Daniel Houser | George Mason University (original) (raw)

Papers by Daniel Houser

Convergent evidence for detrimental effects of punishment on cooperation has been obtained in a w... more Convergent evidence for detrimental effects of punishment on cooperation has been obtained in a wide variety of environments, ranging from American students facing punishment in laboratory experiments, to Israeli parents facing fines for arriving late to their child's day care. We show here that enhancing the norm salience role of punishment can eliminate its detrimental effects. In a public goods game, privately implemented punishment reduces cooperation in relation to a baseline treatment without punishment. However, when that same incentive is implemented publicly, but anonymously to avoid shame, cooperation is sustained at significantly higher rates than in both baseline and private punishment treatments. Our data provide evidence that publicly implemented punishment enhances the salience of the violated social norm to both the punished and those who observe punishment, and that this increased norm salience promotes group members' norm obedience. Our findings have import...

Abstract: The role of natural language communication in economic exchange has been the focus of s... more Abstract: The role of natural language communication in economic exchange has been the focus of substantial experimental analysis. Recently, scholars have taken the important step of investigating whether certain types of communication (e.g., promises) might affect decisions differently than other types of communication (e.g., empty talk). Doing this requires the classification of natural language messages. Unfortunately, no broadly accepted method is available for this purpose. We here describe a coordination game for objective classification of natural language messages. The game is similar in spirit to the ‘ESP ’ game that has proven successful for the classification of tens of millions of internet images. We illustrate our game using data reported by Charness and Dufwenberg (2006). We demonstrate that our objective classification procedure allows one to infer more from the data than is possible with subjective approaches.

The relationship between trust and risk is a topic of enduring interest. Although there are subst... more The relationship between trust and risk is a topic of enduring interest. Although there are substantial differences between the ideas the terms express, many researchers from different disciplines have pointed out that these two concepts become very closely related in personal exchange contexts. This raises the important practical concern over whether behaviors in the widely-used “trust game” actually measure trust, or instead reveal more about risk attitudes. It is critical to confront this question rigorously, as data from these games are increasingly used to support conclusions from a wide variety of fields including macroeconomic development, social psychology and cultural anthropology. The aim of this paper is to provide cogent evidence on the relationship between trust and risk in “trust” games. Subjects in our experiment participate either in a trust game or in its risk game counterpart. In the trust version, subjects play a standard trust game and know their counterparts are...

Economic and Political Studies, 2020

Electoral clientelism or vote buying has been regarded as undermining democratic institutions and... more Electoral clientelism or vote buying has been regarded as undermining democratic institutions and weakening the accountability of the state towards its citizens, especially the poor. Social identity as a form of political mobilisation may contribute to this, enabling support to be won with clientelist transfers. This paper reports data from a novel laboratory experiment designed to examine whether clientelism can be sustained as a political strategy, and whether identity impacts the nature or efficacy of clientelism. Specifically, we design a voting and leadership game in order to examine whether individuals vote for clientelist allocations by a leader even at the expense of more efficient and egalitarian allocations. We find group identity does not significantly impact the prevalence of clientelist plans. Leaders are more likely, however, to choose allocations that provide fewer benefits (lower rents) to themselves when they are part of the majority in-group than when they are in the minority.

SSRN Electronic Journal, 2018

Over the last two decades social preferences have been implicated in a wide variety of key econom... more Over the last two decades social preferences have been implicated in a wide variety of key economic behaviors. Here we investigate connections between social preferences and the demand for information about others' economic decisions and outcomes, which we denote "social curiosity." Our analysis is within the context of the inequality aversion model of Fehr and Schmidt (1999). Using data from laboratory experiments with sequential public goods games, we estimate social preferences at the individual level, and then correlate social preferences with one's willingness to pay to make visible others' contribution decisions. Our investigation enables us to shed light on how costs to knowing others' economic decisions and outcomes impact decisions among people with different social preferences, and in particular the extent to which such costs impact the willingness for groups to cooperate. JEL-Codes: C910, H410.

