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Abstract

A main research focus in many Social Dilemma Games is the suitability of external institutional treatments in inducing socially optimal outcomes. It is likely that participating subjects exhibit unobserved heterogeneity in their reaction to these treatments. This type of “institutional heterogeneity” has to date not found much attention in the experimental literature. We propose a Hierarchical Bayesian estimation framework to highlight these heterogeneity effects. We illustrate that models that ignore treatment-specific heterogeneity can severely under-estimate the variability in treatment-induced decisions amongst the subject population. The resulting misleading picture of comparative treatment effects can lead to sub-optimal institutional choices and related policy decisions.

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File URL: http://www.econpapers.uaa.alaska.edu/RePEC/ala/wpaper/ALA201204.pdf
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Bibliographic Info

Paper provided by University of Alaska Anchorage, Department of Economics in its series Working Papers with number 2012-04.

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Date of creation: Nov 2012
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Handle: RePEc:ala:wpaper:2012-04

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Web page: http://www.cbpp.uaa.alaska.edu/CBPPHome/DepartmentsandMajors/Economics.aspx
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Related research

Keywords: experimental economics; Social Dilemma Games; Hierarchical Modeling; Bayesian Simulation; Common Property Resource;

Find related papers by JEL classification:

• C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
• C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models
• C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
• C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
• Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

This paper has been announced in the following NEP Reports:

• NEP-ALL-2013-02-16 (All new papers)

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