Identification of Other-Regarding Preferences: Evidence from a Common Pool Resource Game in Colombia

Abstract

Social preferences have been important to the explanation of deviations from Nash equilibrium in game outcomes. An enduring challenge in any model of other-regarding preferences is to identify heterogeneity within the population. Using data from a common pool resource (CPR) game in the field with 1,095 individuals (21% students and 79% villagers, users of a CPR) we estimate a structural model including preferences for altruism, reciprocity and equity. We identify behavioral types using a latent class logit model. Exogenous determinants of type are examined such as socio-economic characteristics, perceptions on the CPR, perceived interest in cooperation among the community, whether the participant does volunteer work and whether the CPR is the household main economic activity of the household.A competing explanation of deviations from Nash equilibrium is the existence of a cognitive factor: the construction of a best reply might make rational expectations about other players’ mistakes (e.g. quantal response equilibrium). Whilst a cognitive aspect would help the model better fit the data, we do not find much evidence for cognitive heterogeneity, and instead a great deal of behavioral heterogeneity. Choice prediction based on types is robust out of sample.