Heterogeneous Social Preferences Research Articles

Evolution of cooperation in spatial public goods game based on heterogenous social preferences and dynamic punishment

The mechanism of promoting cooperation in the public goods game has always been concerned by scholars. However, most of the existing studies are based on the premise that participants are self-interested. In order to explore why some sellers on e-commerce platforms voluntarily maintain the platform’s reputation, we incorporate heterogeneous social preferences of sellers into the spatial public goods game. We find that heterogeneous social preferences can enhance cooperation by improving collective rationality. Specifically, the altruistic preference of sellers can greatly reduce free-riding behavior, while the inequality aversion preference has a little inhibitory effect. Interestingly, when the benefit of maintaining the platform’s reputation is relatively high, the reciprocal preference can inhibit cooperation, but it can promote cooperation when the benefit is relatively small. This is due to the existence of some loosely connected but stable cooperative or defective clusters of sellers in e-commerce platforms. Furthermore, we propose a dynamic punishment mechanism to punish free riders. We observe that the dynamic punishment mechanism is more effective than the static punishment mechanism in solving the second-order free-riding problem faced by punishers. Increasing the enhancement factor of public goods is identified as a fundamental approach to mitigating this problem.

Social preferences and sales performance

AbstractWe use an incentivized experimental game to uncover heterogeneity in social preferences among salespeople in a large Austrian retail chain. Our results show that the majority of agents take the welfare of others into account but a significant fraction reveal selfish behavior. Matching individual behavior in the game with firm data on sales performance shows that agents with social preferences achieve a significantly higher revenue per customer. However, at the same time, they achieve fewer sales per day. Both effects offset each other, so that the overall association with total sales revenue becomes insignificant. Our findings highlight the nuanced role of selfish versus social preferences in sales contexts with important implications for economic research.

Collision-free Navigation with Unknown and Heterogeneous Social Preferences

In this study, we address cooperative navigation using multiple agents with social preferences such as egoism and altruism. Previous studies have proposed collision-free navigation with social preferences under the assumption that the social preferences of other agents are available. However, if some agents cannot express their social preferences to others, this method is unavailable. In this study, we consider the cooperative navigation problem where agents do not know the social preference of the others. Our social preference estimation scheme can realize provably collision-free navigation. Agents estimate social preferences based on their trajectories. Then, they modify existing Voronoi cells by using their positions and the estimated social preferences of other agents. Moving within the modified Voronoi cells enables all agents to avoid collision with others, even if the actual social preferences are unknown. Through a simulation study for various distributions of social preferences, we show that the proposed method can avoid collision and achieve navigation performance close to that of the existing method using the actual social preferences.

Assessment of social demand heterogeneity to inform agricultural diffuse pollution mitigation policies

Agroecosystems provide several agroecosystem disservices, among which diffuse nutrient pollution is one of the most significant, mainly due to its negative impacts on surrounding ecosystems, such as coastal ecosystems. Therefore, the implementation of agricultural measures to mitigate nutrient pollution might become a way to overcome this environmental challenge. However, proper implementation requires both a cost-effectiveness assessment and social support. This paper aims to value the social demand for agricultural measures to mitigate nutrient pollution and the benefits gained in the surrounding ecosystems from their implementation. Additionally, the demand preference heterogeneity is assessed. Measures proposed by a law intended to mitigate diffuse nitrate pollution in the Campo de Cartagena catchment area (south-eastern Spain) and thereby restore one of the main coastal lagoons in the European Mediterranean Sea, the Mar Menor, are used as a case study. A choice experiment and latent class mixed logit were employed to disentangle heterogeneous social preferences. Despite the fact that preference heterogeneity was revealed regarding the proposed agricultural measures, strong preferences linked to the restoration of the Mar Menor were shown by all the distinct classes. The socioeconomic benefits derived from the measures along with the expected environmental benefits from the restoration of the surrounding ecosystems exceed the farmers' costs for their implementation. Consequently, the results provide guidance to policy makers in the establishment of socially supported strategies for agricultural nitrate pollution mitigation.

