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This introduction to one of the key areas of behavioural economics – social preferences – explains in clear, nontechnical language how particular groups of experiments have been used by behavioural economists to shed light on the processes of economic decision making. These include bargaining games, trust games and public good games. The significance of determinants such as punishment, sanctioning, emotion, cooperation, reciprocity, leadership, framing and cross-cultural differences are demonstrated and explained, and students are provided with the understanding and resources needed to replicate the experiments themselves.
1. Introduction
1.1 Homo economicus
1.2 Behavioural and experimental economics
1.3 Deception and monetary incentives
2. Bargaining games
2.1 Introduction
2.2 Dictator games
2.3 Competition from proposers’ and responders’ side
2.4 Psychological factors
2.5 Financial factors
3. Trust and gift exchange games
3.1 Introduction
3.2 Disentangling motives in the trust game
3.3 Behavioural determinants of trust
3.4 Gift exchange games
4. Public Good Games I
4.1 Introduction
4.2 Do people cooperate?
4.3 Why do people cooperate?
4.4 Conditional cooperation
5. Public Good Games II
5.1 Introduction
5.2 Can pre-play communication promote pro-social outcomes?
5.3 Income inequality and pubic good provision
5.4 Social identity and discrimination in public good experiments
6. Leadership
6.1 Introduction
6.2 Sequential vs simultaneous public good games
6.3 Leader appointment
6.4 Who leads more effectively?
7. Public good games with sanctioning I
7.1 Introduction
7.2 The role of emotions
7.3 Sanctioning mechanisms
7.4 Does the presence of monetary sanctions always promote cooperation?
8. Public good games with sanctioning II
8.1 Introduction
8.2 Voting on public good institutions with punishment and rewards
8.3 Voting on formal sanctions
8.4 Third-party punishment games
8.5 Factors determining the assignment of third-party sanctions
9. Cross-cultural experiments
9.1 Introduction
9.2 Fairness and bargaining behaviour
9.3 Trust games
9.4 Cooperative behaviour
9.5 Negative reciprocity
Appendix A Experimental instructions
Appendix B Glossary
Description
This introduction to one of the key areas of behavioural economics – social preferences – explains in clear, nontechnical language how particular groups of experiments have been used by behavioural economists to shed light on the processes of economic decision making. These include bargaining games, trust games and public good games. The significance of determinants such as punishment, sanctioning, emotion, cooperation, reciprocity, leadership, framing and cross-cultural differences are demonstrated and explained, and students are provided with the understanding and resources needed to replicate the experiments themselves.
