Selective Incentives and Generalized Information Exchange

Abstract

The goal of this research is to understand how generalized exchange systems emerge when information, as the object of exchange, produces a collective good. When individuals contribute information for a collective benefit, it can create a group-generalized exchange system that involves a social dilemma. I argue that two properties of information, replication and high jointness of supply, are crucial for understanding the nature of the social dilemma in these exchange systems. Combined with low-cost contributions, these special features of information can allow social psychological selective incentives to significantly encourage cooperation. Experiments were conducted to examine the independent effects of two social psychological selective incentives (social approval and observational cooperation) on sharing behavior in a generalized information exchange system. The results indicate that observing high levels of cooperative behavior is beneficial in the short run, but ultimately it only leads to moderately higher levels of cooperation than when individuals cannot observe cooperative behavior. On the other hand, when individuals receive either high or low levels of social approval, it has a very positive, significant impact on cooperative behavior. This research has implications for real-world generalized information exchange systems such as those found on the Internet. In addition, the theory and results in this study can also be extended to public goods that share the features of low-costs contributions, replication, and high jointness of supply.