NON‐MONETARY INCENTIVES AND OPPORTUNISTIC BEHAVIOR: EVIDENCE FROM A LABORATORY PUBLIC GOOD GAME

This study reports data from a laboratory experiment that investigates the incentive effect of three distinct social communication schemes on free‐riding behavior. We use performance‐based approval and disapproval ratings and a linear public good game to address the above issues. The treatments vary in terms of subjects' opportunities to anonymously assign (1) only the approval ratings to other group members, (2) only the disapproval ratings to other group members, and (3) either the approval or the disapproval ratings to other group members (but not both to the same group member), after they play a standard linear public good game. Despite the Nash prediction of zero individual contribution in all three treatments, the data show that the disapproval points generate significantly higher contribution than the approval points. The treatment in which subjects could communicate either the approval or the disapproval points produces the highest level of contribution. We discuss the implications that these findings may have for efficient design of organizations. (JEL D03, H41, C72, C92)     

FOOLING MYSELF OR FOOLING OBSERVERS? AVOIDING SOCIAL PRESSURES BY MANIPULATING PERCEPTIONS OF DESERVINGNESS OF OTHERS

We present a novel experiment demonstrating strategies selfish individuals utilize to avoid social pressure to be altruistic. Subjects participate in a trust game, after which they have an opportunity to state their beliefs about their opponent's actions. Subsequently, subjects participate in a task designed to “reveal” their true beliefs. Subjects who initially made selfish choices falsely state their beliefs about their opponent's kindness. Their “revealed” beliefs were significantly more accurate, which exposed subjects' knowledge that their selfishness was unjustifiable by their opponent's behavior. The initial false statements complied with social norms, suggesting subjects' attempts to project a more favorable social image. (JEL C9, D03, D83)     

INVESTMENT CHOICE ARCHITECTURE IN TRUST GAMES: WHEN “ALL‐IN” IS NOT ENOUGH

While many economic interactions feature “All‐or‐Nothing” options nudging investors towards going “all‐in,” such designs may unintentionally affect reciprocity. We manipulate the investor's action space in two versions of the “trust game.” In one version investors can invest either “all” their endowment or “nothing.” In the other version, they can invest any amount of the endowment. Consistent with our intentions‐based model, we show that “all‐or‐nothing” designs coax more investment but limit investors' demonstrability of intended trust. As a result, “all‐in” investors are less generously reciprocated than when they can invest any amount, where full investments are a clearer signal of trustworthiness. (JEL C72, C90, C91, D63, D64, L51)     

PAYOFF LEVELS,LOSS AVOIDANCE,AND EQUILIBRIUM SELECTION IN GAMES WITH MULTIPLE EQUILIBRIA: AN EXPERIMENTAL STUDY

Game theorists typically assume that changing a game's payoff levels—by adding the same constant to, or subtracting it from, all payoffs—should not affect behavior. Although this invariance is an implication of the theory when payoffs mirror expected utilities, it is an empirical question when “payoffs” are actually money amounts. Loss avoidance is a phenomenon where payoff‐level changes matter when they change the signs of payoffs: gains become losses or vice versa. We report the results of a human‐subjects experiment designed to test for two types of loss avoidance: certain‐loss avoidance (avoiding a strategy leading to a sure loss, in favor of an alternative that might lead to a gain) and possible‐loss avoidance (avoiding a strategy leading to a possible loss, in favor of an alternative that leads to a sure gain). Subjects in the experiment play three versions of Stag Hunt, which are identical up to the level of payoffs, under a variety of treatments. We find strong evidence of behavior consistent with certain‐loss avoidance in the experiment. We also find evidence of possible‐loss avoidance, although weaker than that for certain‐loss avoidance. Our results carry implications for theorists modeling real‐life situations with game theory and for experimenters attempting to test theory and interpret observed behavior in terms of theory. (JEL D81, C72, C73)     