The volunteer’s dilemma explains the bystander effect

Abstract The bystander effect is the phenomenon that people are less likely to help others when they are in a group than when they are alone. The theoretical literature typically explains the bystander effect with the volunteer’s dilemma: if providing help is equivalent to creating a public good, then bystanders could be less likely to help in groups because they free ride on the other bystanders. This paper uses a dynamic game to experimentally test such strategic interactions as an explanation for the bystander effect. In line with the predictions of the volunteer’s dilemma, I find that bystanders help immediately when they are alone but help later and are less likely to help if they are part of a larger group. In contrast to the model’s predictions, subjects in need of help are helped earlier and are more likely to be helped in larger groups. This finding can be accounted for in an extended model that includes both altruistic and selfish bystanders. The paper concludes that the volunteer’s dilemma is a sensible way to model situations in which someone is in need of help, but it highlights the need to take heterogeneous social preferences into account.

Social Preferences and Environmental Behavior: A Comparison of Self-Reported and Observed Behaviors

Faced with the depletion of natural resources and climate change, individuals making the choice to behave in a more environmentally conscious way is increasingly necessary. Rational choice theory suggests that individuals will only behave in pro-environmental ways if they perceive those actions to align with their own self-interests. Others, however, have highlighted instances where individuals act pro-socially or altruistically, deviating from their own self-interests for the benefit of others. The present study examines whether individuals’ social preferences are associated with engagement in pro-environmental behaviors. Specifically, drawing on a methodology from behavioral economics, we use dictator and ultimatum game behavior to measure social preferences, and we then evaluate whether heterogeneity in social preferences is associated with self-reported pro-environmental behaviors and observed recycling behavior. The results indicate that individual differences in social preferences have a modest association with self-reported pro-environmental behaviors but no association with observed recycling behavior. Self-reported pro-environmental behavior was not associated with observed recycling behavior. We also find that recycling bin proximity to classroom doors increased participation in recycling. This finding demonstrates that individuals are receptive to the proximate opportunity to recycle. This suggests increasing the ease with which people can engage in pro-environmental behaviors, such as recycling, will promote participation in these practices. Overall, our research indicates that social preferences do not seem to drive individuals to act in environmentally friendly ways. This work also provides new opportunities for future research to integrate economic games into the study of pro-environmental behaviors.

CRITIQUE ON IDENTITY ECONOMICS

Identity economics has acquired its literature in the last twenty years. However, the theoretical and methodological consistency of the concept is still quite weak, or the claims are no longer as sharp as it was at the beginning. Therefore, most of the followers of Akerlof and Kranton (2000) have considered identity as a variable rather than a vital part of the mechanism in explaining the behaviors. Except for John B. Davis, there is no attempt to clarify the arguments in the literature. Davis developed critiques to achieve the theoretical simplicity of identity economics. Although identity is a very complex concept, Davis insists on explaining it in an economic mechanism. Even if experimental research seems to be the applicable methodology for identity economics, in Kranton’s research, the results of experiments present us systematic heterogeneity in social preferences for differentiated social identities which means there is no smooth behavioral path in her research yet to support the same claims in theory. In this article, we propose ethnographic and sociological field researches that can support the methodology that provide the purpose and result consistency. Although modeling identity might be evaluated as full of incoherence due to the problematics of identity economics, it brings us a broader parameter to understand differentiated social characteristics and preferences. This article seeks to simplify the modeling of identity and clarify progressive steps in the literature considering critical recommendations.

