View
54
Download
2
Category
Preview:
DESCRIPTION
Laboratory studies of social stratification and “class” Anna Gunnthorsdottir Australian School of Business and Vienna Univ. of Economics & Business Kevin McCabe George Mason Univ . Stefan Seifert Technical Univ. Karlsruhe Jianfei Shen , Univ. of New South Wales - PowerPoint PPT Presentation
Citation preview
Laboratory studies of social stratification and “class”
Anna GunnthorsdottirAustralian School of Business and Vienna Univ. of Economics & Business
Kevin McCabe George Mason Univ. Stefan Seifert Technical Univ. Karlsruhe
Jianfei Shen, Univ. of New South Wales
Palmar Thorsteinsson, Univ. of Iceland
Roumen Vragov The Right Incentive, NY
J. Pub. Econ. 2010; Res. Exptal Econ. 2010
Three main findings from the program
1) We are responsive to social stratification (“class”)
2) We respond efficiently & precisely (eqm!) to social organization based on contribution (“merit”)
3) We can, in the aggregate, tacitly coordinate complex non-obvious asymmetric equilibria. It is however not quite clear how.
“…to a psychologist [the tacit coordination of an asymmetric equilibrium in a (simple) Market Entry game] looks like ‘Magic’.”
Kahneman, 1988, p.12
Kahneman, D. (1988). Experimental economics: a psychological perspective. In Tietz, R., Albers, W., Selten, R. (Eds.), Bounded Rational Behavior in Experimental Games and Markets. Berlin: Springer, pp. 11-18.
“Magic”
The Voluntary Contribution Mechanism (VCM)
Isaac, R.M., McCue, K. F., & Plott, C. R. (1984). Public goods provision in an experimental environment. Journal of Public Economics, 26, 51-74.
Divide endowment between two accounts
Private Account Group Account
ngs
n
i
i
1
For a social dilemma, set g > 1 and g < n
Basic requirements for a model of contribution-based grouping
1. Group membership is competitively and solely based on individual contributions
2. The equilibrium analysis extends across all players and all groups, since players compete for membership in groups that vary in their payoff
3. In the causal chain, the contribution decision precedes grouping and associated payoff
GBM equilibria (in pure strategies)
1) Free-riding equilibrium where nobody contributes
2) “Near-efficient” equilibrium (NEE)– z < n contribute 0, the rest contribute their entire endowment– Payoff dominant*
* Harsanyi, J. & R. Selten, 1988. A General Theory of Equilibrium Selection in Games.Cambridge, MA: MIT Press.
For the near-efficient equilibrium, players must:
1. Coordinate which of the two equilibria to play
2. “Grasp” a non-obvious asymmetric equilibrium
3. Play only 2 out of their 101 strategies
4. Play only their corner strategies (0 or 100)
5. Play the two corner strategies in the right frequencies
6. Tacitly coordinate who plays which strategy
Experiment parameters
w(i=1,2,…N) = 100
N = total number of players = 12
Group size n = 4
g = 2
MPCR = 0.5
z = 2
# rounds = 80
Means per round
MPCR=0.5
0
20
40
60
80
100
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77
Round #
Frequency of strategies observed/predicted
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88 92 96 100
0%
10%20%30%
40%50%
60%
70%
80%
90%
100%
Choice proportions Rounds 1-80
Public contribution
Perc
enta
ge
0
20
40
60
80
100
120
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 770
20
40
60
80
100
120
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77
0
20
40
60
80
100
120
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77
0
20
40
60
80
100
120
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77
0
20
40
60
80
100
120
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77
0
20
40
60
80
100
120
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77
0
20
40
60
80
100
120
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77
0
20
40
60
80
100
120
1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
0%10%20%30%40%50%60%70%80%90%
100%
Robots contribute 0 all 80 rounds
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
0%10%20%30%40%50%60%70%80%90%
100%
Robots contribute 0 Rounds 21-80
One type more able to contribute than the other type
Type “Low”: wL = 80 Type “High”: wH = 120
N = 12 NH = 6NL = 6
n = 4g/n = MPCR = 0.5# rounds = 80
Equilibria in pure strategies:[0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0][0, 0, 80, 80, 80, 80, 120, 120, 120, 120, 120, 120]
… mingling cannot be avoided
Low ability members try to sponge off high-ability members in the mixed group
High-ability members would like to escape this exploitation but can’t
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
105
110
115
120
0%10%20%30%40%50%60%70%80%90%
Choice proportions Rounds 1-80, four sessions
Public contribution
Perc
enta
ge
0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90 93 96 99 102
105
108
111
114
117
120
0%10%20%30%40%50%60%70%80%90%
Choice proportions Rounds 21-80, four sessions
Public contribution
Perc
enta
ge
…“segregated with castes”
Assume NH mod n = 0 and NL ≥ 2n
For example: wL = 80 and wH = 120 NH = 4 and NL = 8
Is there an equilibrium w. positive contributions?
Payoff-dominant equilibrium prediction
(Non-contribution by all remains an alternative pure-strategy equilibrium)
s* = {0, 0, 80, 80, 80, 80, 80, 80, 81, 81, 81, 81, 81}
A simple model of merit-based grouping
No lags, no reputation, no information asymmetry about contribution or the distribution of abilities to contribute
What you contribute determines where you find yourself (with an element of chance incorporated), with whom, and how much you earn.
A “perfect” world in that contribution, or a change in behavior for the better, is instantly recognized, and “transgressions” are immediately forgotten.
Class
E (1-12) = {80, 85, … 130, 135}
N = 12
n = 4g/n = 0.5T = 80
No NEE, not even considering that the strategy space is discrete Only a ZEE, a pure-mixed strategy eqm not yet fully excluded
Conclusions
Experimental subject respond in a natural, efficient and predictable way to contribution-based organization (policy?) – and they respond as “homini economici”
Subjects respond to differences based on ability (Rousseau: “products of nature”) and aim to maintain and exploit positions that stem from these differences
Aggregates of subjects are capable of tacit coordination to much larger extent than previously realized (How?)
Recommended