Creation of empirical knowledge in economics has taken a dramatic turn in the past few decades. O... more Creation of empirical knowledge in economics has taken a dramatic turn in the past few decades. One feature of the new research landscape is the nature and extent to which scholars generate data. Today, in nearly every field the experimental approach plays an increasingly crucial role in testing theories and informing organizational decisions. Whereas there is much to appreciate about this revolution, recently a credibility crisis has taken hold across the social sciences, arguing that an important component of Fischer (1935)'s tripod has not been fully embraced: replication. Indeed, while the importance of replications is not debatable scientifically, current incentives are not sufficient to encourage replications from the individual researcher's perspective. We propose a novel mechanism that promotes replications by leveraging mutually beneficial gains between scholars and editors. We develop a model capturing the trade-offs involved in seeking independent replications before submission of a paper to journals.

Journal of Economic Behavior & Organization, 2018

We conducted a hidden-effort trust game, in which we assigned subjects to one of two groups. The ... more We conducted a hidden-effort trust game, in which we assigned subjects to one of two groups. The groups, which were formed through two different group formation processes, included a "social" group that required sharing and exchange among its members, and a "non-social" group that did not. Once assigned, subjects participated in the game with members from both groups, either with or without the opportunity to punish a trustee who may have defected on them. We found that for investors in the non-social group, the opportunity to punish a trustee worked to promote trust, but only when the trustee was a member of the other group. For the social group, the opportunity to punish had no effect on the investors' trust decisions, regardless of the trustee's group. We provide a theoretical framework to explain this asymmetric effect of punishment on trust. Our results suggest that groups with identities founded in sharing and exchange-a feature of globalized societies-may find it less necessary to engage in costly punishment. As a result, they may enjoy gains in economic efficiency.

SSRN Electronic Journal, 2012

We examine the effect of deceptive advertising on voting decisions in elections. We model twocand... more We examine the effect of deceptive advertising on voting decisions in elections. We model twocandidate elections in which 1) voters are uncertain about candidates' attributes; and 2) candidates can inform voters of their attributes by sending advertisements. We compare political campaigns with truthful advertising to campaigns in which there is a small chance of deceptive advertising. Our theoretical model predicts that informed voters should act on the information contained in the advertisement. Thus, even in deceptive campaigns, informed voters should either vote for the candidate from whom they received an advertisement or abstain from voting; they should never vote for the opposing candidate. We test our model in laboratory elections, and, as predicted, find higher participation among informed voters in elections that allow only for truthful advertisement than in elections that permit deceptive advertising. Contrary to our theoretical predictions, we find substantial differences in voting behavior between truthful and deceptive campaigns. When faced with a small probability of deception, informed voters in deceptive campaigns vote for the candidate who did not send an advertisement, thereby making sub-optimal voting choices. Even when there is only a small chance that an advertisement is deceptive, voters are more likely to elect the candidate who generates less welfare.

SSRN Electronic Journal, 2014

Communication between departments within a firm may include deception. Theory suggests that telli... more Communication between departments within a firm may include deception. Theory suggests that telling lies in these environments may be strategically optimal if there exists a small difference in monetary incentives (Crawford and Sobel, 1982; Galeotti et al, 2012). We design a laboratory experiment to investigate whether agents with different monetary incentives in a network environment behave according to theoretical predictions. We found that players' choices are consistent with the theory. That is, most communication within an incentive group is truthful and deception often occurs between subjects from different groups. These results have important implications for intra-organizational conflict management, demonstrating that in order to minimize deceptive communication between departments the firm may need to reduce incentive differences between these groups.

SSRN Electronic Journal, 2012

The authors thank Cecilia Chen for outstanding research assistance in designing the experiment, w... more The authors thank Cecilia Chen for outstanding research assistance in designing the experiment, writing the z-tree code, and running the experiment in the laboratory. They thank John Geanakoplos, Rosemary Nagel, and Andrew Schotter for very helpful comments. Marco Cipriani thanks David Hou for outstanding research assistance analyzing the data. Ana Fostel thanks the International Monetary Fund for fi nancial support.

