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Do Incentive Contracts Crowd out Voluntary Cooperation?

Fehr, Ernst; Gaechter, Simon - Institut für Volkswirtschaftslehre, …

In this paper we provide experimental evidence indicating that incentive contracts may cause a strong crowding out of reciprocity-driven voluntary cooperation. This crowding out effect constitutes costs of incentive provision that have been largely neglected by economists. In our experiments the...

Persistent link: https://www.econbiz.de/10005627780

The Hidden Costs and Returns of Incentives - Trust and Trustworthiness among CEOs

Fehr, E.; List, John A. - Institut für Volkswirtschaftslehre, …

situations requiring trust and trustworthiness. As a control we compare the behavior of CEOs with the behavior of students. We … incentives. However, the availability of penalizing incentives also creates hidden returns: if a principal expresses trust by … punishment threat is not available. Thus trust seems to reinforce trustworthy behavior. Overall, trustworthiness is highest if …

Persistent link: https://www.econbiz.de/10005627811

Appropriating the Commons - A Theoretical Explanation

Falk, Armin; Fehr, Ernst; Fischbacher, Urs - Institut für Volkswirtschaftslehre, …

In this paper we show that a simple model of reciprocal preferences explains major experimental regularities of common pool resource (CPR) experiments. The evidence indicates that in standard CPR games without communication and without sanctioning possibilities inefficient excess appropriation...

Persistent link: https://www.econbiz.de/10005585660

Testing Theories of Fairness - Intentions Matter

Falk, Armin; Fehr, Ernst; Fischbacher, Urs - Institut für Volkswirtschaftslehre, …

Recently developed models of fairness can explain a wide variety of seemingly contradictory facts. The most controversial and yet unresolved issue in the modeling of fairness preferences concerns the behavioral relevance of fairness intentions. Intuitively, fairness intentions seem to play an...

Persistent link: https://www.econbiz.de/10005627833

The Envious Punisher: Understanding Third and Second Party Punishment with Simple Games

Leibbrandt, Andreas; López-Pérez, Raúl - Institut für Volkswirtschaftslehre, … - 2008

We provide a systematic comparison of punishment from unaffected third parties and affected second parties using a within-subject design in ten simple games. We apply the classification analysis by El-Gamal and Grether (1995) and find that a parsimonious model assuming subjects are either...

Persistent link: https://www.econbiz.de/10005627932

On the Nature of Fair Behavior

Falk, Armin; Fehr, Ernst; Fischbacher, Urs - Institut für Volkswirtschaftslehre, …

This paper shows that identical offers in an ultimatum game generate systematically different rejection rates depending on the other offers that are available to the proposer. This result casts doubt on the consequentialist practice in economics to define the utility of an action solely in terms...

Persistent link: https://www.econbiz.de/10005627957

Money and Reciprocity

Hens, Thorsten; Vogt, Bodo - Institut für Volkswirtschaftslehre, …

Based on an experimental analysis of a simple monetary economy we argue that a monetary system is more stable than one would expect from individual rationality. We show that positive reciprocity stabilizes the monetary system, provided every participant considers the feedbacks of his choice to...

Persistent link: https://www.econbiz.de/10005627772

Efficient Contracting and Fair Play in a Simple Principal-Agent Experiment

Anderhub, Vital; Gaechter, Simon; Koenigstein, Manfred - Institut für Volkswirtschaftslehre, …

We study behavior within a simple principal--agent experiment. Our design allows for a large class of linear contracts. Principals can offer any feasible combination of (negative) fixed wages and incentives in the form of return sharing. This great contractual flexibility allows us to study...

Persistent link: https://www.econbiz.de/10005627819

Reputation and Reciprocity: Consequences for the Labour Relation

Gaechter, Simon; Falk, Armin - Institut für Volkswirtschaftslehre, …

Recent evidence highlights the importance of social norms in many economic relations. However, many of these relationships are long-term and provide repeated game incentives for performance. We experimentally investigate interaction effects of reciprocity and repeated game incentives in two...

Persistent link: https://www.econbiz.de/10005627915

Driving Forces of Informal Sanctions

Falk, Armin; Fehr, Ernst; Fischbacher, Urs - Institut für Volkswirtschaftslehre, …

Informal sanctions are a major determinant of a society's social capital because they are key to the enforcement of implicit agreements and social norms. Yet, little is known about the driving forces behind informal sanctions. We systematically examine the determinants of informal sanctions by a...

Persistent link: https://www.econbiz.de/10005627991