Schedule - Parallel Session 6 - Games and Strategic Behaviour 1

We design a novel experiment to isolate the existence of distributional social preferences. Using four sets of popular 2×2 games (asymmetric matching pennies, battle of the sexes, prisoner’s dilemma and chicken) we elicit choices both when payoffs to the other party are hidden and when they are revealed. This design contrasts a player’s attitude to risk over the underlying lotteries paying out to self with preferences over the same outcomes coupled with consequences to the other. In this design the ‘recipient’ is a passive player, permitting a tightly controlled investigation of Fehr & Schmidt’s inequality- aversion parameters as only attitudes to the impact of these factors can account for any differences between treatments. No other source of intentions-based social preferences, such as reciprocity or team-reasoning, are possible in this design, removing common confounds in earlier tests of their model. Our experiment employs a Holt & Laury-type method for eliciting risk preferences over the underlying lotteries then a related ‘generalised strategy method’ to do the same when the full game is revealed to subjects. We run a simulation of a random preference formulation of the Fehr & Schmidt model with risk-aversion for each of our games to see the likely parameter magnitude and distribution that can match our experimental findings. We find evidence of pro-social concerns in the prisoner’s dilemma and stag hunt games. Importantly, we also find evidence that those showing such concerns in one game also exhibit them in others. Previous tests of Fehr-Schmidt have found some support for the model in aggregate but not at the individual level. However, we find only mild evidence of pro- or anti-social preferences in the asymmetric matching pennies and battle of the sexes’ games, suggesting distributional concerns are context dependent. At most a half of our participants showed evidence of any pro- or anti-social preferences across the set of these games. The other half of the subjects is best modelled as having inequality-aversion parameters equal to zero. While offering support to the existence of Fehr-Schmidt preferences in some games by some people, the magnitude of the effects in general is not large. This suggests distributional preferences of the kind proposed by Fehr & Schmidt may be milder and less general than previously assumed. But it also shows there is an independent effect of inequality aversion for some even after controlling for intentions-based forms of social preference.

In a circular neighborhood with each member having a left and a right neighbor indi-viduals choose two contribution levels, one each for the public good shared with the left, respectively right, neighbor. This allows for general free riders, who do not contribute at all and general cooperators, who contribute to both local public goods, as well as for those who contribute in a discriminatory way. Although all local two-person games are structurally independent, we mainly aim to confirm intra- as well as interpersonal spillover effects. Additionally we try to answer questions like: Will one differentiate between one’s two direct neighbors when they differ, e.g. in game parameters or past behavior? Will there be clusters of similarly behaving types? Will one observe initial cooperation up to end game effects? We hope to infer more clearly motives for voluntary cooperation like direct and indirect reciprocity concerns via analyzing individual adaptations in playing two structurally independent games. Treatments differ in cooperation incentives and structural (a)symmetry of local public goods.