… Do as the Romans do. A model of conformity with the endogenous formation of preferences

This note is an answer to a previous model on conformity in public goods contributions developed by Carpenter (2004), where a population evolution is allowed according to the standard replicator dynamic (Taylor and Jonker, 1978, Maynard Smith, 1982). To confirm his theoretical prediction, Carpenter developed an experiment showing that free riding actually grows faster when agents have the information necessary to conform. The model and the experiment are, however, inherently different, for the time scales of the model are not able to capture the short run convergence of behavior in the experimental laboratory.We here present a model of conformity which offers the same laboratory results as Carpenter without resorting to evolutionary models, and also gives agents the chance to adopt different strategies implying various levels of cooperation.     

EXTERNAL THREAT AND COLLECTIVE ACTION

This article studies how players allocate their endowed resources between productive and conflictual activities in the context of rivalry between two groups. We show that the suboptimality and exploitation propositions established by Olson (1965) do not necessarily apply when external threat is endogenized. We also illustrate that it does not always pay to take an offensive stance. When competing with an offensive group, it might be better for members of a defensive group to remain defensive. Furthermore, in the context of rivalry between two groups, free riding can actually benefit everyone in the system. (JEL D70 , D74 )     

RIGHT-TO-WORK LAWS AND FREE RIDING

Many economists argue that state right-to-work laws, by disallowing union shops, encourage free riding and thus diminish union viability. Others counter that right-to-work laws are not enforced and that they represent local attitudes and employee characteristics which would encourage free riding in any me. We find that when other factors which affect free riding are taken into account, the marginal impact of right-to-work laws remains significant, although of a smaller magnitude than that found in previous bivariate studies.     

Contests with group-specific public-good prizes

We examine the equilibrium effort levels of individual players and groups in contests in which n groups compete to win a group-specific public-good prize, the individual players choose their effort levels simultaneously and independently, and the probability of winning for each group depends on the groups’ effort levels. In the basic model, we show that, in each group, only the highest-valuation players expend positive effort and the rest expend zero effort; there is underinvestment in the contest for the group as a whole. Next, in the main model in which the players are budget-constrained, we show that low-valuation players free ride on high-valuation players’ contributions, not vice versa, but the free-rider problem is “alleviated” as compared with the basic model.     

How majorities can lose the election Another voting paradox

We show that due to free riding of potential voters facing positive voting costs, the proposal with the highest number of supporters can still be the most likely to lose a binary election. Received: 17 January 2001/Accepted: 10 June 2002 Financial support was provided by The Netherlands Organization for Scientific Research (NWO). We thank an anonymous referee for useful comments.     

On increased risk and the voluntary provision of public goods

This paper examines the impacts of increased risk on the voluntary provision of public goods. I strengthen the view that uncertainty ameliorates free riding even given negative non-Nash conjectures. This result holds since the change in the perceived free riding (i.e., the magnitude of the conjecture) drives voluntary contribution to public good supply. The result has two main implications. First, the traditional model of the rational self-interested individual can explain voluntary contributions. Second, a public policy to encourage volunteerism would maintain private information of private contributions to the supply of public goods. However, risk as a public policy instrument is limited by ethical concerns and behavioral responses to risk.U.S. Environmental Protection Agency provided support for this research. Garey Durden, Todd Sandler, Fred Sterbenz, Robert Sugden, and Joe Kerkvliet provided useful comments. I owe tanks to Peter Bohm, Hans Wijkander, and Charles Mason for encouraging my work in this area. Two referees provided detailed suggestions that greatly improved the paper.     

Unequal and Unfair: Free Riding in One‐Shot Interactions

This study investigates the effect of status on perceptions of and reactions to free riders. Extrapolating from expectation states theory, I posit that higher status actors are granted a greater degree of social leniency than lower status actors when it comes to free riding. Specifically, I hypothesize that higher status actors are less likely to evoke the same negative emotional and behavioral responses elicited by lower status free riders. Using gender as an indicator of status, I employ a simple vignette to examine this relationship. Results validate previous findings related to the negative emotional and affective responses individuals have toward free riders. Furthermore, while findings fail to support the stated hypotheses, additional results demonstrate the subtle complexity of the relationship between gender, status, and free riding as well as its effect on the emotional and behavioral responses of individuals within small groups. As a result, I suggest that an outright rejection of the stated hypotheses may be premature and that further research in this area is warranted.     