Neuroeconomics, 2009

Introduction 47 Extensive Form Games 48 Normal or Strategic Form Games 50 Mixed Strategy Equilibr... more Introduction 47 Extensive Form Games 48 Normal or Strategic Form Games 50 Mixed Strategy Equilibrium 50 Games with Incomplete Information 51 Trembling Hand Equilibrium 53 Quantal Response Equilibrium 53 Game Theory Experiments 54 Design and Practice 54 Experiments with Normal Form Games 55 Experiments with Extensive Form Games 56 Neuroeconomics Experiments 57 Design 57 Neuroeconomics Experiments with the Trust Game 58 Neuroeconomics Experiments with the Ultimatum Game 59 Towards a Neuroeconomic Theory of Behavior in Games 60 Conclusion 61 References 61

Public Choice, 2008

Substantial academic interest and public policy debate centers on campaign finance reform. Campai... more Substantial academic interest and public policy debate centers on campaign finance reform. Campaign resources can provide benefits to constituencies if candidates use them to fund the distribution of useful information. On the other hand, voters can potentially be harmed if candidates trade policy favors to special interests in exchange for contributions. Unfortunately, because informative field data on this topic are very difficult to obtain, the effects of different campaign finance strategies on election outcomes and economic welfare remain largely uninformed by empirical analyses. This paper reports data from novel laboratory experiments designed to shed light on the campaign finance debate. Our experiment is based on a model where power-hungry candidates are motivated to trade favors for campaign contributions. Our data is consistent with the model's predictions. We find that voters' revise their beliefs in response to candidate advertising in a way that is consistent with theory. Moreover, in relation to privately financed electoral competitions, in publicly financed campaigns (i) high-quality candidates are elected more frequently, and (ii) margins of victory are larger. Both of these outcomes are predicted by theory. We conduct policy experiments on various campaign finance strategies, including the widely suggested caps on private fundraising. Our results suggest that caps can improve voter welfare but do not increase the likelihood that high-quality candidates will be elected.

Proceedings of the National Academy of Sciences, 2005

Unlike other species, humans cooperate in large, distantly related groups, a fact that has long p... more Unlike other species, humans cooperate in large, distantly related groups, a fact that has long presented a puzzle to biologists. The pathway by which adaptations for large-scale cooperation among nonkin evolved in humans remains a subject of vigorous debate. Results from theoretical analyses and agent-based simulations suggest that evolutionary dynamics need not yield homogeneous populations, but can instead generate a polymorphic population that consists of individuals who vary in their degree of cooperativeness. These results resonate with the recent increasing emphasis on the importance of individual differences in understanding and modeling behavior and dynamics in experimental games and decision problems. Here, we report the results of laboratory experiments that complement both theory and simulation results. We find that our subjects fall into three types, an individual's type is stable, and a group's cooperative outcomes can be remarkably well predicted if one knows ...

PLoS ONE, 2013

We report data from laboratory experiments where participants were primed using phrases related t... more We report data from laboratory experiments where participants were primed using phrases related to markets and trade. Participants then participated in trust games with anonymous strangers. The decisions of primed participants are compared to those of a control group. We find evidence that priming for market participation affects positively the beliefs regarding the trustworthiness of anonymous strangers and increases trusting decisions.

Journal of Risk and Uncertainty, 2011

It is often of interest to elicit beliefs from populations that may include naïve participants. U... more It is often of interest to elicit beliefs from populations that may include naïve participants. Unfortunately, elicitation mechanisms are typically assessed under the assumption that people respond optimally to incentives. Using laboratory experiments with a population that potentially includes naïve participants, we compare the performance of two belief elicitation mechanisms proposed by Karni (2009). These mechanisms, denoted as "declarative" and "clock," are valuable because their incentive compatibility does not require strong assumptions such as risk neutrality or expected utility maximization. We show that, theoretically and empirically, when there is a sufficient fraction of naïve participants, the clock mechanism elicits beliefs more accurately than the declarative mechanism. The source of this accuracy advantage is twofold: the clock censors naïve responses, and participants are more likely to employ dominant strategies under the clock. Our findings hold substantial practical value to anyone interested in eliciting beliefs from representative populations, a goal of increasing importance, for example, when conducting large-scale surveys or field experiments.

