38 Questions
What percentage of the optimal quantity is the public good typically provided in single play public goods experiments?
40-60%
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.
20%
What was the average contribution rate predicted by economists who were told about the experiments?
20%
Match the researchers with their corresponding studies:
Kim and Walker = Isaac, Walker, and Thomas Multiple trial experiments = Single play public goods experiments
The contribution rate in multiple trial experiments is lower than that in single play public goods experiments.
False
What is the title of Marwell and Ames' article?
"Economists Free Ride: Does Anyone Else?"
What is the main conclusion that emerges from the experiments mentioned in the text?
People tend to cooperate until they realize others are taking advantage of them.
Robert Frank argues that people can successfully fake being cooperative for an extended period of time.
False
What is the key to Robert Frank's argument about the norm of cooperation?
One cannot successfully fake being cooperative for an extended period of time.
According to Adam Smith, people are motivated by the pleasure of seeing others' ______________________.
happiness
What is the term used to describe the motivation behind taking pleasure in others' pleasure?
Pure Altruism
The behavior of cooperation is only observed in infinitely repeated games.
False
Match the following concepts with their definitions:
Reciprocal Altruism = Taking pleasure in others' pleasure Pure Altruism = Cooperating in infinitely repeated games Norm of Cooperation = Motivated by positive payoffs for others Defectors = People who adopt a norm of cooperation
What is the title of the forthcoming article in the Quarterly Journal of Economics by an author affiliated with the University of Wisconsin?
Strategies and Learning in Public Goods Experiments
Theodore Bergstrom, Lawrence E. Blume, and Hal Varian's article 'On the Private Provision of Public Goods' was published in 1985.
False
What is the title of the book written by Robert Axelrod?
The Evolution of Cooperation
Charles T. Clotfelter's book 'Federal Tax Policy and _______________' was published in 1985.
Charitable Giving
Which of the following authors is affiliated with the University of Chicago?
Charles T. Clotfelter
Gerald Marwell and Ruth Ames' article 'Economists Free Ride, Does Anyone Else?' was published in 1980.
False
Match the following authors with their affiliated institutions:
James Andreoni = University of Wisconsin Robert Axelrod = University of Michigan Charles T. Clotfelter = University of Chicago Theodore Bergstrom = University of California
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?
Journal of Economic Theory
What was the outcome of the computer tournaments conducted by Axelrod?
TIT-FOR-TAT won against other strategies
Reciprocal altruism can directly explain the high cooperation rates observed in single-trial experiments.
False
What is the implication of reciprocal altruism in situations of anonymity or one-shot interactions?
Individuals will be uncooperative.
In a repeated prisoner's dilemma game with a finite number of trials, the dominant strategy for both players is to __________ on every trial.
defect
Match the following researchers with their contribution:
Axelrod = Conducted computer tournaments on strategies in prisoner's dilemma Goetze and Orbed = Reached a similar conclusion on reciprocal altruism Kreps, Milgrom, Roberts, and Wilson = Investigated the optimal strategy in a repeated prisoner's dilemma game
TIT-FOR-TAT is a strategy that can be easily applied in groups of more than two people.
False
What is the observed cooperation rate in single-trial experiments?
50 percent
What is the concept that suggests that reciprocating individuals have greater fitness than non-reciprocating ones?
Inclusive fitness
What is the term used by Amartya Sen to describe people who are always selfishly rational?
Rational fools
Group discussion can lead to suboptimal outcomes for all involved.
False
What is the main critique of traditional economic analyses according to the author?
They do not incorporate the role of discussion and the establishment of group identity
The results involving the role of discussion and the establishment of group identity are more difficult to incorporate into traditional economic _______________.
analyses
Match the authors with their contributions:
James Andreoni = Wrote "Why Free Ride?" Amartya Sen = Described people who are always selfishly rational as "rational fools" Robyn M. Dawes = Co-authored a paper with Richard Thaler Richard H. Thaler = Co-authored a paper with Robyn M. Dawes
Mutual choices based on egoistic payoffs can lead to optimal outcomes for all involved.
False
The authors of the paper wish to thank _______________ for helpful comments on an earlier draft.
James Andreoni, Linnda Caporael, Mark Isaac, and John Orbell
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."
This quiz explores the free rider hypothesis in public goods experiments, discussing the results of single play experiments and the contributions of subjects.
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