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What percentage of the optimal quantity is the public good typically provided in single play public goods experiments?
The strong free rider hypothesis is supported by the results of single play public goods experiments.
False
What was the contribution rate of University of Wisconsin economics graduate students in Marwell and Ames' study?
20%
Marwell and Ames found that the contribution rate fell to ______________ percent when the subjects were a group of University of Wisconsin economics graduate students.
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What was the average contribution rate predicted by economists who were told about the experiments?
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Match the researchers with their corresponding studies:
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The contribution rate in multiple trial experiments is lower than that in single play public goods experiments.
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What is the title of Marwell and Ames' article?
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What is the main conclusion that emerges from the experiments mentioned in the text?
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Robert Frank argues that people can successfully fake being cooperative for an extended period of time.
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What is the key to Robert Frank's argument about the norm of cooperation?
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According to Adam Smith, people are motivated by the pleasure of seeing others' ______________________.
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What is the term used to describe the motivation behind taking pleasure in others' pleasure?
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The behavior of cooperation is only observed in infinitely repeated games.
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Match the following concepts with their definitions:
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What is the title of the forthcoming article in the Quarterly Journal of Economics by an author affiliated with the University of Wisconsin?
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Theodore Bergstrom, Lawrence E. Blume, and Hal Varian's article 'On the Private Provision of Public Goods' was published in 1985.
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What is the title of the book written by Robert Axelrod?
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Charles T. Clotfelter's book 'Federal Tax Policy and _______________' was published in 1985.
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Which of the following authors is affiliated with the University of Chicago?
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Gerald Marwell and Ruth Ames' article 'Economists Free Ride, Does Anyone Else?' was published in 1980.
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Match the following authors with their affiliated institutions:
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What is the title of the journal where David Kreps, Paul Milgrom, John Roberts, and Robert Wilson's article 'Rational Cooperation in Finitely Repeated Prisoners' Dilemmas' was published?
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What was the outcome of the computer tournaments conducted by Axelrod?
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Reciprocal altruism can directly explain the high cooperation rates observed in single-trial experiments.
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What is the implication of reciprocal altruism in situations of anonymity or one-shot interactions?
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In a repeated prisoner's dilemma game with a finite number of trials, the dominant strategy for both players is to __________ on every trial.
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Match the following researchers with their contribution:
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TIT-FOR-TAT is a strategy that can be easily applied in groups of more than two people.
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What is the observed cooperation rate in single-trial experiments?
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What is the concept that suggests that reciprocating individuals have greater fitness than non-reciprocating ones?
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What is the term used by Amartya Sen to describe people who are always selfishly rational?
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Group discussion can lead to suboptimal outcomes for all involved.
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What is the main critique of traditional economic analyses according to the author?
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The results involving the role of discussion and the establishment of group identity are more difficult to incorporate into traditional economic _______________.
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Match the authors with their contributions:
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Mutual choices based on egoistic payoffs can lead to optimal outcomes for all involved.
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The authors of the paper wish to thank _______________ for helpful comments on an earlier draft.
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Study Notes
Weak Free Rider Hypothesis
- The weak free rider hypothesis does not yield precise predictions.
- Results from single play ("one shot") public goods experiments show little support for the strong free rider hypothesis.
- In these experiments, a substantial number of contributors provide the public good at 40-60% of the optimal quantity.
- On average, subjects contribute 40-60% of their stake to the public good.
Marwell and Ames (1981) Study
- Marwell and Ames found that the 40-60% contribution rate held in many conditions:
- For subjects playing the game for the first time or after previous experience.
- For subjects who believed they were playing in groups of 4 or 80.
- For subjects playing for a range of monetary stakes.
- The only notable exception was when the subjects were a group of University of Wisconsin economics graduate students, where the contribution rate fell to 20%.
Multiple Trial Experiments
- In multiple trial experiments, cooperation rates are similar to those obtained by Marwell and Ames on the initial trial.
- Two major conclusions emerge:
- Cooperation is observed at rates similar to those obtained by Marwell and Ames.
- The contribution rate decays over time.
Reciprocal Altruism
- Reciprocal altruism cannot be used directly to explain the experimental results.
- In situations of anonymity or interacting with people on a "one-shot" basis, individuals will be uncooperative.
- Reciprocal altruism is difficult to apply in situations with more than 2 people involved.
Norm of Cooperation
- People tend to cooperate until experience shows that others are taking advantage of them.
- This "norm of cooperation" resembles reciprocal altruism in infinitely repeated games.
- One explanation for this behavior is that people who adopt a norm of cooperation will do well by eliciting cooperation from others and attracting interaction with other cooperators.
Altruism
- Pure altruism is a motive where people are motivated by "taking pleasure in others' pleasure."
- Adam Smith described this motive in The Theory of Moral Sentiments (1759; 1976).
- People are motivated by positive payoffs for others as well as for themselves.
Role of Selfish Rationality
- The role of selfish rationality in economic models needs careful scrutiny.
- Amartya Sen described people who are always selfishly rational as "rational fools," because mutual choices based only on egoistic payoffs consistently lead to suboptimal outcomes for all involved.
- Perhaps we need to give more attention to "sensible cooperators."
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Description
This quiz explores the free rider hypothesis in public goods experiments, discussing the results of single play experiments and the contributions of subjects.
