Behavioral Economics of Social Preferences PDF

Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings Behavioural Economics of Social 1. Strong Reciprocity Is Common Preferences 2. Free-Riders Undermine Cooperation 3. Altruistic Punishment Sustains Cooperation 4. Effect...

Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings Behavioural Economics of Social 1. Strong Reciprocity Is Common Preferences 2. Free-Riders Undermine Cooperation 3. Altruistic Punishment Sustains Cooperation 4. Effective PSYC2212/3312: Psychology and Social Behaviour Punishment Depends On Legitimacy 5. Symbolic Punishment Is Mark Hurlstone Effective bel-uwa.github.io 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership Week 17 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Learning Objectives Psychology and Social Behaviour mark.hurlstone @uwa.edu.au What is behavioural economics? Key Findings Self-interest axiom and the standard economic model 1. Strong Reciprocity Is Common 2. Free-Riders Are people selfish—as the standard economic model Undermine Cooperation supposes—or do they exhibit social preferences? 3. Altruistic Punishment Sustains Cooperation Review the evidence obtained for social preferences in the 4. Effective Punishment Depends On experimental laboratory Legitimacy 5. Symbolic Punishment Is Do experimental results in the laboratory reflect real-life Effective 6. People Punish behaviour? Those Who Hurt Others 7. Behaviour Is Implications for the standard economic model Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  What Is Behavioural Economics? Psychology and Social Behaviour mark.hurlstone Economists have a simple and elegant model of decision @uwa.edu.au making Key Findings This standard economic model is a “normative theory”, 1. Strong Reciprocity Is Common 2. Free-Riders rather than a “descriptive theory” Undermine Cooperation 3. Altruistic It specifies how people ought to make decisions, rather than Punishment Sustains Cooperation describe how people actually do make decisions 4. Effective Punishment Depends On It assumes that humans are approximated by a homo Legitimacy 5. Symbolic Punishment Is economicus who is rational, calculating, computationally Effective 6. People Punish proficient, and above all perfectly selfish Those Who Hurt Others 7. Behaviour Is These are very strong assumptions and they have been Conditioned on Group Membership robustly challenged by psychologists 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  What Is Behavioural Economics? Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Behavioural economics is a bridging discipline between Key Findings economics and psychology 1. Strong Reciprocity Is Common 2. Free-Riders It is about testing the standard economic model on humans, Undermine Cooperation 3. Altruistic seeing when it works and when it fails, and asking whether it Punishment Sustains Cooperation can be augmented to better fit what we observe 4. Effective Punishment Depends On It is not about replacing the standard economic model Legitimacy 5. Symbolic Punishment Is Rather, it is about incorporating psychological insights that Effective 6. People Punish Those Who Hurt can improve the predictive and descriptive utility of the model Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Today: Focus On Social Preferences Psychology and Social Behaviour We will review evidence questioning the self-interest axiom mark.hurlstone @uwa.edu.au of the standard economic model Key Findings We ask, to what extent do people exhibit social 1. Strong Reciprocity Is Common preferences? 2. Free-Riders Undermine Cooperation Social preferences are a concern, positive or negative, for 3. Altruistic Punishment Sustains Cooperation the well being of others, and a desire to uphold ethical norms 4. Effective Punishment Depends On Social preferences include generosity toward others, a Legitimacy 5. Symbolic preference for “fair” outcomes, and character virtues such as Punishment Is Effective honesty 6. People Punish Those Who Hurt Others To the extent that humans exhibit social preferences, this 7. Behaviour Is Conditioned on undermines the self-interest axiom of the standard economic Group Membership 8. People Enjoy Punishing Free model Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Social Preferences In Natural Settings Psychology and Social Behaviour The facts of real life seem at odds with the standard mark.hurlstone @uwa.edu.au economic model Key Findings At the societal level, our societies have achieved a degree of 1. Strong Reciprocity Is Common cooperation that is unprecedented in the animal kingdom 2. Free-Riders Undermine Cooperation At a lower level, people even in anonymous situations vote, 3. Altruistic Punishment Sustains take part in collective actions, often manage not to overuse Cooperation 4. Effective common resources, care for the environment, mostly do not Punishment Depends