Coordinated Action in the Massively Multiplayer Online Game World of Warcraft

In tandem with the technological advancement of immersive virtual environments, digital games have evolved into complex social worlds where people play collaboratively to achieve individual‐ and group‐oriented goals. The massively multiplayer online games genre has received international attention for the large numbers of users that commit a significant amount of time and effort to online play. Play styles within such game worlds are diverse, but “raiding” is generally considered among gamers and scholars alike to be the most challenging form of collaborative play. Like other forms of social activity, raiding is predicated on players' abilities to successfully coordinate individual lines of action. Yet the vast majority of raiders are not physically copresent during their collaborative efforts. Using Couch's theory of coordinated action as an interpretive frame, we explore the computer‐mediated process of raiding in the massively multiplayer online game World of Warcraft by analyzing ethnographic data and audio/visual recordings of gameplay. Our study expands Couch's theory of coordinated action in two ways. First, we demonstrate how individuals and groups simultaneously engage in multiple forms of coordinated activity (e.g., conflict and cooperation). Second, we reveal two semiotic layers of coordinated action—the “subject‐subject” (i.e., intersubjective) layer that is facilitated through the game's user interface, and the “subject‐object” layer that comprises players' interactions with the user interface itself. Our study thus considers the potential of Couch's theory for the study of computer‐mediated communication and nonhumans in interaction.     

AUDIT STATE DEPENDENT TAXPAYER COMPLIANCE: THEORY AND EVIDENCE FROM COLOMBIA

We develop and analyze a dynamic model of individual taxpayer compliance choice that predicts “audit state dependent taxpayer compliance,” by distinguishing between forward-looking versus myopic versus naïve behavior. We then test experimentally the audit state dependent model by reporting the results from the first tax compliance experiment run in Colombia. We find that subjects' compliance rates increase with greater enforcement. We also find more novel results: fine rates should be increased after an audit, and “nudging” myopic individuals toward reporting a constant rather than a fluctuating proportion of income would benefit both the taxpayer and the tax authority.(JEL H26, C91)     

CATASTROPHE AND RATIONAL POLICY: CASE OF NATIONAL SECURITY

Predicting catastrophes involves heavy‐tailed distributions with no mean, eluding proactive policy as expected cost‐benefit analysis fails. We study US government counterterrorism policy, given heightened risk of terrorism. But terrorism also involves human behavior. We synthesize the behavioral and statistical aspects in an adversary‐defender game. Calibration to extensive data shows that where a Weibull distribution is the best predictor, US counterterrorism policy is rational (and optimal). Here, we estimate the adversary's unobserved variables, e.g., difficulty of an attack. We also find cases where the best predictor is a Generalized‐Pareto with no finite mean and rational policy fails. Here, we offer “work‐arounds”. (JEL H56, D81, C46)     

LIVING IN TWO NEIGHBORHOODS—SOCIAL INTERACTION EFFECTS IN THE LABORATORY

Field evidence suggests that people belonging to the same group often behave similarly, that is, behavior exhibits social interaction effects. We conduct a laboratory experiment that avoids the identification problem present in the field and allows us to study the behavioral logic of social interaction effects. Our novel design feature is that each subject is simultaneously a member of two randomly assigned and identical groups where only members (“neighbors”) are different. We study behavior in a coordination game with multiple equilibria and a public goods game, which has only one equilibrium in material payoffs. We speak of social interactions if the same subject at the same time makes group‐specific decisions that depend on their respective neighbors' decisions. We find that a majority of subjects exhibit social interaction effects both when the game has multiple equilibria in material payoffs and when it only has one equilibrium. (JEL C91, H41, K42, H26)     

PAY SECRECY AND EFFORT PROVISION

Pay secrecy is often justified on the ground of concerns about the detrimental consequences of intra‐firm pay comparisons for work morale and performance. Surprisingly, however, there is only limited empirical evidence that the availability of pay comparison information is detrimental for effort provision. In this paper, I study pay comparison effects in a gift‐exchange game laboratory experiment where an employer is matched with two symmetric employees. I compare effort choices made by employees in a “pay secrecy” treatment and in two “public wages” treatments where employees are informed of the wage paid to the co‐worker. In one “public wages” treatment the employer can choose both wages she pays to the employees, while in the other treatment the wage paid to one employee is regulated exogenously. I show that pay disclosure can be detrimental for effort provision if employees are treated unequally. (JEL A13, C92, J31)     

