Cost of action, perceived intention, positive reciprocity, and signalling model

This economic experiment tests the positive relationship between perceived intention and positive reciprocity by altering material-payoff structures in treatments, or material-payoff approach. To design the treatments, this study applies a signalling model to explain how the intention of an action is signalled and perceived. As a result from the model, cost of an action positively relates to the perceived intention. The results from seventy-nine subjects who participated in this four-session hand-run experiment that was double-blindly organized between August - September 2011 support the relationship. Moreover, this study hypothesizes on consistent decisions across treatments with different levels of perceived intention, and the results support the hypotheses. The insight into sacrificing and rewarding is the significant implication in this study.