On Legitimacy evade taxes, donate to charities etc. 5. Symbolic Punishment Is Effective Suggests the strict self-interest hypothesis is at variance with 6. People Punish Those Who Hurt the degree of cooperation we see around us Others 7. Behaviour Is Conditioned on But in the field there are confounding variables that can Group Membership 8. People Enjoy cloud the picture Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Laboratory Experiments Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Laboratory experiments are probably the best tool for Key Findings studying social preferences 1. Strong Reciprocity Is Common In the field many factors are operative at the same time 2. Free-Riders Undermine Cooperation The laboratory allows for a degree of control not feasible in 3. Altruistic Punishment Sustains Cooperation the field 4. Effective Punishment Depends On Depending on their decisions, participants in these Legitimacy 5. Symbolic experiments can earn a considerable amount of money Punishment Is Effective 6. People Punish Thus, the laboratory allows observing real economic Those Who Hurt Others 7. Behaviour Is behaviour under controlled circumstances Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Key Findings From The Experimental Laboratory Psychology and Social Behaviour mark.hurlstone We review several key findings from the experimental @uwa.edu.au laboratory Key Findings 1. Strong Reciprocity The vehicles for these discoveries are an assortment of Is Common 2. Free-Riders economic games, including: Undermine Cooperation 3. Altruistic ultimatum game Punishment Sustains Cooperation public goods game 4. Effective Punishment public goods with punishment game Depends On Legitimacy dictator game with third-party punishment 5. Symbolic Punishment Is Effective trust game 6. People Punish Those Who Hurt Others The findings represent “stylised facts” about human 7. Behaviour Is Conditioned on cooperation and social preferences Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  1. Strong Reciprocity Is Common Psychology and Social Behaviour A strong reciprocator is an individual who is willing to: mark.hurlstone @uwa.edu.au Key Findings “sacrifice resources for rewarding fair and punishing un- 1. Strong Reciprocity Is Common fair behavior even if this is costly and provides neither 2. Free-Riders Undermine present nor future material rewards for the reciprocator” Cooperation 3. Altruistic Punishment Sustains Cooperation 4. Effective Thus, strong reciprocators reciprocate both positively Punishment Depends On Legitimacy (respond to kindness with kindness) and negatively (meet 5. Symbolic Punishment Is hostility with hostility) Effective 6. People Punish Those Who Hurt Positive reciprocity promotes cooperation, and negative Others 7. Behaviour Is reciprocity stabilises it Conditioned on Group Membership 8. People Enjoy In laboratory experiments, strong reciprocity is common Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Ultimatum Game Psychology and Social Behaviour mark.hurlstone @uwa.edu.au In the ultimatum game there are two players: proposer and receiver Key Findings 1. Strong Reciprocity Is Common A proposer is given a sum of money, say $10 2. Free-Riders Undermine Cooperation She must decide how much of that money to give to the 3. Altruistic Punishment Sustains receiver Cooperation 4. Effective Punishment The receiver must decide to accept or reject the offer Depends On Legitimacy 5. Symbolic Punishment Is If he accepts, the receiver gets what he is given and the Effective 6. People Punish proposer keeps the rest Those Who Hurt Others 7. Behaviour Is If he rejects, both get zero Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Ultimatum Game Psychology and Social Behaviour mark.hurlstone @uwa.edu.au The self-interest axiom provides a clear prediction of how the Key Findings 1. Strong Reciprocity game will be played Is Common 2. Free-Riders Undermine Because the game is one-shot and anonymous, the Cooperation 3. Altruistic Punishment Sustains responder will accept any positive amount of money Cooperation 4. Effective Punishment Knowing this, a self-regarding proposer will offer $1, and this Depends On Legitimacy will be accepted 5. Symbolic Punishment Is Effective This is not typically what happens though 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Proposers Have Social Preferences (Forsythe et al., 1994; Slonim & Roth, 1998) Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings 1. Strong Reciprocity Is Common 2. Free-Riders Undermine Cooperation 3. Altruistic Punishment Sustains Cooperation 4. Effective Punishment Depends On Legitimacy 5. Symbolic Punishment Is Effective 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Receivers Have Social Preferences Too (Larrick & Blount, 1997) Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings 1. Strong Reciprocity Is Common 2. Free-Riders Undermine