Journal of Public Economics, 2011

Convergent evidence for detrimental effects of punishment on cooperation has been obtained in a w... more Convergent evidence for detrimental effects of punishment on cooperation has been obtained in a wide variety of environments, ranging from American students facing punishment in laboratory experiments, to Israeli parents facing fines for arriving late to their child's day care. We show here that enhancing the norm salience role of punishment can eliminate its detrimental effects. In a public goods game, privately implemented punishment reduces cooperation in relation to a baseline treatment without punishment. However, when that same incentive is implemented publicly, but anonymously to avoid shame, cooperation is sustained at significantly higher rates than in both baseline and private punishment treatments. Our data provide evidence that publicly implemented punishment enhances the salience of the violated social norm to both the punished and those who observe punishment, and that this increased norm salience promotes group members' norm obedience. Our findings have important efficiency implications for the design of mechanisms intended to deter misconduct.

Journal of Economic Behavior & Organization, 2010

The role of trust in promoting economic activity and societal development has received considerab... more The role of trust in promoting economic activity and societal development has received considerable academic attention by social scientists. A popular way to measure trust at the individual level is the so-called "investment game" (Berg, Dickhaut, and McCabe, 1995). It has been widely noted, however, that risk attitudes can also affect decisions in this game, and thus in principle confound inferences about trust. We provide novel evidence, shedding light on the role of risk attitudes for trusting decisions. To the best of our knowledge, our data are the first rigorous evidence that (i) aggregate investment distributions differ significantly between trust and risk environments, and (ii) risk attitudes predict individual investment decisions in risk games but not in the corresponding trust games. Our results are convergent evidence that trust decisions are not tightly connected to a person's risk attitudes, and they lend support to the "trust" interpretation of decisions in investment games.

Journal of Economic Behavior & Organization, 2013

Recent research suggests that while there are negative effects of betrayal aversion, that the pre... more Recent research suggests that while there are negative effects of betrayal aversion, that the presence of betrayal-averse agents is beneficial in reducing trustees' willingness to betray trust. If true, then many common knowledge institutions may have adopted institutional rules and features which mitigate the emotional disutility associated with betrayal aversion while simultaneously maintaining the high levels of reciprocation brought about by the presence of betrayal-averse agents. Here we conduct a laboratory experiment which identifies a prevalent successful institutional feature common to many everyday institutions: the voluntary, but not forced, option to discover the painful details of failed economic exchange.

Journal of Business & Economic Statistics, 2004

We use a laboratory experiment to investigate the effect that assuming rational expectations has ... more We use a laboratory experiment to investigate the effect that assuming rational expectations has on structural inference in a dynamic discrete choice decision problem. Our experimental design induces preferences up to each subject's subjective rates of time preference, leaving unrestricted only this parameter and the decision rule that the subject uses in solving the problem. We analyze the data under the assumption that all subjects use the rational expectations decision rule, and also under weaker behavioral assumptions that allow for heterogeneity in the way people form decisions. We find no evidence that assuming rational expectations distorts inferences about the cross-sectional distribution of discount rates.

Games and Economic Behavior, 2008

People can become less cooperative when threatened with sanctions, and previous research has poin... more People can become less cooperative when threatened with sanctions, and previous research has pointed to both "intentions" and incentives as sources of this effect. This paper reports data from a novel experiment aimed at determining the relative importance of intentions and incentives in producing non-cooperative behavior in a personal exchange environment. Subjects play a one-shot investment game in pairs. Investors send an amount to trustees and request a return on this investment and, in some treatments, are given the option to threaten sanctions to enforce this return request. The decisions of trustees who face credible threats intentionally imposed (or not) by their investors are compared to the decisions of trustees who face credible threats randomly imposed (or not) by nature. When not threatened, trustees typically decide to return a positive amount that is less than the investor requested. When threatened with sanctions this decision becomes least common. In particular, under severe sanction threats most trustees return the desired amount, while under weak threats the most common decision is to return nothing. These results do not depend on whether trustees are threatened intentionally by their investors or randomly by nature. We suggest that credible sanction threats generate a "cognitive shift" that crowd-out norm-based social behaviors and increase the likelihood of income-maximizing decisions.

