Published papers

This paper presents the first experimental study on how higher-order punishment affects third-party sanction enforcement in the presence of multiple third parties. The design varies across treatments the number of third parties witnessing a norm violation and the opportunities available for third parties to costly punish each other after observing their peers’ enforcement actions. To test generalizability of higher-order enforcement effects, the experiment is conducted across two contrasting societies – India and the United Kingdom – using a prisoner's dilemma game. These societies are selected for their positions at opposite ends of the tight-loose ancestral kinship spectrum. In both societies, third parties punish defectors who exploit their paired cooperators more strongly than any other person, consistent with prior research. Yet, punitive patterns differ. In the UK, third parties punish defectors less frequently and less strongly when other third parties are present; when higher-order punishments are available among third parties, their failure to punish defectors and acts of anti-social punishment invite strong higher-order punishment from their peers, which encourages their pro-social first-order punishments and makes mutual cooperation a Nash equilibrium outcome in the primary cooperation dilemma. However, in India, overall punishment levels are lower, group size and incentive structure changes have no discernible effects, and higher-order punishments are not better disciplined. These findings support a model of norm conformity for the UK and do not contradict such a model for India.

Exogenous reputational information is known to improve cooperation. This study experimentally investigates how people create such information by reporting their partner's action choices, and whether endogenous monitoring helps to sustain cooperation, in an indefinitely repeated prisoner's dilemma game with random matching. The experimental results show that most subjects report their opponents' action choices, thereby successfully cooperating when reporting does not involve costs. However, when reporting is costly, participants are strongly discouraged from doing so. Consequently, they fail to achieve strong cooperative norms when the reported information is conveyed privately only to their next-round interaction partners. Costly reporting occurs only occasionally even when there is a public record whereby all future partners can check the reported information, but significantly more frequently relative to the condition in which it is sent to the next partner only. With public records, groups can foster cooperative norms aided by reported information that gradually accumulates and becomes more informative over time.

A novel laboratory experiment is used to show that mismatching between task preferences and task assignment strongly undermines worker performance and leads to free riding in teams. Unlike prior experiments using real effort tasks, task preferences are elicited from all workers. Under team-based remuneration (revenue sharing), free riding is significant, but this effect is largely driven by those working on undesired tasks. Workers’ endogenous sorting into tasks improves productivity as it mitigates task mismatching although workers’ task selection per se has only small effects on work performance and effort provisions beyond the positive sorting effects.

Teams are increasingly popular decision-making and work units in firms. This paper uses a novel real-effort experiment to show that (a) some teams in the workplace reduce their members' private benefits to achieve a group optimum in a social dilemma and (b) such endogenous choices by themselves enhance their work productivity (per-work-time production)—a phenomenon called the “dividend of democracy.” In the experiment, worker subjects are randomly assigned to a team of three, and they then jointly solve a collaborative real-effort task under a revenue-sharing rule in their group with two other teams, while each individual worker can privately and independently shirk by playing a Tetris game. Strikingly, teams exhibit significantly higher productivity (per-work-time production) when they can decide whether to reduce the return from shirking by voting than when the policy implementation is randomly decided from above, irrespective of the policy implementation outcome. This means that democratic culture directly affects behavior. On the other hand, the workers under democracy also increase their shirking, presumably due to enhanced fatigue owing to the stronger productivity. Despite this, democracy does not decrease overall production thanks to the enhanced work productivity.

Clientelism is frequently observed in our societies. Various mechanisms that help sustain incomplete political contracts (e.g., monitoring and punishment) have been studied in the literature to date. However, do such contracts emerge in elections with secret ballots when the interactions are one-shot? How does repetition affect the evolution of incomplete political contracts? Using an incentivized experiment, this article finds that even during one-shot interactions where monitoring is not possible, candidates form incomplete contracts through vote buying and promise-making. The candidates' clientelistic behaviors are heterogeneous: some target swing voters, whereas others offer the most to loyal voters, or even opposition voters. These tactics distort voting behaviors as well as election outcomes. Repeated interactions significantly magnify candidates' offers and deepen clientelistic relationships. These results underscore the possibility that clientelism evolves due to people's strategic behaviors and interdependent preferences, without relying on alternative mechanisms (JEL C92, D72).