AN EXPERIMENT ON INNOVATION AND COLLUSION

This paper examines the relationship between product innovation and the success of price collusion using novel laboratory experiments. Average market prices in low innovation (LO) experiments are significantly higher than those in high innovation, but otherwise identical experiments. This price difference is attributed to LO experimental subjects' greater common market experience. The data illustrate how collusion can be perceived as the “only way to make it” in LO markets where product innovation is not a viable strategy for increasing profits. They suggest that product homogeneity can be a proximate cause, and product innovation an ultimate cause, of collusion. (JEL L41, L10, C92)     

ADVANCE PRODUCTION,INVENTORIES, AND MARKET POWER: AN EXPERIMENTAL INVESTIGATION

We report an experiment that assesses the effects of alterations in production conditions and product durability on market power in Bertrand‐Edgeworth duopolies. Static equilibrium analysis predicts that advance (rather than “to demand”) production raises prices, but does not affect profits. The further addition of a simple inventory option causes prices to fall and seller earnings to increase. Contrary to these predictions, we observe similar prices in baseline and advance production treatments, but lower profits given advance production. An inventory option reduces both prices and earnings. Results are driven by the treatments' effects on sellers' capacities to tacitly collude. (JEL C9, D4, L4)     

Further Evidence for Infants' Preference for Prosocial Over Antisocial Behaviors

This study extends the findings that young infants prefer prosocial to antisocial others (Hamlin & Wynn, Cognitive Development 2011, 26, 30; Hamlin, Wynn, & Bloom, Nature 2007, 450, 557) to older infants (12–24 and 24–36 months) with a novel display. We presented infants with short cartoons in which a character (the “Protoganist”) engaged in a ball play with two others, one acting prosocially (the “Giver”), and the other antisocially (the “Keeper”). Afterward, infants were presented with the Giver and the Keeper characters and encouraged to reach for the one of their choices. We found that infants exhibited robust choice for the Giver. In addition, infants' preference for the Giver persisted despite changes in facial features (dark skin, scrambled face). These findings provide further evidence for infant's preference for prosociality.     

Toward a Sociology of Nature

Although we often believe that nature stands apart from social life, our experience of nature is profoundly social. This paper unpacks this paradox in order to (1) explain sociology's neglect of the environment and (2) introduce the articles in this special issue on “the sociology of nature.” I argue that sociology's disinterest in the biophysical world is a legacy of its classical concern with tracing society's “Great Transformation” from gemeinschaft to gesellschaft: while early anthropologists studied “primitive” societies that allegedly had not yet completed “the passage from nature to culture” (Lévi‐Strauss 1963 : 99), pioneering sociologists presumed that industrialization and urbanization liberated “modern” society from nature and therefore focused their attention on “urbanism as a way of life” (Wirth 1938 ). As exemplified by the articles in this symposium, environmental sociology critiques the nature‐culture and town‐country dualisms. One of environmental sociology's core contributions has been demonstrating that nature is just as much a social construction as race or gender; however, its more profound challenge to the discipline lies in its refutation of the sociological axiom that social facts can be explained purely through reference to other social facts. “Environmental facts” are a constitutive feature of social life, not merely an effect of it.     

DEMOCRACY AND GROWTH: A PERSPECTIVE FROM DEMOCRATIC EXPERIENCE

This article investigates the impact of democracy on growth by simultaneously considering a country's secular‐historical experience of democracy and current political regime. The results obtained show that the effect of democracy on growth exhibits an asymmetrical pattern depending on the country's democracy stock. Only in “democratic countries” with “prolonged experiences of democratic rule” can democracy promote growth. This claim stands in contrast to the earlier literature in which there is either no consistent relationship between growth and democracy or perhaps a nonlinear relationship. This conclusion provides circumstantial support for the claim of the “democracy promotes growth” hypothesis. (JEL O43)     

