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Spillover Effects of Institutions on Cooperative Behavior, Preferences, and Beliefs

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  • Florian Engl
  • Arno Riedl
  • Roberto Weber

Abstract

Most institutions are limited in scope. We study experimentally how enforcement institutions affect behavior, preferences, and beliefs beyond their direct influence over the behaviors they control. Groups play two identical public good games, with cooperation institutionally enforced in one game. Institutions generally have economically significant positive spillover effects to the unregulated game. We also observe that institutions enhance conditional cooperation preferences and beliefs about others' cooperativeness, suggesting that both factors are drivers of observed spillover effects. In additional treatments, we provide evidence for several factors, including characteristics of institutions, that enhance or limit the effectiveness and scope of spillover effects.

Suggested Citation

  • Florian Engl & Arno Riedl & Roberto Weber, 2021. "Spillover Effects of Institutions on Cooperative Behavior, Preferences, and Beliefs," American Economic Journal: Microeconomics, American Economic Association, vol. 13(4), pages 261-299, November.
    • Handle: RePEc:aea:aejmic:v:13:y:2021:i:4:p:261-99
    DOI: 10.1257/mic.20180336
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    More about this item

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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