It is well-known that efficiency often fails to improve in public goods games with peer-to-peer punishment when counter-punishment is possible. This paper experimentally demonstrates, for the first time, that the effects of sanctioning institutions are modest, regardless of the decision-making format (individual or team). In the “team” conditions, subjects are randomly assigned to teams of three, and make joint decisions through communication. Their dialogue provides valuable insights into the motivations behind (counter-)punishment, as well as the resulting behavioral effects. A coding exercise reveals that first-order punishments (and counter-punishments) are primarily emotional responses to peers’ low contributions (and first-order punishments, respectively).

The observability of partners’ past play is known to theoretically improve cooperation in an infinitely repeated prisoner's dilemma game under random matching. This paper presents evidence from an incentivized experiment that reputational information per se may not improve cooperation. A structural estimation suggests that a certain percentage of players act according to the “Always Defect” strategy, whether or not the reputational information is available. The remaining players adopt available cooperative strategies: specifically, the tit-for-tat strategy when reputational information is not available, and a strategy that conditions on the matched partner's past play when reputational information is available.

A novel field experiment shows that learning activities in pairs with a greater spread in abilities lead to better individual work performance, relative to those in pairs with similar abilities. The positive effect of the former is not limited to their performance in peer learning material, but it also spills over to their performance in other areas. The underlying improvement comes from the increased performance of those whose achievements were weak prior to peer learning. This implies that exogenously determining learning partners with different abilities helps improve productivity through knowledge sharing and potential peer effects.

A novel laboratory experiment is used to show that the state of people's self-regulatory resources influences their reliance on the formal enforcement of norms in a social dilemma. The subjects’ self-regulatory resources are manipulated using well-known depletion tasks. On the one hand, when their resources are not depleted, most decide to govern themselves through decentralized, peer-to-peer punishment in a public goods dilemma, and then achieve high cooperation norms. On the other hand, when the resources are limited, the majority enact a costly formal sanctioning institution; backed by formal punishment, the groups achieve strong cooperation. A supplementary survey on the Covid-19 pandemic was conducted to enhance the external validity of the findings, generating a similar pattern while revealing that people's desire to commit, not their beliefs about others’ behavior without formal enforcement, drives their institutional preferences. Self-control preference theories, combined with inequity aversion, can explain these patterns because they predict that those with limited self-control are motivated to remove temptations in advance as a commitment device.

Initiated by the seminal work of Fehr and Fischbacher (Evolution and Human Behavior (2004)), a large body of research has shown that people often take punitive actions towards norm violators even when they are not directly involved in transactions. This paper shows in an experimental setting that this behavioral finding extends to a situation where a pair of individuals jointly decides how strong a third-party punishment to impose. It also shows that this punishment behavior is robust to the size of social distance within pairs. These results lend useful insight since decisions in our everyday lives and also in courts are often made by teams.

Dal Bó et al. (2010) show experimentally that the effect of a policy may be greater when it is democratically selected than when it is exogenously imposed. In this paper we propose a new and simpler estimation strategy that does not require information on the vote of subjects in the exogenous treatment. The new estimation strategy is based on calculating the average behavior under democracy by weighting the behavior of each type of voter by its prevalence in the whole population (and not conditional on the vote outcome). We derive the distribution of this new weights-based estimator of the democracy effect and show it eliminates selection effects under certain conditions. We apply the new estimation strategy to the data in Dal Bó et al. (2010) and to the data from a new experiment for which we cannot use the previous estimation strategy as we do not have information on how subjects would have voted in the exogenous treatment. We find a significant democracy effect in the former but not on the latter application.

The transfer paradox, whereby a transfer of resources that influences the equilibrium price benefits the donor while harming the recipient, is a classic paradox in general equilibrium theory. This paper pursues an experimental investigation of the transfer paradox using a three-agent pure exchange economy that is predicted to have such a paradox. The results indicate that an endowment adjustment among agents influences the market price, and consequently the donors benefit from the transfer, consistent with the competitive equilibrium theory. When given an option to make a transfer, half of donor agents voluntarily decide to adjust the endowment distribution.