Behavioral mechanism design as a benchmark for experimental studies

I study the behavioral mechanism design problem in which, in addition to the usual selfish players, there are noisy players who play randomly and ethical players who actively seek to maximize social welfare and are committed, up to a point, to “do their bit” to achieve that goal. I calibrate this model using data on lottery choice and on giving in dictator games. I then use it to study seventeen different (out of sample) experiments including stag hunt games, ultimatum bargaining games, public goods games with and without punishment, and gift exchange games. I show that this simple calibrated model makes sharp predictions and does a good job both qualitatively and quantitatively in explaining the data from those experiments. The theory also identifies quantitative anomalies in the data pointing the way to future improvements. I conclude that this simple calibrated model might be a good benchmark for other experiments.