FIRM PARTICIPATION IN STEEL INDUSTRY LOBBYING

Why do firms participate in steel industry lobbying to obtain antidumping and countervailing duties? In contrast to previous work, we find that economic variables, measured at the industry level, do not significantly affect the degree of participation by individual firms. We find that steel producers tend to free-ride, but firms in segments of the steel industry that can control free riding tend to participate more. We also find that the distribution of benefits and the costs of contributing are significant determinants of the number of contributing firms.     

Sanctioning as a social norm: Expectations of non-strategic sanctioning in a public goods game experiment

Sanctioning increases cooperation in public goods games, but not indiscriminately under all conditions and in all societies, and the mechanisms by which sanctioning exercises its impact on behavior are yet to be studied in detail. We show experimentally that in the presence of sanctioning, our experimental subjects adjust their behavior in order to avoid being a free rider. They do this not only in the STANDARD sanctions treatment, where they directly experience any sanctions assigned to them, but also in our main treatment, the SECRET sanctions treatment, where no information on sanctions received is available until the end of the experiment. We observe no such free riding avoidance in the treatment without sanctioning. The mere knowledge that sanctions might be assigned increases cooperation among the members of our subject pool; subjects expect that non-strategic sanctioning occurs against the free riders. Moreover, these expectations are correct as we observe a similar pattern and extent of sanctioning in both treatments. We propose that sanctioning in itself is a social norm and may be culturally dependent, as suggested in the literature.     

The determinants and effects of right-to-work laws: A review of the recent literature

I review the recent literature on the determinants and effects of right-to-work (RTW) laws. The focus is primarily on the econometric studies published since the early 1980s. Five major areas of impact are assessed: unionization, free riding, union organizing activities and successes in NLRB elections, wage structure, and state industrial development. While individual findings are quite sensitive to model specification, the accumulated evidence indicates that RTW laws have at least a significant short-run impact on all of these areas except perhaps wages.     

DOES OPTION THEORY HOLD FOR MAJOR LEAGUE BASEBALL CONTRACTS?

We test whether option theory indicated by the Black–Scholes formula is consistent with contract negotiations between teams and players in Major League Baseball (MLB). Teams use contract options in order to obtain the right to buy a player's services for an extra year when negotiating multiple year contracts. These options are similar to European call options, and should reduce the risk of buying volatile assets (players with high variation in performance). In this paper, we model the decision to buy an option (include an option year in the contract) and whether to exercise the option (pay the option salary in the option year versus buying out the option). The results indicate that the behavior of MLB teams is consistent with standard option theory both in terms of buying and exercising options. The sample is the complete population of free agent hitters who signed new contracts between the years 2003 and 2011. We were unable to find any published literature that has addressed this issue. (JEL ZO, H3)     

BECAUSE IT'S FREE POKER! A QUALITATIVE ANALYSIS OF FREE TEXAS HOLD'EM POKER TOURNAMENTS

The game of poker has dramatically increased in popularity in America over the past decade, and includes a new trend in poker in which tournaments are played with no monetary wagering. These “free” poker tournaments are the primary focus of this project. Our interest in these free poker tournaments was twofold: first, we wished to identify what would motivate a person to play poker when there is no profit motive; second, we wanted to learn how the social dynamics of the game itself may or may not change when monetary risk is not present. Through covert participant observation of free poker tournaments at four different locations we were able to discover three main motivations among the players: sharpening skills for later cash games, sociability, and gaining the status of a “regular player.” We also discovered that the tenor and tempo of the game tended to vary not as a function of the location, but rather because of the social class of the players. We offer several hypotheses to guide future research endeavors in this area.     

INEFFICIENCY AS A STRATEGIC DEVICE IN GROUP CONTESTS AGAINST DOMINANT OPPONENTS

Contests between groups are prone to intra‐group externalities (free‐riding). Yet, costless incentive schemes that entirely avoid free‐riding within a group might be undesirable, both individually and socially. In contests between two groups, a relatively weak (i.e., small or unproductive) group will optimally not implement them because they compound differences in strength between groups. If the groups are of relatively similar strengths, they are both worse off when they rein in their intra‐group externalities compared to a situation where they do not. If groups' strengths differ sufficiently, the relatively strong group benefits at the expense of the relatively weak one. (JEL Z13, D72, N40, D74)     

DO STATES FREE RIDE IN ANTITRUST ENFORCEMENT?