Evolution and Heterogeneity of Social Preferences

Why do individuals take different decisions when confronted with similar choices? This paper investigates whether the answer lies in an evolutionary process. Our analysis builds on recent work in evolutionary game theory showing the superiority of a given type of preferences, homo moralis, in fitness games with assortative matching. We adapt the classical definition of evolutionary stability to the case where individuals with distinct preferences coexist in a population. This approach allows us to establish the characteristics of an evolutionarily stable population. Then, introducing an assortment matrix for assortatively matched interactions, we prove the existence of a heterogeneous evolutionarily stable population in 2×2 symmetric fitness games under constant assortment, and we identify the conditions for its existence. Conversely to the classical setting, we find that the favored preferences in a heterogeneous evolutionarily stable population are context-dependent. As an illustration, we discuss when and how an evolutionarily stable population made of both selfish and moral individuals exists in a prisoner’s dilemma. These findings offer a theoretical foundation for the empirically observed diversity of preferences among individuals.

The Volunteer’s Dilemma Explains the Bystander Effect

The bystander effect is the phenomenon that people are less likely to help others when they are in a group than when they are alone. The theoretical literature typically explains the bystander effect with the volunteer’s dilemma: if providing help is equivalent to creating a public good, then bystanders could be less likely to help in groups because they free ride on the other bystanders. This paper uses a dynamic game to experimentally test such strategic interactions as an explanation for the bystander effect. In line with the predictions of the volunteer’s dilemma, I find that bystanders help immediately when they are alone but help later and are less likely to help if they are part of a larger group. In contrast to the model’s predictions, subjects in need of help are helped earlier and are more likely to be helped in larger groups. This finding can be accounted for in an extended model that includes both altruistic and selfish bystanders. The paper concludes that the volunteer’s dilemma is a sensible way to model situations in which someone is in need of help, but it highlights the need to take heterogeneous social preferences into account.

Voluntary pooling of genetic risk: A health insurance experiment

Abstract Scientific and technological advances increasingly allow for better tailoring of health insurance plans to individual health risk profiles. This development questions the sustainability of health plans that feature strong cross-subsidization across different health risk types and health behaviors. An important observation is that the willingness to cross-subsidize risks in health plans might depend on whether the risk is uncontrollable by individuals, such as genetic risk, or modifiable via health behaviors. This paper provides the results of an experiment on the willingness to pool genetic risk in health insurance. Subjects’ overall health risk has an assigned, uncontrollable genetic risk part that differs across individuals as well as a behavioral risk part, which can be reduced by costly effort. Participants can decide between a pooling, community-rated group insurance scheme and an insurance with a fully individually risk-adjusted premium. In the experimental variation, the group insurance scheme either includes behavioral risk or separates it out via individual premium discounts. Although we observe social preferences for pooling, only a low level of actual genetic risk pooling emerges across the experimental conditions. This is due to both large heterogeneity in social preferences across subjects, and the dynamics of the willingness to pay for group insurance in the different experimental markets.

Do altruists lie less?

Much is known about heterogeneity in social preferences and about heterogeneity in lying aversion – but little is known about the relation between the two at the individual level. Are the altruists simply upright persons who do not only care about the well-being of others but also about honesty? And are the selfish those who lie whenever lying maximizes their material payoff? This paper addresses those questions in experiments that first elicit subjects’ social preferences and then let them make decisions in an environment where lying increases the own material payoff and has either consequences for the payoffs of others or no consequences for others. We find that altruists lie less when lying hurts another party but we do not find any evidence in support of the hypothesis that altruists are more (or less) averse to lying than others in environments where lying has no effects on the payoffs of others.

The many Faces of Human Sociality: Uncovering the Distribution and Stability of Social Preferences

AbstractWe uncover heterogeneity in social preferences with a structural model that accounts for outcome-based and reciprocity-based social preferences and assigns individuals to endogenously determined preferences types. We find that neither at the aggregate level nor when we allow for several distinct preference types do purely selfish types emerge, suggesting that other-regarding preferences are the rule and not the exception. There are three temporally stable other-regarding types. When ahead, all types value others' payoffs more than when behind. The first, strongly altruistic type puts a large weight on others' payoffs even when behind and displays moderate levels of reciprocity. The second, moderately altruistic type also puts positive weight on others' payoff, yet at a lower level, and displays no positive reciprocity. The third, behindness averse type puts a large negative weight on others' payoffs when behind and is selfish otherwise. In addition, we show that individual-specific estimates of preferences offer only very modest improvements in out-of-sample predictions compared to our three-type model. Thus, a parsimonious model with three types captures the bulk of the information about subjects' social preferences.