Convergent evidence for detrimental effects of punishment on cooperation has been obtained in a w... more Convergent evidence for detrimental effects of punishment on cooperation has been obtained in a wide variety of environments, ranging from American students facing punishment in laboratory experiments, to Israeli parents facing fines for arriving late to their child's day care. We show here that enhancing the norm salience role of punishment can eliminate its detrimental effects. In a public goods game, privately implemented punishment reduces cooperation in relation to a baseline treatment without punishment. However, when that same incentive is implemented publicly, but anonymously to avoid shame, cooperation is sustained at significantly higher rates than in both baseline and private punishment treatments. Our data provide evidence that publicly implemented punishment enhances the salience of the violated social norm to both the punished and those who observe punishment, and that this increased norm salience promotes group members' norm obedience. Our findings have import...

Abstract: The role of natural language communication in economic exchange has been the focus of s... more Abstract: The role of natural language communication in economic exchange has been the focus of substantial experimental analysis. Recently, scholars have taken the important step of investigating whether certain types of communication (e.g., promises) might affect decisions differently than other types of communication (e.g., empty talk). Doing this requires the classification of natural language messages. Unfortunately, no broadly accepted method is available for this purpose. We here describe a coordination game for objective classification of natural language messages. The game is similar in spirit to the ‘ESP ’ game that has proven successful for the classification of tens of millions of internet images. We illustrate our game using data reported by Charness and Dufwenberg (2006). We demonstrate that our objective classification procedure allows one to infer more from the data than is possible with subjective approaches.

The relationship between trust and risk is a topic of enduring interest. Although there are subst... more The relationship between trust and risk is a topic of enduring interest. Although there are substantial differences between the ideas the terms express, many researchers from different disciplines have pointed out that these two concepts become very closely related in personal exchange contexts. This raises the important practical concern over whether behaviors in the widely-used “trust game” actually measure trust, or instead reveal more about risk attitudes. It is critical to confront this question rigorously, as data from these games are increasingly used to support conclusions from a wide variety of fields including macroeconomic development, social psychology and cultural anthropology. The aim of this paper is to provide cogent evidence on the relationship between trust and risk in “trust” games. Subjects in our experiment participate either in a trust game or in its risk game counterpart. In the trust version, subjects play a standard trust game and know their counterparts are...

Economic and Political Studies, 2020

Electoral clientelism or vote buying has been regarded as undermining democratic institutions and... more Electoral clientelism or vote buying has been regarded as undermining democratic institutions and weakening the accountability of the state towards its citizens, especially the poor. Social identity as a form of political mobilisation may contribute to this, enabling support to be won with clientelist transfers. This paper reports data from a novel laboratory experiment designed to examine whether clientelism can be sustained as a political strategy, and whether identity impacts the nature or efficacy of clientelism. Specifically, we design a voting and leadership game in order to examine whether individuals vote for clientelist allocations by a leader even at the expense of more efficient and egalitarian allocations. We find group identity does not significantly impact the prevalence of clientelist plans. Leaders are more likely, however, to choose allocations that provide fewer benefits (lower rents) to themselves when they are part of the majority in-group than when they are in the minority.

SSRN Electronic Journal, 2018

Over the last two decades social preferences have been implicated in a wide variety of key econom... more Over the last two decades social preferences have been implicated in a wide variety of key economic behaviors. Here we investigate connections between social preferences and the demand for information about others' economic decisions and outcomes, which we denote "social curiosity." Our analysis is within the context of the inequality aversion model of Fehr and Schmidt (1999). Using data from laboratory experiments with sequential public goods games, we estimate social preferences at the individual level, and then correlate social preferences with one's willingness to pay to make visible others' contribution decisions. Our investigation enables us to shed light on how costs to knowing others' economic decisions and outcomes impact decisions among people with different social preferences, and in particular the extent to which such costs impact the willingness for groups to cooperate. JEL-Codes: C910, H410.