Cooperation 3. Altruistic Punishment Sustains Cooperation 4. Effective Punishment Depends On Legitimacy 5. Symbolic Punishment Is Effective 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Ultimatum Game Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Why do acceptors reject positive offers? Key Findings 1. Strong Reciprocity They are motivated by a desire to punish the proposer for Is Common 2. Free-Riders Undermine being unfair, even though it means giving up some money to Cooperation 3. Altruistic do so Punishment Sustains Cooperation 4. Effective In support of this, in post game de-briefings responders who Punishment Depends On have rejected low offers often express anger at the Legitimacy 5. Symbolic proposer’s greed and a desire to punish unfair behaviour Punishment Is Effective 6. People Punish This is evidence of strong reciprocity Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Prisoners’ Dilemma Game Psychology and Social Behaviour mark.hurlstone @uwa.edu.au The prisoners’ dilemma game is perhaps the most famous of all experimental games Key Findings 1. Strong Reciprocity Is Common In this game there are two players, call them Alice and Bob 2. Free-Riders Undermine Cooperation They interact only once and cannot make any binding 3. Altruistic Punishment Sustains Cooperation agreements 4. Effective Punishment Depends On Each player can choose one of two strategies, without Legitimacy 5. Symbolic knowing the strategy chosen by the other: Punishment Is Effective 6. People Punish 1 cooperate (C) or Those Who Hurt Others 2 defect (D) 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Prisoners’ Dilemma Game: Payoff Matrix Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings 1. Strong Reciprocity Is Common 2. Free-Riders Undermine Cooperation 3. Altruistic Punishment Sustains Cooperation 4. Effective Punishment Depends On Legitimacy 5. Symbolic Punishment Is Effective 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Prisoners’ Dilemma Game Psychology and Social Behaviour Despite the strong temptation to defect, many experiments mark.hurlstone @uwa.edu.au have found that a considerable fraction of subjects (30%–40%) prefer to cooperate (Sally, 1995) Key Findings 1. Strong Reciprocity Is Common This is clearly at variance with the strong prediction under 2. Free-Riders Undermine the self-interest axiom of complete defection Cooperation 3. Altruistic Punishment Sustains The fraction of cooperators increases if Alice (Bob) can be Cooperation 4. Effective Punishment given assurances that Bob (Alice) will cooperate (Kiyonari et Depends On Legitimacy al. (2000): 5. Symbolic Punishment Is Effective standard simultaneous prisoners’ dilemma (38%) 6. People Punish Those Who Hurt sequential “second player” prisoners’ dilemma (62%) Others 7. Behaviour Is sequential “first player” prisoners’ dilemma (59%) Conditioned on Group Membership 8. People Enjoy This is further evidence of strong reciprocity Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  2. Free-Riders Undermine Cooperation Psychology and Social Behaviour mark.hurlstone @uwa.edu.au In a social dilemma that is repeated for a number of rounds, subjects tend to start with a positive and significant level of Key Findings 1. Strong Reciprocity cooperation Is Common 2. Free-Riders Undermine However, unless there are very few free-riders in the group Cooperation 3. Altruistic cooperation subsequently decays to a very low level Punishment Sustains Cooperation 4. Effective a free-rider is someone who benefits from the Punishment Depends On Legitimacy contributions of other group members, while himself 5. Symbolic Punishment Is contributing less or nothing at all Effective 6. People Punish Those Who Hurt This decay of cooperation is observed in the experimental Others 7. Behaviour Is public goods game Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Public Goods Game Psychology and Social Behaviour mark.hurlstone A group of four players are each given $20 as a reward for @uwa.edu.au participating in each of ten rounds of the game Key Findings On each round, the players must decide how much of this 1. Strong Reciprocity Is Common 2. Free-Riders $20 to contribute to a “public pool” Undermine Cooperation 3. Altruistic At the end of each round, the contents of the pool is doubled Punishment Sustains Cooperation and then divided equally among all the players, irrespective 4. Effective Punishment of their contribution Depends On Legitimacy 5. Symbolic The social dilemma lies in the conflict between the group and Punishment Is Effective 6. People Punish the individual’s interest Those Who Hurt Others 7. Behaviour Is The group does best when all players cooperate but Conditioned on Group Membership deviations from full cooperation are individually profitable 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Decay of Cooperation Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings 