IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

The House Money Effect and Negative Reciprocity

In the vast majority of experiments documenting the existence of reciprocity subjects are endowed with windfall funds. In some situations such endowments might create a so-called “house money effect”. We identify two reasons why the source of endowment might matter for negative reciprocity: (1) Using earned – as opposed to windfall money – might increase the costs of negative reciprocity due to this money being in a different mental account and thus lead to less retaliation. (2) Decreasing a decision-maker’s endowment consisting of earned money might be considered a stronger violation of property rights and lead to more retaliation. We test our conjectures in an experiment and find that subjects retaliate more in both cases.

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.

File URL: http://www.econ.canterbury.ac.nz/RePEc/cbt/econwp/1406.pdf
Download Restriction: no

Paper provided by University of Canterbury, Department of Economics and Finance in its series Working Papers in Economics with number 14/06.

as
in new window

Length: 33 pages
Date of creation: 07 Feb 2014
Date of revision:
Handle: RePEc:cbt:econwp:14/06
Contact details of provider: Postal: Private Bag 4800, Christchurch, New Zealand
Phone: 64 3 369 3123 (Administrator)
Fax: 64 3 364 2635
Web page: http://www.econ.canterbury.ac.nz

More information through EDIRC

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.:

as in new window
  1. G. Bolton, 2010. "A comparative model of bargaining: theory and evidence," Levine's Working Paper Archive 263, David K. Levine.
  2. Charness, Gary & Rabin, Matthew, 2001. "Understanding Social Preferences with Simple Tests," Department of Economics, Working Paper Series qt4qz9k8vg, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  3. Nikiforakis, Nikos & Engelmann, Dirk, 2011. "Altruistic punishment and the threat of feuds," Journal of Economic Behavior & Organization, Elsevier, vol. 78(3), pages 319-332, May.
  4. Todd L. Cherry & Peter Frykblom & Jason F. Shogren, 2002. "Hardnose the Dictator," American Economic Review, American Economic Association, vol. 92(4), pages 1218-1221, September.
  5. Falk, Armin & Fehr, Ernst, 2002. "Psychological Foundations of Incentives," CEPR Discussion Papers 3185, C.E.P.R. Discussion Papers.
  6. David Reinstein & Gerhard Riener, 2012. "Decomposing desert and tangibility effects in a charitable giving experiment," Experimental Economics, Springer, vol. 15(1), pages 229-240, March.
  7. Georg Kirchsteiger & Martin Dufwenberg, 2004. "A theory of sequential reciprocity," ULB Institutional Repository 2013/5899, ULB -- Universite Libre de Bruxelles.
  8. Falk, Armin & Fischbacher, Urs, 2001. "A Theory of Reciprocity," CEPR Discussion Papers 3014, C.E.P.R. Discussion Papers.
  9. James C. Cox & Cary A. Deck, 2005. "On the Nature of Reciprocal Motives," Economic Inquiry, Western Economic Association International, vol. 43(3), pages 623-635, July.
  10. James Cox & Daniel Friedman & Steven Gjerstad, 2004. "A Tractable Model of Reciprocity and Fairness," Experimental 0406001, EconWPA.
  11. Uri Gneezy & John A. List, 2006. "Putting Behavioral Economics to Work: Testing for Gift Exchange in Labor Markets Using Field Experiments," NBER Working Papers 12063, National Bureau of Economic Research, Inc.
  12. Charness, Gary & Kuhn, Peter J., 2010. "Lab Labor: What Can Labor Economists Learn from the Lab?," IZA Discussion Papers 4941, Institute for the Study of Labor (IZA).
  13. Rutstrom, E. Elisabet & Williams, Melonie B., 2000. "Entitlements and fairness:: an experimental study of distributive preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 43(1), pages 75-89, September.
  14. Fehr, Ernst & Schmidt, Klaus M., 1999. "A theory of fairness, competition, and cooperation," Munich Reprints in Economics 20650, University of Munich, Department of Economics.
  15. Cox, James C. & Friedman, Daniel & Sadiraj, Vjollca, 2009. "Revealed Altruism," Santa Cruz Department of Economics, Working Paper Series qt6rb5t4mc, Department of Economics, UC Santa Cruz.
  16. Richard H. Thaler & Eric J. Johnson, 1990. "Gambling with the House Money and Trying to Break Even: The Effects of Prior Outcomes on Risky Choice," Management Science, INFORMS, vol. 36(6), pages 643-660, June.
  17. Nikos Nikiforakis & Hans-Theo Normann, 2005. "A Comparative Statics Analysis of Punishment in Public-Good Experiments," Royal Holloway, University of London: Discussion Papers in Economics 05/07, Department of Economics, Royal Holloway University of London, revised Jun 2005.
  18. Ronald Bosman & Frans van Winden, 2002. "Emotional Hazard in a Power-to-take Experiment," Economic Journal, Royal Economic Society, vol. 112(476), pages 147-169, January.