Creation of empirical knowledge in economics has taken a dramatic turn in the past few decades. O... more Creation of empirical knowledge in economics has taken a dramatic turn in the past few decades. One feature of the new research landscape is the nature and extent to which scholars generate data. Today, in nearly every field the experimental approach plays an increasingly crucial role in testing theories and informing organizational decisions. Whereas there is much to appreciate about this revolution, recently a credibility crisis has taken hold across the social sciences, arguing that an important component of Fischer (1935)'s tripod has not been fully embraced: replication. Indeed, while the importance of replications is not debatable scientifically, current incentives are not sufficient to encourage replications from the individual researcher's perspective. We propose a novel mechanism that promotes replications by leveraging mutually beneficial gains between scholars and editors. We develop a model capturing the trade-offs involved in seeking independent replications before submission of a paper to journals.

Journal of Economic Behavior & Organization, 2018

We conducted a hidden-effort trust game, in which we assigned subjects to one of two groups. The ... more We conducted a hidden-effort trust game, in which we assigned subjects to one of two groups. The groups, which were formed through two different group formation processes, included a "social" group that required sharing and exchange among its members, and a "non-social" group that did not. Once assigned, subjects participated in the game with members from both groups, either with or without the opportunity to punish a trustee who may have defected on them. We found that for investors in the non-social group, the opportunity to punish a trustee worked to promote trust, but only when the trustee was a member of the other group. For the social group, the opportunity to punish had no effect on the investors' trust decisions, regardless of the trustee's group. We provide a theoretical framework to explain this asymmetric effect of punishment on trust. Our results suggest that groups with identities founded in sharing and exchange-a feature of globalized societies-may find it less necessary to engage in costly punishment. As a result, they may enjoy gains in economic efficiency.

SSRN Electronic Journal, 2012

We examine the effect of deceptive advertising on voting decisions in elections. We model twocand... more We examine the effect of deceptive advertising on voting decisions in elections. We model twocandidate elections in which 1) voters are uncertain about candidates' attributes; and 2) candidates can inform voters of their attributes by sending advertisements. We compare political campaigns with truthful advertising to campaigns in which there is a small chance of deceptive advertising. Our theoretical model predicts that informed voters should act on the information contained in the advertisement. Thus, even in deceptive campaigns, informed voters should either vote for the candidate from whom they received an advertisement or abstain from voting; they should never vote for the opposing candidate. We test our model in laboratory elections, and, as predicted, find higher participation among informed voters in elections that allow only for truthful advertisement than in elections that permit deceptive advertising. Contrary to our theoretical predictions, we find substantial differences in voting behavior between truthful and deceptive campaigns. When faced with a small probability of deception, informed voters in deceptive campaigns vote for the candidate who did not send an advertisement, thereby making sub-optimal voting choices. Even when there is only a small chance that an advertisement is deceptive, voters are more likely to elect the candidate who generates less welfare.

SSRN Electronic Journal, 2014

Communication between departments within a firm may include deception. Theory suggests that telli... more Communication between departments within a firm may include deception. Theory suggests that telling lies in these environments may be strategically optimal if there exists a small difference in monetary incentives (Crawford and Sobel, 1982; Galeotti et al, 2012). We design a laboratory experiment to investigate whether agents with different monetary incentives in a network environment behave according to theoretical predictions. We found that players' choices are consistent with the theory. That is, most communication within an incentive group is truthful and deception often occurs between subjects from different groups. These results have important implications for intra-organizational conflict management, demonstrating that in order to minimize deceptive communication between departments the firm may need to reduce incentive differences between these groups.

SSRN Electronic Journal, 2012

The authors thank Cecilia Chen for outstanding research assistance in designing the experiment, w... more The authors thank Cecilia Chen for outstanding research assistance in designing the experiment, writing the z-tree code, and running the experiment in the laboratory. They thank John Geanakoplos, Rosemary Nagel, and Andrew Schotter for very helpful comments. Marco Cipriani thanks David Hou for outstanding research assistance analyzing the data. Ana Fostel thanks the International Monetary Fund for fi nancial support.