1. Strong Reciprocity Is Common 2. Free-Riders Undermine Cooperation 3. Altruistic Punishment Sustains Cooperation 4. Effective Punishment Depends On Legitimacy 5. Symbolic Punishment Is Effective 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Decay of Cooperation Psychology and Social Behaviour mark.hurlstone Supporters of the self-interest axiom would interpret the @uwa.edu.au initial high contributions as confusion on the part of the Key Findings subjects, who are not accustomed to anonymous interactions 1. Strong Reciprocity Is Common 2. Free-Riders The decay in contributions is due to subjects learning how to Undermine Cooperation maximise their payoffs 3. Altruistic Punishment Sustains Cooperation If this explanation is correct, if the same subjects were 4. Effective Punishment Depends On permitted to play a second multi-round public goods game Legitimacy 5. Symbolic identical to the first, they should refuse to contribute on the Punishment Is Effective very first round 6. People Punish Those Who Hurt Others Cookson (2000) tested this prediction and found it to be 7. Behaviour Is Conditioned on Group Membership wrong 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Cookson (2000) Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings 1. Strong Reciprocity Is Common 2. Free-Riders Undermine Cooperation 3. Altruistic Punishment Sustains Cooperation 4. Effective Punishment Depends On Legitimacy 5. Symbolic Punishment Is Effective 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free The public goods game is played with several groups and after every series of rounds group membership is Riders reshuffled and the game is restarted. 9. Ecological Validity [email protected] Psychology and Social Behaviour  Decay of Cooperation Psychology and Social Behaviour mark.hurlstone @uwa.edu.au An alternative interpretation is that public-spirited Key Findings 1. Strong Reciprocity contributors want to retaliate against free-riders and the only Is Common 2. Free-Riders way available to them in the game is by not contributing Undermine Cooperation themselves 3. Altruistic Punishment Sustains Cooperation Subjects often report this reason for the unraveling of 4. Effective Punishment Depends On cooperation retrospectively Legitimacy 5. Symbolic Punishment Is Further evidence for this view comes from a study by Page Effective 6. People Punish et al. (2005) Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Page et al. (2005) Psychology and Social Behaviour All subjects initially played a multi-round public goods game mark.hurlstone @uwa.edu.au In a regrouping condition, subjects were given a list of the Key Findings average contributions of the other players and were 1. Strong Reciprocity Is Common permitted to rank their preference for playing with one or 2. Free-Riders Undermine more of these subjects Cooperation 3. Altruistic Punishment Sustains Subjects who ranked each other highly were assigned to the Cooperation 4. Effective same group, and subjects who were not ranked highly by Punishment Depends On Legitimacy others were also assigned to the same group 5. Symbolic Punishment Is Effective In a baseline condition, assignment to conditions was 6. People Punish Those Who Hurt performed randomly by the experimenter Others 7. Behaviour Is Conditioned on Both conditions then completed another multi-round public Group Membership 8. People Enjoy goods game Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Page et al. (2005) Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings 1. Strong Reciprocity Is Common 2. Free-Riders Undermine Cooperation 3. Altruistic Punishment Sustains Cooperation 4. Effective Punishment Depends On Legitimacy 5. Symbolic Punishment Is Effective 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Page et al. (2005) Psychology and Social Behaviour mark.hurlstone @uwa.edu.au The decay of cooperation is due to relatively high Key Findings contributors reacting to low contributors by lowering their 1. Strong Reciprocity Is Common own contribution 2. Free-Riders Undermine Cooperation When subjects in the same group are relatively uniform in 3. Altruistic Punishment Sustains Cooperation their contributing behaviour, this decay mechanism is 4. Effective Punishment attenuated Depends On Legitimacy 5. Symbolic These experiments show that when those predisposed to Punishment Is Effective cooperate can associate preferentially with like-minded 6. People Punish Those Who Hurt people, cooperation is not difficult to sustain Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  3. Altruistic Punishment Sustains Cooperation Psychology and Social Behaviour mark.hurlstone @uwa.edu.au In the standard public goods game, the only way cooperators can retaliate against free-riders is by withholding their Key Findings 1. Strong Reciprocity cooperation Is Common 2. Free-Riders Undermine However, in the public goods with