  19. Louis Putterman & Christopher M. Anderson, 2003. "Do Non-strategic Sanctions Obey the Law of Demand? The Demand for Punishment in the Voluntary Contribution Mechanism," Working Papers 2003-15, Brown University, Department of Economics.
  20. Simon Gachter & Ernst Fehr, 2000. "Cooperation and Punishment in Public Goods Experiments," American Economic Review, American Economic Association, vol. 90(4), pages 980-994, September.
  21. James C. Cox & Vjollca Sadiraj, 2006. "On Modeling Voluntary Contributions to Public Goods," Experimental Economics Center Working Paper Series 2006-26, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
  22. Nikiforakis, Nikos, 2008. "Punishment and counter-punishment in public good games: Can we really govern ourselves," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 91-112, February.
  23. Kube, Sebastian & Maréchal, Michel André & Puppe, Clemens, 2011. "The currency of reciprocity - gift-exchange in the workplace," Working Paper Series in Economics 25, Karlsruhe Institute of Technology (KIT), Department of Economics and Business Engineering.
  24. James C. Cox & Klarita Sadiraj & Vjollca Vjollca, . "Implications of Trust, Fear, and Reciprocity for Modeling Economic Behavior," Experimental Economics Center Working Paper Series 2006-10, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
  25. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers 92-199, University of California at Berkeley.
  26. Georg Kirchsteiger & Ernst Fehr & Simon Gächter, 1997. "Reciprocity as a contract enforcement device: experimental evidence," ULB Institutional Repository 2013/5911, ULB -- Universite Libre de Bruxelles.
  27. Richard Thaler, 1985. "Mental Accounting and Consumer Choice," Marketing Science, INFORMS, vol. 4(3), pages 199-214.
  28. Abbink, Klaus & Irlenbusch, Bernd & Renner, Elke, 2000. "The moonlighting game: An experimental study on reciprocity and retribution," Journal of Economic Behavior & Organization, Elsevier, vol. 42(2), pages 265-277, June.
  29. Carpenter, Jeffrey P., 2007. "The demand for punishment," Journal of Economic Behavior & Organization, Elsevier, vol. 62(4), pages 522-542, April.
  30. James C. Cox & Daniel T. Hall, 2010. "Trust with Private and Common Property: Effects of Stronger Property Right Entitlements," Games, MDPI, Open Access Journal, vol. 1(4), pages 527-550, November.
  31. Nisvan Erkal & Lata Gangadharan & Nikos Nikiforakis, 2009. "Relative Earnings and Giving in a Real-Effort Experiment," Department of Economics - Working Papers Series 1067, The University of Melbourne.
  32. Armin Falk & Ernst Fehr & Urs Fischbacher, 2003. "On the Nature of Fair Behavior," Economic Inquiry, Western Economic Association International, vol. 41(1), pages 20-26, January.
  33. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
  34. Jeremy Clark, 2002. "House Money Effects in Public Good Experiments," Experimental Economics, Springer, vol. 5(3), pages 223-231, December.
  35. Clark, Kenneth & Sefton, Martin, 2001. "The Sequential Prisoner's Dilemma: Evidence on Reciprocation," Economic Journal, Royal Economic Society, vol. 111(468), pages 51-68, January.
  36. Glenn Harrison, 2007. "House money effects in public good experiments: Comment," Experimental Economics, Springer, vol. 10(4), pages 429-437, December.
  37. Bosman, Ronald & Sutter, Matthias & van Winden, Frans, 2005. "The impact of real effort and emotions in the power-to-take game," Journal of Economic Psychology, Elsevier, vol. 26(3), pages 407-429, June.
  38. Colin Camerer, 2003. "Behavioural studies of strategic thinking," Levine's Bibliography 506439000000000490, UCLA Department of Economics.
  39. Oxoby, Robert J. & Spraggon, John, 2008. "Mine and yours: Property rights in dictator games," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 703-713, March.
  40. Hoffman Elizabeth & McCabe Kevin & Shachat Keith & Smith Vernon, 1994. "Preferences, Property Rights, and Anonymity in Bargaining Games," Games and Economic Behavior, Elsevier, vol. 7(3), pages 346-380, November.
  41. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  42. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
  43. Pereira, Paulo T. & Silva, Nuno & Silva, Joao Andrade e, 2006. "Positive and negative reciprocity in the labor market," Journal of Economic Behavior & Organization, Elsevier, vol. 59(3), pages 406-422, March.
  44. Jordi Brandts & Gary Charness, 2011. "The strategy versus the direct-response method: a first survey of experimental comparisons," Experimental Economics, Springer, vol. 14(3), pages 375-398, September.
  45. Luis Roberto Martínez & Christian Jaramillo & Nicolas De Roux & Juan-Camilo Cárdenas, 2010. "It´s Not My Money: An Experiment on Risk Aversion and the House-money Effect," DOCUMENTOS CEDE 006712, UNIVERSIDAD DE LOS ANDES-CEDE.
  46. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:cbt:econwp:14/06. 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: (Albert Yee)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.