Risky Punishment and Reward in the Prisoner
AbstractWe conduct a prisoner’s dilemma experiment with a punishment/reward stage, where punishments and rewards are risky. This is compared with a risk free treatment. We find that subjects do not change their behavior in the face of risky outcomes. Additionally, we measure risk attitude and the emotions of subjects. While we find a strong influence of emotions, individual risk aversion has no effect on the decision to punish or reward. This is good news for lab experiments who abstract from risky outcomes. From the perspective of social preferences, our results provide evidence for risk neutral inclusion of other player’s payoffs in the decisionmaker’s utility function.
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Bibliographic InfoPaper provided by Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim in its series Sonderforschungsbereich 504 Publications with number 07-62.
Length: 20 pages
Date of creation: 05 Sep 2007
Date of revision:
Note: We gratefully acknowledge productive comments and suggestions of Joerg Oechssler, Wendelin Schnedler, and the participants of the Universität Heidelberg departmental seminar. We thank Timo Goeschl for allowing us to run the experiment in his class and Adam Dominiak for research assistance. Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-04-04 (All new papers)
- NEP-CBE-2008-04-04 (Cognitive & Behavioural Economics)
- NEP-EXP-2008-04-04 (Experimental Economics)
- NEP-GTH-2008-04-04 (Game Theory)
- NEP-UPT-2008-04-04 (Utility Models & Prospect Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jon Elster, 1998. "Emotions and Economic Theory," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 47-74, March.
- Ben-Shakhar, Gershon & Bornstein, Gary & Hopfensitz, Astrid & van Winden, Frans, 2007. "Reciprocity and emotions in bargaining using physiological and self-report measures," Journal of Economic Psychology, Elsevier, vol. 28(3), pages 314-323, June.
- Giorgio Coricelli, 2002. "Sequence Matters: an Experimental Study of the Effects of Experiencing Positive and Negative Reciprocity," Department of Economics University of Siena 369, Department of Economics, University of Siena.
- van Winden, Frans, 2001. "Emotional Hazard Exemplified by Taxation-Induced Anger," Kyklos, Wiley Blackwell, vol. 54(2-3), pages 491-506.
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