Social preferences of future physicians

We measure the social preferences of a sample of US medical students and compare their preferences with those of the general population sampled in the American Life Panel (ALP). We also compare the medical students with a subsample of highly educated, wealthy ALP subjects as well as elite law school students and undergraduate students. We further associate the heterogeneity in social preferences within medical students to the tier ranking of their medical schools and their expected specialty choice. Our experimental design allows us to rigorously distinguish altruism from preferences regarding equality-efficiency tradeoffs and accurately measure both at the individual level rather than pooling data or assuming homogeneity across subjects. This is particularly informative, because the subjects in our sample display widely heterogeneous social preferences in terms of both their altruism and equality-efficiency tradeoffs. We find that medical students are substantially less altruistic and more efficiency focused than the average American. Furthermore, medical students attending the top-ranked medical schools are less altruistic than those attending lower-ranked schools. We further show that the social preferences of those attending top-ranked medical schools are statistically indistinguishable from the preferences of a sample of elite law school students. The key limitation of this study is that our experimental measures of social preferences have not yet been externally validated against actual physician practice behaviors. Pending this future research, we probed the predictive validity of our experimental measures of social preferences by showing that the medical students choosing higher-paying medical specialties are less altruistic than those choosing lower-paying specialties.

Networked innovation and coalition formation: the effect of group-based social preferences

ABSTRACTIn this paper, we study the production and dissemination of public knowledge goods, such as technological knowledge, generated by a network of voluntarily cooperating innovators. We develop a private-collective model of public knowledge production in networked innovation systems, where group-based social preferences have an impact on the coalition formation of developers. Our model builds on the large empirical literature on voluntary production of pooled public knowledge goods, including source code in communities of software developers or data provided to open access data repositories. Our analysis shows under which conditions social preferences, such as ‘group belonging’ or ‘peer approval’, influence the stable coalition size, as such rationalising several stylized facts emerging from large-scale surveys of open-source software developers, previously unaccounted for. Furthermore, heterogeneity of social preferences is added to the model to study the formation of stable but mixed coalitions.

A Demand-Side Perspective on Developing a Future Electricity Generation Mix: Identifying Heterogeneity in Social Preferences

Public support is an important factor in failure or success of the government decisions with respect to the electricity generation mix, which highlights the necessity of developing an electricity mix that reflects social preferences and acceptance. This study explores heterogeneity in social preferences for power sources and develops an electricity mix from a demand-side perspective. The study utilizes the choice-based conjoint survey and latent class model, and bases its empirical analysis on South Korea’s electric power sector. Results demonstrate that preferences for power sources in Korean society consist of two classes: one that is sensitive to the environment and one that is sensitive to risk. An electricity mix for Korea that reflects social preferences is 16.5–19.8% coal-fired, 13.3–24.9% liquefied natural gas (LNG), 9.0–11.2% oil, 22.3–32.9% nuclear, and 18.5–38.9% renewables, depending on the scenario. The study confirms that renewables are the power source with the least potential to cause social conflict, compared to nuclear and coal-fired sources. Moreover, increasing the proportion of renewables (currently only 3.9%) while decreasing the proportion of coal-fired power sources (currently 39.9%) to less than half its current level will result in an electricity mix that is accordance with social preferences in the long run.

