Özgür Gürerk

The Effects of Punishment in Dynamic Public-Good Games

Considerable experimental evidence shows that although costly peer-punishment enhances cooperation in repeated public-good games, heavy punishment in early rounds leads to average period payoffs below the non-cooperative equilibrium benchmark. In an environment where past payoffs determine present contribution capabilities, this could be devastating. Groups could fall prey to a poverty trap or, to avoid this, abstain from punishment altogether. We show that neither is the case generally. By continuously contributing larger fractions of their wealth, groups with punishment possibilities exhibit increasing wealth increments, while increments fall when punishment possibilities are absent. Nonetheless, single groups do succumb to the above-mentioned hazards.

Peers at work: Economic real-effort experiments in the presence of virtual co-workers

Traditionally, experimental economics uses controlled and incentivized field and lab experiments to analyze economic behavior. However, investigating peer effects in the classic settings is challenging due to the reflection problem: Who is influencing whom? To overcome this, we enlarge the methodological toolbox of these experiments by means of Virtual Reality. After introducing and validating a real-effort sorting task, we embed a virtual agent as peer of a human subject, who independently performs an identical sorting task. We conducted two experiments investigating (a) the subjects productivity adjustment due to peer effects and (b) the incentive effects on competition. Our results indicate a great potential for Virtual-Reality-based economic experiments.

Avatars as Peers at Work: An Experimental Study in Virtual Reality

Identification of peer effects is often complicated by the reflection problem: Does agent i influence agent j, or vice versa? To be able to identify a clear causality, we embed a virtual human (avatar) as co-worker of a human subject into an immersive virtual environment. We observe that low productive human subjects increase their work performance more when they observe a low productive avatar – compared to a high productive avatar. This result is in line with the predictions of the social comparison theory, in as much as we observe stronger peer effects when the perceived similarity in abilities between the peers is high.Abstract We introduce a novel methodology to study peer effects. Using virtual reality technology, we create a naturalistic work setting in an immersive virtual environment where we embed a computer-generated virtual human as the co-worker of a human subject, both performing a sorting task at a conveyor belt. In our setup, subjects observe the virtual peer, while the virtual human is not observing them. In two treatments, human subjects observe either a low productive or a highly productive virtual peer. We find that human subjects rate their presence feeling of “being there” in the immersive virtual environment as natural. Subjects also recognize that virtual peers in our two treatments showed different productivities. We do not find a general treatment effect on productivity. However, we find that competitive subjects display higher performance when they are in the presence of a highly productive peer - compared to when they observe a low productive peer. We use tracking data to learn about the subjects’ body movements. Analyzing hand and head data, we show that competitive subjects are more careful in the sorting task than non-competitive subjects. We also discuss some VR related methodological issues.

Supervisor’s Reward Power Mitigates Lying in Teammates’ Self-Reports

We experimentally investigate the effects of teammates’ self-reported effort information on the supervisor’s performance pay allocation and on team performance. When reporting, teammates exaggerate their own efforts. However, they exaggerate less if the supervisor has the power to allocate individual payments at her own discretion than when the supervisor has to follow an exogenous allocation rule. The supervisor’s ability to allocate incentive-compatible performance payments does not depend on whether she can monitor subordinates’ true efforts or whether she receives self-reports. The exaggerations in self-reports have detrimental effects on team performance; these effects, however, are less pronounced if the supervisor allocates performance pay endogenously than when payments are distributed exogenously. Acknowledgements: We thank the participants in the IMEBE 2013 in Madrid, and in the ESA World Meetings Zurich 2013, as well as seminar participants from Aachen, Erfurt, and Nottingham for useful comments. We also thank Anne Schielke for her research assistance in the conduction of the experiments. Financial support from the Deutsche Forschungsgemeinschaft, DFG, through GU 954/3 and LA 3372/1, is gratefully acknowledged. Addresses Özgür Gürerk Thomas Lauer Mark Pigors RWTH Aachen University School of Business and Economics Templergraben 64 52062 Aachen, Germany ozgur.gurerk@rwth-aachen.de www.expecon.rwth-aachen.de University of Cologne Department of Economics Albertus-Magnus-Platz 50923 Köln, Germany thomas.lauer@uni-koeln.de www.behavecon.uni-koeln.de University of Cologne Department of Economics Albertus-Magnus-Platz 50923 Köln, Germany mark.pigors@uni-koeln.de www.behavecon.uni-koeln.deWe experimentally investigate the effects of a supervisor’s reward power on teammates’ self-reported effort information and on team performance. When reporting, teammates exaggerate their own efforts, i.e., they lie. However, they do so less if the supervisor has the power to allocate individual payments at her own discretion than when the supervisor is forced to distribute rewards according to an exogenous allocation rule. The exaggerations in self-reports have detrimental effects on team performance; these effects, however, are less pronounced if the supervisor has reward power. The supervisor’s ability to allocate incentive-compatible rewards does not depend on whether she can monitor subordinates’ true efforts or whether she receives self-reports.

Understanding the Behavioral Drivers of Execution Failures in Retail Supply Chains: An Experimental Study Using Virtual Reality

We conduct a real-effort experiment in an immersive virtual environment and quantify the impact of product similarity on operational execution in a retail setting. In our experiments, subjects must identify and sort two types of products based on their observable characteristics. We find measures of operational execution to be substantially lower when the observable characteristics of the two products types are very similar compared to when they are dissimilar. Specifically, we observe more sorting errors and more products left unsorted when subjects handle products with more similar observable characteristics. Introducing a visual cue to distinguish products improves execution when the products are dissimilar (by lowering the frequency of sorting mistakes) and, even more so, when they are similar (by reducing both the number of sorting mistakes and the number of products left unsorted). Overall performance (measured by the faction of products correctly sorted) increases by approximately 22 percent, on average, when subjects handle products with observable characteristics that are easier to distinguish. Using three-dimensional real-time movement measurements of our subjects, we discuss differences among high- and low-performing subjects as well as the managerial implications of our findings for product design, packaging, and labeling on execution performance in the retail context.