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Spillover Effects of Institutions on Cooperative Behavior, Preferences, and Beliefs

Author

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  • Florian Engl
  • Arno Riedl
  • Roberto A. Weber

Abstract

Institutions are an important means for fostering prosocial behaviors, but in many contexts their scope is limited and they govern only a subset of all socially desirable acts. We study experimentally how the presence and nature of an institution that enforces prosocial behavior in one domain affects behavior in a similar but unregulated domain. Groups play two identical public good games, with cooperation institutionally enforced in one game. The presence of an institution in one game generally enhances cooperation in the other game, thus documenting a positive spillover effect. These indirect spillover effects are economically substantial, amounting up to 30 to 40 percent of the direct effect of institutions. In addition, we find evidence for sequential spillover effects, meaning that behavior is affected by the institution even after it is removed. We also observe that institutions enhance prosocial preferences and beliefs about others’ prosocial behavior, even toward strangers, suggesting that both factors are drivers of the observed spillover effects. We further explore other aspects influencing spillover effects, including characteristics of an institution, such as whether it is exogenously imposed or endogenously determined.

Suggested Citation

  • Florian Engl & Arno Riedl & Roberto A. Weber, 2017. "Spillover Effects of Institutions on Cooperative Behavior, Preferences, and Beliefs," CESifo Working Paper Series 6504, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_6504
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    References listed on IDEAS

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    Cited by:

    1. Galbiati, Roberto & Henry, Emeric & Jacquemet, Nicolas, 2017. "Spillovers, Persistence and Learning: Institutions and the Dynamics of Cooperation," CEPR Discussion Papers 12128, C.E.P.R. Discussion Papers.
    2. Fabio Galeotti & Valeria Maggian & Marie Claire Villeval, 2019. "Fraud Deterrence Institutions Reduce Intrinsic Honesty," Working Papers 1924, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    3. Johannes Buckenmaier & Eugen Dimant & Luigi Mittone, 2016. "Tax Evasion and Institutions. An Experiment on The Role of Principal Witness Regulations," PPE Working Papers 0007, Philosophy, Politics and Economics, University of Pennsylvania.
    4. Ai Takeuchi & Erika Seki, 2019. "Coordination and free-riding problems in blood donations," Discussion Papers in Economics and Business 19-15, Osaka University, Graduate School of Economics.
    5. Emeric Henry & Nicolas Jacquemet & Roberto Galbiati, 2017. "Spillovers, Persistence and Learning: Institutions and the Dynamics of Cooperation," Working Papers halshs-01613850, HAL.

    More about this item

    Keywords

    public goods; institutions; spillover effect; social preferences; beliefs;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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