Recent research has documented a substantial role in antitrust enforcement by U.S. states. While many of the cases litigated involve small local firms, a nontrivial portion encompasses multiple‐state issues. Some previous literature has investigated whether states engage in free‐riding behavior in environmental regulation, and whether governments free ride on private decisions in provision of public goods. In this paper, we analyze a sample of antitrust cases involving cross‐state impacts (from the Multi‐State Antitrust Database, provided by the National Association of Attorneys General) and explain the determinants of free riding (which we define as participating in a case, but not as a lead plaintiff). (JEL L40, H41, H77)     

Traveling With the Ball Club: A Code of Conduct for Wives Only

When they accompany their husbands on road trips, the wives of major league baseball players must follow an unwritten code of conduct, a code socially constructed and enforced by men. This code is reflected in the way wives and ballplayers interact on airplanes and buses, and most strikingly, in the requirement that wives stay out of hotel bars where the team is staying. These interactions within a code reflecting female conformity to male dominance, and preserving male privileges, provide a lens through which we can inspect gender inequity and marital inequity, including what can fairly be called institutionalized adultery. We always talk about the unwritten rule book of being a baseball wife. We have our own rules. There's these unwritten rules that you do and you don't do. That's why everybody thinks that every wife should have to go into the minor league system, and not straight into the big leagues. —Marsha     

TO DETER OR TO MODERATE? ALLIANCE FORMATION IN CONTESTS WITH INCOMPLETE INFORMATION

We consider two players' choice about the formation of an alliance ahead of conflict in a framework with incomplete information about the strength of the potential ally. When deciding on alliance formation, players anticipate the self‐selection of other players and the informational value of own and other players' choices. In the absence of these signaling effects, strong players have an incentive to stand alone, which leads to a separating equilibrium. This separating equilibrium can be destabilized by deception incentives if beliefs are updated on the basis of endogenous alliance formation choices. Weak players may find it attractive to appear strong in order to deter competitors from positive effort choices. Strong players may find it attractive to appear weak in order to give their competitors a false sense of security and then beat them with little effort. Moreover, appearing weak allows players to free‐ride when alliances are formed. (JEL D72, D74)     

FREE RIDING, SHIRKING, AND TEAM PRODUCTION IN LEGAL PARTNERSHIPS

A model of team production in legal partnerships, based on the Alchian-Demsetz theory of the firm, is developed and tested empirically in this paper. An estimate of the optimal law-firm size for controlling costly free riding behavior in partnerships is derived. Finally, some survivorship evidence on law-firm sizes, some comparisons of legal and medical group practices, and some thoughts on the role of the sole proprietor in the market for legal services are presented.     

Arbitrator bias and self-interest: Lessons from the baseball labor market

Their desire for enduring employment is commonly assumed to induce arbitrators to make fair awards. We find, however, that in major league baseball's unique institutional setting, selfinterested behavior by arbitrators has led to bias against players and preservation of monopsony rents for team owners. We apply a standard model of arbitrator behavior to all 391 arbitrated cases in baseball since 1979. Under conditions that should lead to an even split in awards to teams and players, probit analysis indicates that arbitrators favor teams 61 percent of the time. Furthermore, bias against African-American and Latinborn players is even more pronounced.     

THE ATTACK‐AND‐DEFENSE GROUP CONTESTS: BEST SHOT VERSUS WEAKEST LINK

This study analyzes a group contest in which one group (defenders) follows a weakest link, whereas the other group (attackers) follows a best shot impact function (IF). We fully characterize the Nash and coalition‐proof equilibria and show that with symmetric valuation the coalition‐proof equilibrium is unique up to the permutation of the identity of the active player in the attacker group. With asymmetric valuation, it is always an equilibrium for one of the highest valuation players to be active; it may also be the case that the highest valuation players in the attacker group free‐ride completely on a group member with a lower valuation. However, in any equilibrium, only one player in the attacker group is active, whereas all the players in the defender group are active and exert the same effort. We also characterize the Nash and coalition‐proof equilibria for the case in which one group follows either a best shot or a weakest link but the other group follows an additive IF. (JEL C72, D70, D72, D74, H41)     

Personality traits and strategic behavior: Anxiousness and aggressiveness in entry games

We demonstrate that personality has a systematic effect on strategic behavior. We focus on two personality traits: anxiousness and aggressiveness, and consider a 2-player entry game, where each player can guarantee a payoff by staying out, a higher payoff if she is the only player to enter, but a lower payoff if both players enter. We find that: anxious players enter less; aggressive players enter more; players are more likely to enter against anxious than non-anxious players; and players are less likely to enter against aggressive than non-aggressive players. We discuss the possible mechanism through which personality affects strategic behavior.