Consequences of Teen Parents' Child‐Care Arrangements for Mothers and Children

Using the nationally representative Early Childhood Longitudinal Study, Birth Cohort (2001–2006; N ?7,900), the authors examined child‐care arrangements among teen parents from birth through prekindergarten. Four latent classes of child care arrangements at 9, 24, and 52 months emerged: (a) “parental care,” (b) “center care,” (c) “paid home‐based care,” and (d) “free kin‐based care.” Disadvantaged teen‐parent families were overrepresented in the “parental care” class, which was negatively associated with children's preschool reading, math, and behavior scores and mothers' socioeconomic and fertility outcomes compared with some nonparental care classes. Nonparental care did not predict any negative maternal or child outcomes, and different care arrangements had different benefits for mothers and children. Time spent in nonparental care and improved maternal outcomes contributed to children's increased scores across domains. Child‐care classes predicted maternal outcomes similarly in teen‐parent and nonteen‐parent families, but the “parental care” class predicted some disproportionately negative child outcomes for teen‐parent families.     

SENTIMENT BIAS AND ASSET PRICES: EVIDENCE FROM SPORTS BETTING MARKETS AND SOCIAL MEDIA

Previous research using attendance‐based proxies for sentiment bias in sports betting markets confirmed the presence of investor sentiment in these markets. We use data from social media (Facebook “Likes”) to proxy for sentiment bias and analyze variation in bookmakers' prices investor sentiment. Based on betting data from seven professional sports leagues in Europe and North America, we find evidence that bookmakers increase prices for bets on teams with relatively more Facebook “Likes,” indicating the presence of price‐insensitive investors with sentiment bias. These price changes do not affect informational efficiency in this market. (JEL L81, G14)     

EMPLOYER RECRUITMENT STRATEGIES AND THE LABOR MARKET OUTCOMES OF NEW HIRES

The results in this article suggest, among other things, a strong association between recruitment choices and starting wages. The theoretical framework motivating the empirical analysis is a wage‐posting game in which firms make wage offers and choose recruitment strategies while recognizing a trade‐off between hiring speed and match quality. Introducing this theoretical framework to the recruitment literature, I present new evidence on employers' choices of recruitment methods to answer the questions “How do employer recruitment choices vary by firm and vacancy characteristics and the skill requirements of jobs?” and “How do vacancy duration and starting wages vary with recruitment choices?”(JEL MS1)     

THE OPTIMAL DEFENSE OF NETWORKS OF TARGETS

This paper examines a game‐theoretic model of attack and defense of multiple networks of targets in which there exist intranetwork strategic complementarities among targets. The defender's objective is to successfully defend all the networks and the attacker's objective is to successfully attack at least one network of targets. Although there are multiple equilibria, we characterize correlation structures in the allocations of forces across targets that arise in all equilibria. For example, in all equilibria the attacker utilizes a stochastic “guerrilla warfare” strategy in which a single random network is attacked. (JEL C72, D74)     

The Art of Restraint: How Experienced Program Leaders Use Their Authority to Support Youth Agency

The staff of youth development programs perform a delicate balancing act between supporting youth agency and exercising necessary authority. To understand this balancing in daily practice, we interviewed 25 experienced (M = 14 years) leaders of arts, leadership, and technology programs for high‐school‐aged youth. We obtained accounts of when, how, and why they gave advice, set limits, and “supported youth when disagreeing.” Qualitative analysis found surprising similarities across leaders. They used authority to give advice and set limits, but did so with reasoned restraint. Maximizing youth's opportunities to learn from experience was central in their decision making. They described employing authority in intentional ways aimed at helping youth's work succeed, strengthening youth's agency, and building skills for agency (e.g., critical thinking, “clarifying intent”).     

LEAGUE‐LEVEL ATTENDANCE AND OUTCOME UNCERTAINTY IN U.S. PRO SPORTS LEAGUES

We extend the breakpoint literature regarding annual league‐level attendance and the impact of outcome uncertainty to the National Basketball Association, National Football League, and National Hockey League. As our measures are different than past work on baseball, we also apply our model to the American and National Leagues. Attendance series for each league under consideration are not stationary overall, but are stationary with break points. No form of outcome uncertainty (game, play‐off, or across seasons) matters for attendance in hockey or baseball regardless of which game uncertainty variable is used. Under the measure of game uncertainty that recommends itself for football, only play‐off uncertainty matters for attendance. Whether outcome uncertainty matters for basketball depends on the measure of game uncertainty. Situational similarities in the break points across leagues suggest general areas for future research. (JEL L83, C22)