We measure ingroup bias in the context of real social groups operating in a slum and investigate which ingroup members' features affect it. We find that higher homogeneity within the group and stronger relationship with the super-categorized group (the community of people living in the slum) significantly reduce the gap between outgroup versus ingroup donations.
Empirical evidence on stock prices shows that firms investing successfully in radical innovation experience higher stock returns. This paper provides a model that sheds light on the relationship between the degree of firm innovativeness and stock returns, the movements of which capture expectations on firm's profitability and growth. The model is grounding on Neo-Schumpeterian growth models and relies on the crucial assumption of radical innovation, characterized by "ambiguity" or Knightian uncertainty: due to its uniqueness and originality, no distribution of probability can be reasonably associated with radical innovation success or failure. Different preferences (α-maxmin, Choquet) are here compared. Results show that the assumption of ambiguity-aversion is crucial in determining higher returns in the presence of radical innovation and that the specific definition of expected utility shapes the extent of the returns. This result holds also in the case of endogenous innovation; risk attitude plays no role.
This article analyzes a firm's decision of entering a new market - or staying outside - and considers five decision models - optimizing, satisficing, incremental, cybernetic, and random - and their domain of applicability in order to discuss how fit they are in describing this specific decision. Because the cybernetic decision strategy appears to be the most appropriate to deal with the entry decision, the work goes deeper into this model focusing on the degree of uncertainty that the environment represents to the decision makers and to the state of the conflict of interest that arises because this decision implies a coordination problem.
We conduct laboratory experiments to study peer effects on compliance with extortive requests. To this aim, we use an "extortion game" with multiple victims. In agreement with our hypothesis, our results show that when the information on peers' behavior is available, compliance with appropriative requests is triggered by conformism among victims rather than by punishment. Moreover, we find that extorted sums are rather small, requests are proportional to the victim's earnings, similar across victims, and are significantly lower when the extorter self-selects into this role. Punishment is rare, but effective. Finally, our results indicate that fairness concerns matter even in a context of extra-legal taxation, shaping both extorters' requests and victims' compliance.
Creative problem-solving by corporations is frequently conducted within a group or a team framework. A relevant issue is to try to determine which type of corporate culture is most effective in enhancing performance in creative tasks. We present a series of experiments that aim at studying group creativity in contexts where corporate culture may tend to promote cooperation or competition among group members. Our experimental results show that cooperative corporate culture fosters creativity. We identify the reason for success as the emergence within the group of a social norm of high effort.
In this paper we present a novel experimental procedure aimed at better understanding the interaction between confidence and ambiguity attitudes in individual decision making. Different ambiguity settings not only can be determined by the lack of information in possible scenarios completely "external" to the decision-maker, but can also be a consequence of the decision maker's ignorance about her own characteristics or performance and, thus, deals with confidence. We design a multistage experiment where subjects face different sources of ambiguity and where we are able to control for self-assessed levels of competence. By means of a Principal Component Analysis, we obtain a set of measures of "internal" and "external" ambiguity aversion. Our regressions show that the two measures are significantly correlated at the subject level, that the subjects' "internal" ambiguity aversion increases in performance in the high-competence task and that "external" ambiguity aversion moderately increases in earnings. Self-selection does not play any role.
In this study, we experimentally analyze the effectiveness of payoff‐irrelevant peer‐to‐peer ratings as a cooperation enforcement device in a finitely repeated public goods game setting. We run two treatments that differ in the amount of information on own and others' received rating points provided to the players, whereas, in a third treatment, we analyze peer approval when assigning ratings to others is costly. In particular, we wonder whether, even under anonymity and in the absence of reputational concerns, (a) players rate others' contribution decisions in the expected direction and (b) the peer rating mechanisms under study foster cooperation and welfare. Our findings reveal that, in the two costless rating treatments, peer rating concerns lead to higher contributions and efficiency, compared to our control. Introducing a small fixed cost for assigning rating points results in a very high percentage of subjects deciding not to rate others' behavior, so that cooperation cannot be enforced.
The paper presents the results of a lab-in-the-field experiment in three South African townships located in the suburbs of Cape Town. The experimental design consists of a set of decisions on how the members of a naturally occurring group allocate an endowment to a private or to a public account. In our treatments, we first manipulate the degree of participation of group members in the choice of the public good, from involvement of the group leader only, to collective discussion and to private voting. Additionally, we explore the effectiveness of monetary incentives (collective versus individual) set in order to promote participation. The results show that leader guidance and participatory incentives significantly raise cooperation and hold after controlling for a wide set of individual and group characteristics.
Three main motivations can explain compliance with social norms: fear of peer punishment, the desire for others' esteem and the desire to meet others' expectations. Though all play a role, only the desire to meet others' expectations can sustain compliance when neither public nor private monitoring is possible. Theoretical models have shown that such desire can indeed sustain social norms, but empirical evidence is lacking. Moreover it is unclear whether this desire ranges over others' "empirical" or "normative" expectations. We propose a new experimental design to isolate this motivation and to investigate what kind of expectations people are inclined to meet. Results indicate that, when nobody can assign either material or immaterial sanctions, the perceived legitimacy of others' normative expectations can motivate a significant number of people to comply with costly social norms.
In this paper we introduce the "extortion game" and propose a set of experiments aimed at studying both the extorter's and the victim's behavior. The primary focus of our experiments is understanding what determines both the extent of the extortive request and the victim's reaction in terms of compliance. Our results show that the extorter's requests are proportional to the victim's earnings, similar across victims and positively correlated with the level of request the extorter perceives as "fair". Punishment is rare and the extorted sums are rather small. Results also shed light on the motivations that make a victim compliant with extortive requests, confirming that punishment plays a role in promoting compliance, but also showing the importance of other concurrent factors like information about peers' behavior and the perceived fairness of the request. Overall, our results indicate that fairness concerns matter even in a context of extra-legal taxation, shaping both extorters' requests and victims' compliance.
Umbilical cord blood is a source of hematopoietic stem cells essential to treat life-threatening diseases, such as leukemia and lymphoma. However, only a very small percentage of parents donate upon delivery. The decision to donate the cord blood occurs at a very specific time and when parents likely experience emotional, informational, and decisional overloads; these features of cord blood donation make it different from other pro-social activities. In collaboration with an OB-GYN clinic in Milan, Italy, we conducted the first randomized controlled trial that applies tools from behavioral science to foster cord blood donation, and quantified the gains that informational and behavioral "nudges" can achieve. We found that information and "soft" commitments increased donations; approaching expecting parents closer to the delivery date and providing them with multiple reminders, moreover, had the strongest impact. However, a significant portion of women who expressed consent to donate could not do so because of organizational constraints. We conclude that simple, non-invasive behavioral interventions that address information gaps and procrastination, and that increase the salience of the activity can substantially enhance altruistic donations of cord blood, especially when coupled with organizational support.