punishment game, Cooperation 3. Altruistic subjects are given a direct way of retaliating against free Punishment Sustains Cooperation riders 4. Effective Punishment Depends On Legitimacy In this game, strong reciprocators use punishment in a way 5. Symbolic Punishment Is that helps to sustain cooperation Effective 6. People Punish Those Who Hurt Because this punishment is costly to the punisher as well as Others 7. Behaviour Is the target, the punishment is considered “altruistic” Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Fehr and Gächter (2002): Public Goods With Punishment Game Psychology and Social Behaviour Two conditions: mark.hurlstone @uwa.edu.au Without punishment Key Findings 1. Strong Reciprocity similar to the public goods game previously described Is Common 2. Free-Riders Undermine With punishment Cooperation 3. Altruistic Punishment Sustains players can punish group members by assigning Cooperation 4. Effective punishment points Punishment Depends On 1 punishment point = $1 to the player awarding the Legitimacy 5. Symbolic Punishment Is punishment vs. $3 to the player being punished Effective 6. People Punish Those Who Hurt Since punishment is costly, a self-interested player should Others 7. Behaviour Is never punish Conditioned on Group Membership 8. People Enjoy In practice, punishment is both common and very effective Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Fehr and Gächter (2002) Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings 1. Strong Reciprocity Is Common 2. Free-Riders Undermine Cooperation 3. Altruistic Punishment Sustains Cooperation 4. Effective Punishment Depends On Legitimacy 5. Symbolic Punishment Is Effective 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Why Do Subjects Punish? Psychology and Social Behaviour One account is that it subjects punish free-riders to alter their mark.hurlstone @uwa.edu.au behaviour or to affect the distribution of payoffs Key Findings Another account is that subjects view punishment of 1. Strong Reciprocity Is Common free-riders as “retribution” 2. Free-Riders Undermine Cooperation Evidence supports the latter account: 3. Altruistic Punishment Sustains Cooperation subjects punish free-riders even in non-repeated 4. Effective Punishment Depends On interactions (Falk et al. 2005)... Legitimacy... and in repeated interactions where punishments are 5. Symbolic Punishment Is Effective not revealed until the end of the experiment (Drew et al. 6. People Punish Those Who Hurt 2010) Others 7. Behaviour Is Conditioned on Thus, subjects enjoy punishment, where ‘enjoyment’ Group Membership 8. People Enjoy includes anger and a desire for retribution Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  4. Effective Punishment Depends On Legitimacy Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings We have seen that altruistic punishment enhances 1. Strong Reciprocity Is Common 2. Free-Riders cooperation among members of a group Undermine Cooperation 3. Altruistic But it raises a new question Punishment Sustains Cooperation 4. Effective Do groups that punish free-riders actually benefit, or do the Punishment Depends On Legitimacy costs of punishing outweigh the benefits to cooperation that 5. Symbolic Punishment Is result? Effective 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Altruistic And Antisocial Punishment Psychology and Social Behaviour mark.hurlstone Herrmann et al. (2008) performed a public goods with @uwa.edu.au punishment game—similar to the Fehr and Gächter Key Findings experiment—using subject pools from 15 populations (e.g., 1. Strong Reciprocity Is Common Boston, Zurich, Riyadh, Muscat, Chengdu) 2. Free-Riders Undermine Cooperation As in earlier experiments, when the punishment option was 3. Altruistic Punishment Sustains Cooperation available it was widely used, especially in the early periods, 4. Effective Punishment and as a result the unraveling of contributions did not occur Depends On Legitimacy 5. Symbolic However, surprisingly, averaging over the 10 periods, most of Punishment Is Effective the subject pools had higher average payoffs when the 6. People Punish Those Who Hurt punishment option was precluded Others 7. Behaviour Is Conditioned on Why is this so? Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Herrmann et al. (2008) Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings 1. Strong Reciprocity Is Common 2. Free-Riders Undermine Cooperation 3. Altruistic Punishment Sustains Cooperation 4. Effective Punishment Depends On Legitimacy 5. Symbolic Punishment Is Effective 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership In many societies, a significant amount of punishment was directed at high contributors (anti-social 8. People Enjoy Punishing Free punishment), possibly as a retaliation against punishment received in earlier rounds by subjects who believed Riders that it was the high contributors who were doing most of the punishment 9. Ecological Validity [email protected] Psychology and Social Behaviour  Herrmann et al. (2008) Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings 1. Strong Reciprocity Is Common 2. Free-Riders Undermine Cooperation 3. Altruistic Punishment Sustains Cooperation 4. Effective Punishment Depends On Legitimacy 5. Symbolic Punishment Is Effective 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Herrmann et al. (2008) Psychology and Social Behaviour mark.hurlstone @uwa.edu.au The interpretation of these results is that punishment depends on legitimacy Key Findings 1. Strong Reciprocity Is Common Punishment of free-riders, was legitimate in Boston, 2. Free-Riders Undermine Melbourne, and Chengdu, but it was not in Muscat and Cooperation 3. Altruistic Athens Punishment Sustains Cooperation 4. Effective In the latter countries, punishment is coordinated by ridicule Punishment Depends On Legitimacy or gossip—it does not inflict material costs—and is rarely 5. Symbolic Punishment Is carried out by a single individual Effective 6. People Punish Those Who Hurt The legitimacy of punishment is therefore to some degree Others 7. Behaviour Is culturally determined Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Does Frequency Of Interaction Matter? Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Gächter et al. (2008) tested whether the net returns to Key Findings 1. Strong Reciprocity having a punishment option are high when the game is Is Common 2. Free-Riders repeated a sufficient number of rounds Undermine Cooperation 3. Altruistic They used the same game as Fehr and Gächter (2002), but Punishment Sustains Cooperation allowed groups to interact for 50 rounds, rather than just 10 4. Effective Punishment Depends On Legitimacy They found that after the initial rounds, the net benefits to the 5. Symbolic Punishment Is group with the punishment option significantly exceeded Effective 6. People Punish those of the no-punishment group Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Gächter et al. (2008) Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings 1. Strong Reciprocity Is Common 2. Free-Riders Undermine Cooperation 3. Altruistic Punishment Sustains Cooperation 4. Effective Punishment Depends On Legitimacy 5. Symbolic Punishment Is Effective 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy In the 50 round condition, after the initial rounds, the “fear” of punishment is enough to sustain cooperation Punishing Free over subsequent rounds Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Do Groups Benefit From a Punishment Option? Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings Having a punishment option improves group outcomes, 1. Strong Reciprocity Is Common 2. Free-Riders provided interactions between group members are frequent Undermine Cooperation 3. Altruistic But the punishment mechanism must be legitimate to avoid Punishment Sustains Cooperation vendetta like retaliation 4. Effective Punishment Depends On What punishment is legitimate is to some degree culturally Legitimacy 5. Symbolic Punishment Is determined Effective 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  5. Purely Symbolic Punishment Is Effective Psychology and Social Behaviour Punishment is effective even when it takes the form of mark.hurlstone @uwa.edu.au criticism by peers, rather than a reduction in material payoffs Key Findings Masclet et al. (2003): 1. Strong Reciprocity Is Common 2. Free-Riders when subjects can assign “disapproval points” to group Undermine Cooperation members, contributions to the public good increase 3. Altruistic Punishment Sustains Cooperation Barr (2001): 4. Effective Punishment Depends On contributions to the public good increase when subjects Legitimacy 5. Symbolic Punishment Is can publicly shame free riders Effective 6. People Punish Those Who Hurt Gächter and Fehr (1999): Others 7. Behaviour Is Conditioned on making individual contributions publicly observable Group Membership 8. People Enjoy substantially raises contributions to the public good Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  5. Purely Symbolic Punishment Is Effective Psychology and Social Behaviour mark.hurlstone @uwa.edu.au These results, and those of Falk et al. (2005) and Drew et al. Key Findings (2009) suggest: 1. Strong Reciprocity Is Common 2. Free-Riders 1 the objective of punishment is not simply behaviour Undermine Cooperation modification, but punishment per se 3. Altruistic Punishment Sustains Cooperation 2 the target’s positive response to punishment is an 4. Effective Punishment attempt to right a wrong in the eyes of fellow group Depends On Legitimacy members 5. Symbolic Punishment Is Effective The self-interest axiom cannot explain the frequency nor 6. People Punish Those Who Hurt Others effectiveness of punishment 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  