Philipp C. Wichardt

Providing public goods in the absence of strong institutions

This paper proposes a simple two-stage mechanism to establish positive contributions to public goods in the absence of powerful institutions to provide the public good and to sanction free-riders. In this mechanism players commit to the public good by paying a deposit prior to the contribution stage. If there is universal commitment, deposits are immediately refunded whenever a player contributes her specified share to the public good. If there is no universal commitment, all deposits are refunded and the standard game is played. For suitable deposits, prior commitment and full ex post contributions are supported as a strict subgame perfect Nash equilibrium for the resulting game. As the mechanism obviates the need for any ex post prosecution of free-riders, it is particularly suited for situations where players do not submit to a common authority as in the case of international agreements.

The moderating effect of conformism values on the relations between other personal values, social norms, moral obligation, and single altruistic behaviours

Three studies predicted and found that the individuals conformism values are one determinant of whether behaviour is guided by other personal values or by social norms. In Study 1 (N=50), pro-gay law reform participants were told they were either in a minority or a majority in terms of their attitude towards the law reform. Only participants who were high in conformism values conformed to the group norm on public behaviour intentions. In studies 2 (N=42) and 3 (N=734), participants played multiple choice prisoners dilemma games with monetary incentives. Only participants who considered conformism values to be relatively unimportant showed the expected connections between universalism values and altruistic behaviour. Study 3 also established that the moderating effect of conformism values on the relation between universalism values and altruistic behaviour was mediated through experienced sense of moral obligation.

Identity and why we cooperate with those we do

That individual identity influences economic decision making was convincingly argued by Akerlof and Kranton (2000, 2004). However, as individual identity will commonly be based on the social affiliation with different groups, conflicting interests also concerning identity may arise. This paper addresses the question what happens in these cases and why, and what the economic consequences will be. Both the importance for the framing of economic decisions and for political integration processes are discussed.

Existence of Nash equilibria in finite extensive form games with imperfect recall: A counterexample

This paper provides an example showing that for finite extensive form games without perfect recall existence of Nash equilibria in behaviour strategies is not guaranteed in general.

A Status Based Motivation for Behavioural Altruism

Purpose - The purpose of this paper is to explore the question of how far costly transfers of economic benefits to others, often understood in economics as instances of (behavioural) altruism, can be motivated by individual group status concerns, i.e. without the common reference to other-regarding preferences. Design/methodology/approach - Results from both economics and social psychology are reviewed and spliced together so as to obtain a more comprehensive picture of group status-based aspects of behavioural altruism. A more formal argument is provided in order to highlight specific effects. Applications (e.g. migration and workforce motivation) are discussed to support the argument and to illustrate its practical relevance. Findings - The reviewed literature indeed supports the argument that individuals care about the status of the groups they belong to and are willing to trade this against economic benefits. Accordingly, certain altruistic acts can be motivated by the individuals (selfish) concern for group status. However, the effect apparently depends on the degree of the individuals identification with the respective group which opens ways to influence its strength. Practical implications - The argument may help policy makers, chief executive officers, and people in similar positions who have to design decision environments, i.e. institutions, in a way that motivates the eventual decision makers to transfer economic benefits (e.g. donations, taxes, effort, …) to the respective institution. Originality/value - The paper adds to the discussion about the driving forces behind altruistic behaviour. In particular, it points out the potential importance of group status concerns in connection with aspects of social identity for individual decisions to transfer economic benefits to others. The relevance of the effect in view of the design of institutions is discussed.

Personality disorder categories as combinations of dimensions: translating cooperative behavior in borderline personality disorder into the five-factor framework.

The authors examined the proposal that personality disorder categories may denote particular detrimental combinations of personality dimensions. A multiround economic exchange game (ten round trust game), conducted with university students pre-selected on basis of their personalities (N = 164), provided a framework within which to investigate inability to repair ruptured cooperation. This behavior, thought to be characteristic of patients diagnosed with DSM-IV borderline personality disorder, was predicted only by the combination of high Neuroticism and low Agreeableness. Our results highlight an advantage of the categorical approach, category labels being a much more economic means of description than the delineation of interactions between dimensions.

Identity, Utility, and Cooperative Behaviour: An Evolutionary Perspective

This paper provides an argument for the advantage of a preference for identity-consistent behaviour from an evolutionary point of view. Within a stylized model of social interaction, it is shown that the development of cooperative social norms is greatly facilitated if the agents possess a preference for identity-consistent behaviour. As compliance with cooperative norms (in the long run) has a positive effect on the agents’ pay-offs, it is argued that such a preference is evolutionarily advantageous. Notably, the argument, which assumes that agents always act in accordance with their preferences, also accounts for the cost of those features that are crucial for the selection process.

Why and How Identity Should Influence Utility

This paper provides an argument for the advantage of a preference for identity-consistent behaviour from an evolutionary point of view. Within a stylised model of social interaction, we show that the development of cooperative social norms is greatly facilitated if the agents of the society possess a preference for identity consistent behaviour. As cooperative norms have a positive impact on aggregate outcomes, we conclude that such preferences are evolutionarily advantageous. Furthermore, we discuss how such a preference can be integrated in the modelling of utility in order to account for the distinctive cooperative trait in human behaviour and show how this squares with the evidence.

An Application of Global Games to Signalling Models

In a flrst attempt to apply the global games methodology to signalling games, Ewerhart and Wichardt (2004) analyse a beer-quiche type signalling game with additional imperfect information about the preferences of the receiver. Their approach allows them to dismiss the unreasonable pool- ing on quiche equilibrium. This paper revisits their example and discusses how an extension of the set of strategies for the sender afiects the analy- sis. Interestingly, for an extended beer-quiche game, a unique equilibrium is selected while two equilibria are consistent with the Intuitive Criterion (Cho and Kreps, 1987). Apart from the technical analysis, potential eco- nomic applications of the results, e.g. in a context of limit pricing and entry deterrence, are indicated.

Norms, Cognitive Dissonance, and Cooperative Behaviour in Laboratory Experiments

Purpose - The paper emphasises the general relevance of social norms and social associations for cooperative behaviour in less or non-social economic contexts, focusing in particular on economic laboratory experiments, and to illustrate the underlying psychological driving forces. Design/methodology/approach - The argument focuses on the interplay between social norms, their psychological enforcement mechanism (cognitive dissonance) and context effects. Drawing on findings from both (social) psychology and experimental economics, it emphasises the relevance of social norms for cooperative behaviour also in less or non-social environments as often created in economic laboratory experiments. Moreover, the conditions for cognitive dissonance effects to occur are summarised and the corresponding behavioural effects are both highlighted and exemplified by means of various examples including the analysis of a specific data set. Findings - The discussion strongly suggests that the influence of common cooperative social norms is difficult to “anonymise away” in laboratory experiments or other less socially focused decision environments. Moreover, it provides a possible explanation for the occurrence of a variety of behavioural patterns often found in such settings, such as initially high but decreasing willingness to cooperate in social dilemmas. Practical implications - Emphasising the far reach of social aspects in economic decision making, the discussion may help in the design of institutions as it illustrates a widespread source of non-economic individual incentives. Originality/value - The argument addresses the idiosyncrasies of individual cooperative behaviour in situations where economic incentives should hinder such behaviour. Adding to earlier arguments which explain such cooperation, for example, by reference to fairness concerns or inequity aversion, the present discussion emphasises in particular the specific psychological driving forces behind such behaviour. In doing so, it establishes a clear link to the research on cognitive dissonance in psychology.