Psychological Motivations Underlying Economic Interactions
Paper Session
Friday, Jan. 3, 2025 2:30 PM - 4:30 PM (PST)
- Chair: Tim Cason, Purdue University
Communication, Guilt, and Agency Risk with Payoff Externalities
Abstract
Communication is effective in enhancing cooperation in strategic settings. In this paper, we present a scenario in which actions of principals and agents not only affect payoffs for the pair within the specific agency relationship, but also impact the earnings and outcomes of an external principal-agent pair. Maximum social efficiency is achieved only if all principals and agents choose to cooperate. We investigate how different types of communication between principals and agents affect cooperation and efficiency in this environment. Communication is hypothesized to impact beliefs, which in turn affects the psychological costs that principals and agents experience when choosing their actions. A baseline treatment allows no communication opportunities. Two communication treatments introduce (a) a single, private message from the agent to the principal in each pair; and (b) preliminary free-form chat between both agents and principals whose payoffs are affected by actions, in addition to the single, private message in (a). Participants provide complete and incentivized first- and second-order beliefs. The opportunity for free-form communication in the group significantly increases cooperative choices of both principals and agents. Allowing agents to send a single private message has only an asymmetric effect. These messages increase cooperative choices by principals but not agents. Beliefs are consistent with the behavior observed, with beliefs that others will cooperate higher in the treatment with free-form communication. Similarly, we also observe the asymmetric influence of the single private message on first and second order beliefs of the principals and agents. Beliefs impact cooperative choices in a manner consistent with simple guilt aversion. These findings provide evidence of a beliefs channel through which communication affects behavior.Guilt Aversion and Other Motivations: Eve versus Adam
Abstract
We explore gender differences in how people are motivated. We focus on guilt aversion, a surprisingly relatively unexplored issue. Our experiment supports the idea that men are more guilt averse than women. We provide a potential intuition for our findings based on the pregnancy-related biological asymmetry between genders. Finally, our paper explores other rationales to explain observed gender behaviors, like moral commitment.Blue Lies
Abstract
We introduce the “blue lie game”, where subjects can decide to lie in favor of their ingroup and to the detriment of the outgroup. We find that blue lies are pervasive, no matter the strength of ingroup identity. Blue lies decrease in the presence of an ingroup norm of truth-telling, but they increase when the same norm is exhibited by the outgroup. Stronger ingroup identity determines a higher sensitivity to the ingroup norm. Silence reduces remarkably the number of blue lies and weakens the effects of norms. We discuss implications for social media interactions, fake news, and echo chambers.Disentangling Suboptimal Updating: Complexity, Structure, and Sequencing
Abstract
We study underlying reasons for the failure of individuals to adhere to Bayes' rule and decompose this departure into three elements: (i) task complexity, (ii) information structure, and (iii) timing of information release. In a series of controlled experiments, we systematically alter all three elements and quantify their magnitude. We link task complexity with the degree of non-linearity embedded in Bayesian updating. We experimentally explore this link and find empirical support for it.Discussant(s)
Shakun Mago
,
University of Richmond
Siyu Wang
,
Wichita State University
Olga Stoddard
,
Brigham Young University
Alessandra Cassar
,
University of San Francisco
Anya Samek
,
University of California-San Diego
JEL Classifications
- D9 - Micro-Based Behavioral Economics
- C9 - Design of Experiments