An agent-based analysis of context-dependent preferences
In "Skating on Thin Ice", Frohlich and Oppenheimer (2006) describe a phenomenon they observed in public goods experiments that is rarely discussed in the literature: individual contributions to the public good are often inconsistent over time, appearing to fluctuate between two distinct contribution levels. Although they conjecture that individuals have complex context-dependent preferences, they did not develop a full specification of the theory. Using an agent-based simulation model, we explore the likelihood of these psychological conjectures, and thereby provide a possible specification of a theory of complex context-dependent preferences. We consider two main theories: first, that inconsistent contributions arise from a deterministic avoidance of exploitation and second, that inconsistent contributions arise from a probabilistic response to exploitation. We show the former theory clearly fails and the latter theory, under specifiable conditions, does produce the observed pattern of contributions. Two simple alternative theories are also considered, that of a highly-stylized "probabilistic guilt" and of goal-oriented but non-utility maximizing behavior (with stable preferences). Both alternatives, under certain conditions, are also able to generate the observed pattern. We develop an analysis of situations in which the predictions of these theories diverge and suggest that one could discriminate between them in laboratory settings. Finally, we consider a possibly fruitful relationship between simulation and experimentation to consider the implications of one's models and conjectures: this research can be seen as one step in an iterative process of theory development, vetting and testing, generating an empirically grounded theory of individual behavior in VCM games.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
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.:
- Matthew Rabin., 1992.
"Incorporating Fairness into Game Theory and Economics,"
Economics Working Papers
92-199, University of California at Berkeley.
- Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
- M. Rabin, 2001. "Incorporating Fairness into Game Theory and Economics," Levine's Working Paper Archive 511, David K. Levine.
- John O. Ledyard, 1994.
"Public Goods: A Survey of Experimental Research,"
9405003, EconWPA, revised 22 May 1994.
- Amos Tversky & Itamar Simonson, 1993. "Context-Dependent Preferences," Management Science, INFORMS, vol. 39(10), pages 1179-1189, October.
- Norman Frohlich & Joe Oppenheimer & Anja Kurki, 2004. "Modeling Other-Regarding Preferences and an Experimental Test," Public Choice, Springer, vol. 119(1_2), pages 91-117, 04.
- Fehr, Ernst & Schmidt, Klaus M., 1998.
"A Theory of Fairness, Competition and Cooperation,"
CEPR Discussion Papers
1812, C.E.P.R. Discussion Papers.
- Fehr, Ernst & Schmidt, Klaus M., . "A theory of fairness, competition, and cooperation," Chapters in Economics, University of Munich, Department of Economics.
- Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 817-868.
- Fehr, Ernst & Schmidt, Klaus M., 1999. "A theory of fairness, competition, and cooperation," Munich Reprints in Economics 20650, University of Munich, Department of Economics.
- Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers 004, Institute for Empirical Research in Economics - University of Zurich.
- Gode, Dhananjay K & Sunder, Shyam, 1993. "Allocative Efficiency of Markets with Zero-Intelligence Traders: Market as a Partial Substitute for Individual Rationality," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 119-37, February.
- Dibble, Catherine, 2006. "Computational Laboratories for Spatial Agent-Based Models," Handbook of Computational Economics, in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 31, pages 1511-1548 Elsevier.
- Vernon L. Smith, 1994. "Economics in the Laboratory," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 113-131, Winter.
- Hoffman, Elizabeth & McCabe, Kevin & Smith, Vernon L, 1996. "Social Distance and Other-Regarding Behavior in Dictator Games," American Economic Review, American Economic Association, vol. 86(3), pages 653-60, June.
- Duffy, John, 2006.
"Agent-Based Models and Human Subject Experiments,"
Handbook of Computational Economics,
in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 19, pages 949-1011
When requesting a correction, please mention this item's handle: RePEc:eee:joepsy:v:31:y:2010:i:3:p:269-284. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.