Sven Fischer

Ex Interim Voting: An Experimental Study of Referendums for Public-Good Provision

We report the results of an experimental study that compares voting mechanisms in the provision of public goods. Subjects can freely decide how much they want to contribute. Whether the public good is finally provided is decided by a referendum under full information about all contributions. If provision is rejected, contributions are reduced by a fee and reimbursed. We compare unanimity with majority voting and both with the baseline of cheap talk. Contributions are highest under unanimity. Yet, results concerning overall efficiency are mixed. When provision occurs, only unanimity enhances efficiency. Overall, however, unanimity leads to too many rejections.

Monopolizing Sanctioning Power under Noise Eliminates Perverse Punishment But Does Not Increase Cooperation

We run several experiments which allow us to compare cooperation under perfect and imperfect information in a centralized and decentralized punishment regime. Under perfect and extremely noisy information, aggregate behavior does not differ between institutions. Under intermediate noise, punishment escalates in the decentralized peer-to-peer punishment regime which badly affects efficiency while sustaining cooperation for longer. Only decentralized punishment is often directed at cooperators (perverse punishment). We report several, sometimes subtle, differences in punishment behavior, and how contributions react.

Cui Bono, Benefit Corporation? An Experiment Inspired by Social Enterprise Legislation in Germany and the US

Abstract How do barely incentivized norms impact incentive-rich environments? We take social enterprise legislation as a case in point. It establishes rules on behalf of constituencies without institutionalized means of enforcement. By relying primarily on managers’ other-regarding concerns while leaving corporate incentive structures unaltered, how effective can such legislation be? We ran a laboratory experiment with a framing likened to German corporate law which traditionally includes social standards. Our results show that a stakeholder provision, as found in both Germany and more recent US regulation, cannot overcome material incentives. Yet even in the absence of adverse incentives the stakeholder duty does not foster other-regarding behavior. Our experiment illustrates the paramount importance of taking into account both incentives and framing effects when designing institutions. We tentatively discuss potential policy implications for social enterprise legislation and the stakeholder debate.

Cooperation under Punishment: Imperfect Information Destroys it and Centralizing Punishment Does Not Help

We run several experiments which allow us to compare cooperation under perfect and imperfect information and under a centralized and decentralized punishment regime. We nd that (1) centralization by itself does not improve cooperation and welfare compared to an informal, peer-to-peer punishment regime and (2) centralized punishment is equally sensitive to noise as decentralized punishment, that is, it leads to signi cantly lower cooperation and welfare (total pro ts). Our results shed critical light on the widespread conjecture that the centralization of punishment institutions is welfare increasing in itself.

Ex Interim Voting in Public Good Provision

We report the results of an experimental study that compares voting mechanisms in the provision of public goods. Subjects can freely decide how much they want to contribute. Whether the public good is finally provided is decided by a referendum under full information about all contributions. If provision is rejected, contributions are reduced by a fee and reimbursed. We compare unanimity with majority voting and both to the baseline of cheap talk. Contributions are highest under unanimity. Yet, results concerning overall efficiency are mixed. When provision occurs, only unanimity enhances efficiency. Overall, however, unanimity leads to too many rejections.

Informational Contagion in the Laboratory

We study the informational channel of financial contagion under laboratory conditions. In our experiment, two markets with correlated fundamentals open sequentially and in both of them subjects receive private information. Subjects in the market opening second also observe the history of trades and prices in the first market. We find that although in both markets private information is only imperfectly aggregated, subjects are able to make correct inferences based on the public information coming from the market that opens first. We thus observe financial contagion under laboratory conditions: the correlation between asset prices is very close to that predicted by the theory. Moreover, as the theory predicts, there is no contagion when asset fundamentals are independent: in other words, subjects only react to the history of prices and trades in the first market when it is rational to do so because they convey information.

Concession Bargaining:An Experimental Comparison of Protocols and Time Horizons

We test experimentally whether dynamic interaction is crucial for concession bargaining. In our complete information bargaining experiments, two parties with asymmetric conflict payoffs try to agree how to share a commonly known pie by bargaining over a finite number of successive trials (agreement attempts). We compare the fully dynamic interaction to one less dynamic and one static protocol. In the quasi-dynamic protocol, later trials merely reveal that so far no agreement has been reached, and in the static protocol, no feedback information is given about earlier trials. We find that neither conflict rate nor efficiency or inequality of agreements differs across protocols. Comparing different numbers of maximal trials shows that more trials render conflict more likely due to less concessions.

Win Shift Lose Stay – An Experimental Test of Non-Compete Clauses

We experimentally test the effect of enforceable non-compete clauses on working efforts. The employee can invest into the probability of making a profitable innovation. After a successful innovation (Win) the employee may want to leave the firm (Shift) whereas after an innovation failure (Lose) he may remain (Stay) . In the treatments with non-compete clause, but not in the baseline, the employer can prevent successful innovators from leaving the firm. With standard preferences, effort should be lower if the worker cannot leave the firm, except if compulsory compensation for having to stay is very high. By contrast we find no reduction in effort even if compensation is low. Employers anticipate the incentive problem and pay a higher wage which employees reciprocate by higher effort.

Effects of exclusion on social preferences

In three party ultimatum games the proposer can first decide whether to exclude one responder, what increases the available pie. The experiments control for intentionality of exclusion and veto power of the third party. We do not find evidence for indirect reciprocity of the remaining responder after exclusion of the other. Similarly, not excluding the second responder is only insignificantly reciprocated by him. Overall, we find little evidence that intentional exclusion affects response behavior.