Neuroeconomics, 2009

Introduction 47 Extensive Form Games 48 Normal or Strategic Form Games 50 Mixed Strategy Equilibr... more Introduction 47 Extensive Form Games 48 Normal or Strategic Form Games 50 Mixed Strategy Equilibrium 50 Games with Incomplete Information 51 Trembling Hand Equilibrium 53 Quantal Response Equilibrium 53 Game Theory Experiments 54 Design and Practice 54 Experiments with Normal Form Games 55 Experiments with Extensive Form Games 56 Neuroeconomics Experiments 57 Design 57 Neuroeconomics Experiments with the Trust Game 58 Neuroeconomics Experiments with the Ultimatum Game 59 Towards a Neuroeconomic Theory of Behavior in Games 60 Conclusion 61 References 61

Public Choice, 2008

Substantial academic interest and public policy debate centers on campaign finance reform. Campai... more Substantial academic interest and public policy debate centers on campaign finance reform. Campaign resources can provide benefits to constituencies if candidates use them to fund the distribution of useful information. On the other hand, voters can potentially be harmed if candidates trade policy favors to special interests in exchange for contributions. Unfortunately, because informative field data on this topic are very difficult to obtain, the effects of different campaign finance strategies on election outcomes and economic welfare remain largely uninformed by empirical analyses. This paper reports data from novel laboratory experiments designed to shed light on the campaign finance debate. Our experiment is based on a model where power-hungry candidates are motivated to trade favors for campaign contributions. Our data is consistent with the model's predictions. We find that voters' revise their beliefs in response to candidate advertising in a way that is consistent with theory. Moreover, in relation to privately financed electoral competitions, in publicly financed campaigns (i) high-quality candidates are elected more frequently, and (ii) margins of victory are larger. Both of these outcomes are predicted by theory. We conduct policy experiments on various campaign finance strategies, including the widely suggested caps on private fundraising. Our results suggest that caps can improve voter welfare but do not increase the likelihood that high-quality candidates will be elected.

Proceedings of the National Academy of Sciences, 2005

Unlike other species, humans cooperate in large, distantly related groups, a fact that has long p... more Unlike other species, humans cooperate in large, distantly related groups, a fact that has long presented a puzzle to biologists. The pathway by which adaptations for large-scale cooperation among nonkin evolved in humans remains a subject of vigorous debate. Results from theoretical analyses and agent-based simulations suggest that evolutionary dynamics need not yield homogeneous populations, but can instead generate a polymorphic population that consists of individuals who vary in their degree of cooperativeness. These results resonate with the recent increasing emphasis on the importance of individual differences in understanding and modeling behavior and dynamics in experimental games and decision problems. Here, we report the results of laboratory experiments that complement both theory and simulation results. We find that our subjects fall into three types, an individual's type is stable, and a group's cooperative outcomes can be remarkably well predicted if one knows ...

PLoS ONE, 2013

We report data from laboratory experiments where participants were primed using phrases related t... more We report data from laboratory experiments where participants were primed using phrases related to markets and trade. Participants then participated in trust games with anonymous strangers. The decisions of primed participants are compared to those of a control group. We find evidence that priming for market participation affects positively the beliefs regarding the trustworthiness of anonymous strangers and increases trusting decisions.

Journal of Risk and Uncertainty, 2011

It is often of interest to elicit beliefs from populations that may include naïve participants. U... more It is often of interest to elicit beliefs from populations that may include naïve participants. Unfortunately, elicitation mechanisms are typically assessed under the assumption that people respond optimally to incentives. Using laboratory experiments with a population that potentially includes naïve participants, we compare the performance of two belief elicitation mechanisms proposed by Karni (2009). These mechanisms, denoted as "declarative" and "clock," are valuable because their incentive compatibility does not require strong assumptions such as risk neutrality or expected utility maximization. We show that, theoretically and empirically, when there is a sufficient fraction of naïve participants, the clock mechanism elicits beliefs more accurately than the declarative mechanism. The source of this accuracy advantage is twofold: the clock censors naïve responses, and participants are more likely to employ dominant strategies under the clock. Our findings hold substantial practical value to anyone interested in eliciting beliefs from representative populations, a goal of increasing importance, for example, when conducting large-scale surveys or field experiments.

