Freedom, Power and Interference: An Experiment on Decision Rights

Abstract

Freedom and power are pervasive components in any social, political, and economic interaction. Individuals interact by making decisions, affecting themselves to the extent that they have the freedom to do so, and affecting others to the extent that they have the power to do so. Thus, freedom and power are fundamentally related to the exercise of decision rights. Economics, which has traditionally considered decision rights solely for their instrumental value in achieving outcomes, has recently moved to consider decision rights also for their intrinsic value, i.e., the value beyond the expected utility associated with them. In this paper, we propose a behavioral theory of preference for decision rights, driven by preference for freedom, power, and non-interference, and we conduct a novel laboratory experiment in which the effect of each preference is distinguished. We employ the following terminology. An individual experiences freedom when his preferences over the possible outcomes influence the outcomes he achieves. An individual experiences power when his preferences influence another individual’s outcomes. An individual does not experience interference when his outcomes are not influenced by another individual’s preferences. Each concept captures the causal dependence of an individuals’ preferences on an individuals’ outcomes. In our behavioral theory, individuals have not only preferences over outcomes, which lead them to value decision rights instrumentally, but also preference for freedom, power, and non-interference, which lead them to value decision rights intrinsically. Evidence from our experiment confirms the existence of an intrinsic value of decision rights, as reported by the existing literature. Most importantly, our theoretical framework and experimental design allow to disentangle the factors generating the intrinsic value of decision rights. We highlight two main findings. First, we find no evidence of preference for power. This result suggests that preference for power, as casually observed in politics or other institutional settings, may simply be instrumental to other components of well-being, such as status recognition. Second, we find stronger evidence of preference for non-interference than of preference for freedom. This result suggests that individuals value decision rights neither because they enjoy the freedom of making a choice, nor because they enjoy having power over other individuals, but rather because they dislike letting other individuals interfere in their outcomes. Our framework and findings lead to a fundamental change in perspective on preference for decision rights. Individuals like to have decision rights in virtue of the absence of the decision rights of other individuals.