effect of these treatments on the contribution behavior of agents with different social preferences in a modified intergroup public good (IPG) game. Then, we report the empirical results: Contribution rates in the competitive, cooperative, and control treatments were 1.45%, 1.08%, and 0.78%, respectively. With the exception of one large contribution, the distribution of contributions in the competitive treatment first order stochastically dominates that of the cooperative treatment. Qualitatively, it appears that the cooperative treatment induced more contributions around the common monetary reference point, while the competitive treatment led to more contributions at twice this amount. These results suggest that eliciting competitive rather than cooperative motivations can lead to higher contributions in IPG settings. (JEL D72, H41, C93)