6. People Punish Those Who Hurt Others Psychology and Social Behaviour mark.hurlstone @uwa.edu.au People don’t just punish those that have hurt them Key Findings 1. Strong Reciprocity Is Common They also punish those who hurt others 2. Free-Riders Undermine Cooperation This occurs when the action causing the hurt violates a 3. Altruistic Punishment Sustains Cooperation “social norm” 4. Effective Punishment Depends On Punishment is thus not simply retaliation in response to Legitimacy 5. Symbolic personal damages—it appears to reflect more general Punishment Is Effective ethical norms 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Fehr and Fischbacher (2004): Third Party Punishment and Social Norms Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Dictator game with third-party punishment Key Findings Three players: dictator, recipient, and observer 1. Strong Reciprocity Is Common 2. Free-Riders Undermine Game between dictator and recipient is a dictator game Cooperation 3. Altruistic Punishment Sustains Dictator given an endowment of $100 and can transfer any Cooperation 4. Effective amount to recipient (the recipient has no say in the matter) Punishment Depends On Legitimacy The observer—the “third party”—has an endowment of $50 5. Symbolic Punishment Is Effective and observes the dictator’s transfer 6. People Punish Those Who Hurt Others After this, the observer can assign punishment points 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Fehr and Fischbacher (2004): Third Party Punishment and Social Norms Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Each punishment point assigned to the dictator costs the Key Findings 1. Strong Reciprocity Is Common observer $1 2. Free-Riders Undermine dictator incurs a penalty of $3 Cooperation 3. Altruistic Punishment Sustains Cooperation Since punishment is costly, a self regarding observer will 4. Effective Punishment never punish Depends On Legitimacy 5. Symbolic However, if there is a “sharing” or “fairness” norm, an Punishment Is Effective observer may well punish the dictator if she gives too little 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Fehr and Fischbacher (2004): Third Party Punishment and Social Norms Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings 1. Strong Reciprocity Is Common 2. Free-Riders Undermine Cooperation 3. Altruistic Punishment Sustains Cooperation 4. Effective Punishment Depends On Legitimacy 5. Symbolic Punishment Is Effective 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Fehr and Fischbacher (2004): Third Party Punishment and Social Norms Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings 1. Strong Reciprocity Is Common 2. Free-Riders Undermine Cooperation 3. Altruistic Punishment Sustains Cooperation 4. Effective Punishment Depends On Legitimacy 5. Symbolic Punishment Is Effective 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  7. Behaviour Is Conditioned on Group Membership Psychology and Social Behaviour mark.hurlstone @uwa.edu.au In experimental and natural settings, people often behave Key Findings 1. Strong Reciprocity differently toward others, depending on the linguistic, ethnic, Is Common 2. Free-Riders and religious groups to which they belong Undermine Cooperation 3. Altruistic People are more willing to cooperate with in-group members Punishment Sustains Cooperation than out-group members, and more willing to punish 4. Effective Punishment Depends On out-group members than in-group members Legitimacy 5. Symbolic Punishment Is The sensitivity of cooperation to group membership has Effective 6. People Punish been studied using the trust game (Berg et al., 1995) Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Trust Game Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Two players, call them Alice (the “truster”) and Bob (the “trustee”) Key Findings 1. Strong Reciprocity Is Common Alice is awarded a sum of money and given the opportunity 2. Free-Riders Undermine Cooperation to transfer any amount of it to Bob 3. Altruistic Punishment Sustains Cooperation The experimenter then triples the amount transferred (e.g., if 4. Effective Punishment Alice gives 10, Bob receives 30) Depends On Legitimacy 5. Symbolic Bob then has the opportunity to return some of this Punishment Is Effective augmented sum to Alice 6. People Punish Those Who Hurt Others This ends the game 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Trust Game Psychology and Social Behaviour mark.hurlstone @uwa.edu.au If Alice cared only about payoffs, and assumed that Bob had Key Findings 1. Strong Reciprocity the same self-regarding preferences, she would transfer Is Common 2. Free-Riders nothing Undermine Cooperation 3. Altruistic She would correctly infer that whatever Bob received would Punishment Sustains Cooperation be kept rather than returned 4. Effective Punishment Depends On Legitimacy But when the game is played