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Optimal Policies and Socially Oriented Behavior: Some Problematic Effects of an Incentive Compatible Device

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  • Frohlich, Norman
  • Oppenheimer, Joe

Abstract

Mancur Olson was pivotal in identifying the formal structure of collective action and the problems of achieving optimal social outcomes with it. Using experimental methods, an incentive compatible device is introduced in a 5-person prisoner's dilemma. The arrangements reflect constructs of Harsanyi and Rawls designed to identify optimal and fair outcomes. The device moves groups towards optimality but its removal negatively affects subsequent behavior, compared to a control with no ICD. This spill-over problem seems to reflect a weakened connection between socially oriented values and behavior, suggesting that ICD's may have unanticipated negative externalities. Copyright 2003 by Kluwer Academic Publishers

Suggested Citation

  • Frohlich, Norman & Oppenheimer, Joe, 2003. "Optimal Policies and Socially Oriented Behavior: Some Problematic Effects of an Incentive Compatible Device," Public Choice, Springer, vol. 117(3-4), pages 273-293, December.
    • Handle: RePEc:kap:pubcho:v:117:y:2003:i:3-4:p:273-93
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    Cited by:

    1. Mekvabishvili, Rati, 2023. "Weak and Strong Formal Institutions in Resolving Social Dilemmas: Are They Double-Edged Swords?," MPRA Paper 119659, University Library of Munich, Germany.
    2. Rati Mekvabishvili, 2023. "Weak and Strong Formal Institutions in Resolving Social Dilemmas: Are They Double-Edged Swords?," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 7(2), pages 11-20, December.
    3. Norman Frohlich & Joe A. Oppenheimer, 2007. "Justice Preferences and the Arrow Problem," Journal of Theoretical Politics, , vol. 19(4), pages 363-390, October.
    4. Norman Frohlich & Joe Oppenheimer, 2006. "Skating on Thin Ice," Journal of Theoretical Politics, , vol. 18(3), pages 235-266, July.
    5. Joe Oppenheimer & Stephen Wendel & Norman Frohlich, 2011. "Paradox lost: Explaining and modeling seemingly random individual behavior in social dilemmas," Journal of Theoretical Politics, , vol. 23(2), pages 165-187, April.
    6. Grischa Perino & Luca A. Panzone & Timothy Swanson, 2014. "Motivation Crowding In Real Consumption Decisions: Who Is Messing With My Groceries?," Economic Inquiry, Western Economic Association International, vol. 52(2), pages 592-607, April.

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