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Interaction of reasoning ability and distributional preferences in a social dilemma

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  • Baader, Malte
  • Vostroknutov, Alexander

Abstract

In a within subjects design we evaluate distributional preferences and reasoning ability to explain choices in the Traveler's Dilemma. We recruit subjects from economics and non-economics majors to have a high variance of preferences and abilities. We find that economists follow the efficiency criterion while non-economists follow maximin. Economists also show a better reasoning ability. We, therefore, confirm the self-selection hypothesis of choosing a major. An equilibrium of an incomplete information version of the Traveler's Dilemma explains the behavior we observe. Subjects with low reasoning ability make choices away from equilibrium. Thus, (non)cooperative behavior might be misinterpreted if subjects’ reasoning ability is not taken into account.

Suggested Citation

  • Baader, Malte & Vostroknutov, Alexander, 2017. "Interaction of reasoning ability and distributional preferences in a social dilemma," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 79-91.
  • Handle: RePEc:eee:jeborg:v:142:y:2017:i:c:p:79-91
    DOI: 10.1016/j.jebo.2017.07.025
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    Keywords

    C72; C92; D63; Reasoning ability; Distributional preferences; Traveler's Dilemma; Economics education; Cooperation;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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