Experimental methodology: Assigning pro-social groups in the lab

Learning how to create prosocial groups in the lab will allow for the application of laboratory methods to a broader set of empirical questions. I created an experiment to test the effect of group membership on individuals’ social behavior by comparing three group assignment mechanisms: exogenous, quasi-endogenous, and endogenous. The exogenous mechanism, the standard in experimental economics, was to randomly match participants. The quasi-endogenous mechanism, following previous literature, was to group individuals based on their preferences over paintings. The endogenous mechanism was to anonymously group individuals based on membership in a campus group from which they were recruited. I tested these groups in an experiment of risky investment decisions made in conjunction with decisions to reduce risk exposure. Participants could informally share with fellow group members and/or buy insurance that reduced risk. Group type had significant effects. Exogenous groups were the least prosocial, informally sharing the least and adopting significantly more costly insurance than the other group types. These findings highlight the importance of group assignment mechanisms in the lab and suggest that the strength of those social networks can be manipulated in a predictable way.