anonymously, Alice typically 5. Symbolic Punishment Is contributes a significant amount, and significant amounts are Effective 6. People Punish returned by Bob Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Trust Game Psychology and Social Behaviour Several experimenters have implemented the trust game mark.hurlstone @uwa.edu.au played between subjects who were—while otherwise anonymous—aware of the ethnic, religious, or linguistic Key Findings 1. Strong Reciprocity identity of their partner Is Common 2. Free-Riders Undermine Fershtman et al. (2002) implemented this game in Belgium, Cooperation 3. Altruistic played between students at Flemish and Walloon universities Punishment Sustains Cooperation 4. Effective Both Flemish and Walloon Alices make lower offers to Punishment Depends On Legitimacy out-group than in-group members 5. Symbolic Punishment Is Effective However, they offer as much to a partner of unknown 6. People Punish Those Who Hurt in-group/out-group status as they do to in-group members Others 7. Behaviour Is Conditioned on Such discriminatory preferences are a puzzle, as they often Group Membership 8. People Enjoy impel people to forego beneficial exchanges Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  8. People Enjoy Cooperating And Punishing Free Riders Psychology and Social There is evidence from neuroimaging studies that people Behaviour mark.hurlstone enjoy cooperating and punishing those who violate norms of @uwa.edu.au fairness Key Findings Ultimatum game responders who reject a low offer exhibit 1. Strong Reciprocity Is Common heightened activation of the bilateral anterior insula (Sanfey 2. Free-Riders Undermine Cooperation et al. 2003) 3. Altruistic Punishment Sustains a neural locus of the distaste for inequality and unfair Cooperation 4. Effective Punishment treatment? Depends On Legitimacy 5. Symbolic Mutual cooperation and a monetary payoff enhances activity Punishment Is Effective in the striatum more than the same payoff resulting from 6. People Punish Those Who Hurt performance of an individual task (Rilling et al., 2004) Others 7. Behaviour Is Conditioned on Subjects who punished partners that had violated their trust Group Membership 8. People Enjoy Punishing Free exhibited enhanced activation of the dorsal striatum (De Riders 9. Ecological Validity Quervain et al., 2004) [email protected] Psychology and Social Behaviour  9. Ecological Validity Psychology and Social Behaviour Do experimental results in the laboratory reflect real-life mark.hurlstone behaviour? @uwa.edu.au There is some evidence that they do have external validity Key Findings 1. Strong Reciprocity Is Common Carpenter and Seki (2011): 2. Free-Riders Undermine Cooperation Japanese shrimp fishermen 3. Altruistic Punishment Sustains Cooperation Leibbrandt et al. (2010): 4. Effective Punishment Depends On Inland and ocean fishermen in Brazil Legitimacy 5. Symbolic Punishment Is Fehr and Leibbrandt (2010): Effective 6. People Punish Those Who Hurt Brazilian shrimp fishers Others 7. Behaviour Is Conditioned on Group Membership Rustagi et al. (2010): 8. People Enjoy Punishing Free Riders Forest commons management 9. Ecological Validity [email protected] Psychology and Social Behaviour  Summary & Conclusions Psychology and Social Behaviour mark.hurlstone Results are at variance with the self-interest axiom of the @uwa.edu.au standard economic model Key Findings 1. Strong Reciprocity Many people are willing to sacrifice their own monetary Is Common 2. Free-Riders payoff to increase that of others (ultimatum game, trust Undermine Cooperation game, public goods game) 3. Altruistic Punishment Sustains Cooperation Many people reciprocate kind acts with kinds acts of their 4. Effective Punishment Depends On own (trust game, prisoners’ dilemma) Legitimacy 5. Symbolic Punishment Is Many people reciprocate hostile acts with hostile acts of their Effective 6. People Punish own (ultimatum game, public goods game, public goods with Those Who Hurt Others punishment game, dictator game with third party 7. Behaviour Is Conditioned on Group Membership punishment) 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour  Summary & Conclusions Psychology and Social Behaviour mark.hurlstone @uwa.edu.au Key Findings 1. Strong Reciprocity Is Common There is ubiquitous evidence of social preferences (all 2. Free-Riders Undermine games)—many people are generous toward others, care Cooperation 3. Altruistic about fairness, and seek to avoid inequality Punishment Sustains Cooperation 4. Effective The standard economic model must therefore be augmented Punishment Depends On Legitimacy to take these social preferences into consideration 5. Symbolic Punishment Is Effective 6. People Punish Those Who Hurt Others 7. Behaviour Is Conditioned on Group Membership 8. People Enjoy Punishing Free Riders 9. Ecological Validity [email protected] Psychology and Social Behaviour