Prosocial Orientation Alters Network Dynamics and Fosters Cooperation

Dynamic networks have been shown to increase cooperation, but prior findings are compatible with two different mechanisms for the evolution of cooperation. It may be that dynamic networks promote cooperation even in networks composed entirely of egoists, who strategically cooperate to attract and maintain profitable interaction partners. Alternatively, drawing on recent insights into heterogeneous social preferences, we expect that dynamic networks will increase cooperation only when nodes are occupied by persons with more prosocial preferences, who tend to attract and keep more cooperative partners relative to egoists. Our experiment used a standard procedure to classify participants a priori as egoistic or prosocial and then embedded them in homogeneous networks of all prosocials or all egoists, or in heterogeneous networks (50/50). Participants then interacted in repeated prisoner's dilemma games with alters in both static and dynamic networks. In both heterogeneous and homogeneous networks, we find dynamic networks only promote cooperation among prosocials. Resulting from their greater cooperation, prosocials’ relations are more stable, yielding substantially higher fitness compared to egoists in both heterogeneous and homogeneous dynamic networks. Our results suggest that a key to the evolution and stability of cooperation is the ability of those with prosocial preferences to alter their networks.

How Social Preferences Shape Incentives in (Experimental) Markets for Credence Goods.

Credence goods markets suffer from inefficiencies caused by superior information of sellers about the surplus‐maximising quality. While standard theory predicts that equal mark‐up prices solve the credence goods problem if customers can verify the quality received, experimental evidence indicates the opposite. We identify a lack of robustness with respect to heterogeneity in social preferences as a possible cause of this and conduct new experiments that allow for parsimonious identification of sellers’ social preference types. Our results confirm the assumed heterogeneity in social preferences and provide strong support for our explanation of the failure of verifiability to increase efficiency.

Variants of the Monoamine Oxidase A gene (MAOA) predict free-riding behavior in women in a strategic public goods experiment.

Laboratory experiments have documented substantial heterogeneity in social preferences, but little is known about the origins of such behavior. Previous research on public goods experiments suggests that individual-level demographic and psychological variables correlate with player types. However, the key question about biological sources of variation in these preferences remains open. The aim of this study is to uncover genetic variations that influence differences in cooperative behavior. For this reason, we identify types of players within a strategic public goods experiment. We explicitly test for an association between individual variance in strategy choice and the functional promoter-region repeat of the monoamine oxidase A gene (MAOA). Our experimental findings suggest a link between MAOA and the occurrence of free-riding in females. Females with MAOA-L are less likely to behave like weak free-riders than MAOA-H carriers, whereas among males, our results did not support a significant relation between genotype and player type. Furthermore, MAOA-L female carriers contribute more than MAOA-H subjects to the public good if they know that others contribute nothing, and they showed slightly lower scores on the Machiavellianism scale. This is the first piece of evidence that genotype might predict player type within a public goods setting. It contributes to our understanding of biological drivers of economic decision-making and points to the need for further exploration.

How to Model Heterogeneity in Costly Punishment: Insights from Responders' Response Times

ABSTRACTWe investigate what processes may underlie heterogeneity in social preferences. We address this question by examining participants' decisions and associated response times across 12 mini‐ultimatum games. Using a finite mixture model and cross‐validating its classification with a response time analysis, we identified four groups of responders: one group takes little to no account of the proposed split or the foregone allocation and swiftly accepts any positive offer; two groups process primarily the objective properties of the allocations (fairness and kindness) and need more time the more properties need to be examined; and a fourth group, which takes more time than the others, appears to take into account what they would have proposed had they been put in the role of the proposer. We discuss implications of this joint decision–response time analysis. Copyright © 2013 John Wiley & Sons, Ltd.

Incomplete Information about Social Preferences Explains Equal Division and Delay in Bargaining

Two deviations of alternating-offer bargaining behavior from economic theory are observed together, yet have been studied separately. Players who could secure themselves a large surplus share if bargainers were purely self-interested incompletely exploit their advantage. Delay in agreement occurs even if all experimentally controlled information is common knowledge. This paper rationalizes both regularities coherently by modeling heterogeneous social preferences, either self-interest or envy, of one bargaining party as private information in a three period game of bargaining and preference screening and signaling.