Journal of Public Economics, 2011

Convergent evidence for detrimental effects of punishment on cooperation has been obtained in a w... more Convergent evidence for detrimental effects of punishment on cooperation has been obtained in a wide variety of environments, ranging from American students facing punishment in laboratory experiments, to Israeli parents facing fines for arriving late to their child's day care. We show here that enhancing the norm salience role of punishment can eliminate its detrimental effects. In a public goods game, privately implemented punishment reduces cooperation in relation to a baseline treatment without punishment. However, when that same incentive is implemented publicly, but anonymously to avoid shame, cooperation is sustained at significantly higher rates than in both baseline and private punishment treatments. Our data provide evidence that publicly implemented punishment enhances the salience of the violated social norm to both the punished and those who observe punishment, and that this increased norm salience promotes group members' norm obedience. Our findings have important efficiency implications for the design of mechanisms intended to deter misconduct.

Journal of Economic Behavior & Organization, 2010

The role of trust in promoting economic activity and societal development has received considerab... more The role of trust in promoting economic activity and societal development has received considerable academic attention by social scientists. A popular way to measure trust at the individual level is the so-called "investment game" (Berg, Dickhaut, and McCabe, 1995). It has been widely noted, however, that risk attitudes can also affect decisions in this game, and thus in principle confound inferences about trust. We provide novel evidence, shedding light on the role of risk attitudes for trusting decisions. To the best of our knowledge, our data are the first rigorous evidence that (i) aggregate investment distributions differ significantly between trust and risk environments, and (ii) risk attitudes predict individual investment decisions in risk games but not in the corresponding trust games. Our results are convergent evidence that trust decisions are not tightly connected to a person's risk attitudes, and they lend support to the "trust" interpretation of decisions in investment games.

Journal of Economic Behavior & Organization, 2013

Recent research suggests that while there are negative effects of betrayal aversion, that the pre... more Recent research suggests that while there are negative effects of betrayal aversion, that the presence of betrayal-averse agents is beneficial in reducing trustees' willingness to betray trust. If true, then many common knowledge institutions may have adopted institutional rules and features which mitigate the emotional disutility associated with betrayal aversion while simultaneously maintaining the high levels of reciprocation brought about by the presence of betrayal-averse agents. Here we conduct a laboratory experiment which identifies a prevalent successful institutional feature common to many everyday institutions: the voluntary, but not forced, option to discover the painful details of failed economic exchange.

Journal of Business & Economic Statistics, 2004

We use a laboratory experiment to investigate the effect that assuming rational expectations has ... more We use a laboratory experiment to investigate the effect that assuming rational expectations has on structural inference in a dynamic discrete choice decision problem. Our experimental design induces preferences up to each subject's subjective rates of time preference, leaving unrestricted only this parameter and the decision rule that the subject uses in solving the problem. We analyze the data under the assumption that all subjects use the rational expectations decision rule, and also under weaker behavioral assumptions that allow for heterogeneity in the way people form decisions. We find no evidence that assuming rational expectations distorts inferences about the cross-sectional distribution of discount rates.

Games and Economic Behavior, 2008

People can become less cooperative when threatened with sanctions, and previous research has poin... more People can become less cooperative when threatened with sanctions, and previous research has pointed to both "intentions" and incentives as sources of this effect. This paper reports data from a novel experiment aimed at determining the relative importance of intentions and incentives in producing non-cooperative behavior in a personal exchange environment. Subjects play a one-shot investment game in pairs. Investors send an amount to trustees and request a return on this investment and, in some treatments, are given the option to threaten sanctions to enforce this return request. The decisions of trustees who face credible threats intentionally imposed (or not) by their investors are compared to the decisions of trustees who face credible threats randomly imposed (or not) by nature. When not threatened, trustees typically decide to return a positive amount that is less than the investor requested. When threatened with sanctions this decision becomes least common. In particular, under severe sanction threats most trustees return the desired amount, while under weak threats the most common decision is to return nothing. These results do not depend on whether trustees are threatened intentionally by their investors or randomly by nature. We suggest that credible sanction threats generate a "cognitive shift" that crowd-out norm-based social behaviors and increase the likelihood of income-maximizing decisions.