Henry Bradley
Communication and Coordination in Games with Third-Party Externalities
In many cases the actions of decision makers in coordination problems do not solely impact personal welfare, but also the welfare of third parties. Standard models of agent’s preferences, which do not consider the welfare of others in utility functions, predict agents to behave in a rationally self-maximising way. That is, even in the light of potentially large negative externalities, the decision maker will behave according only to his own payoffs, without any weight given to the outcomes for other parties. Evidence from Bland and Nikiforakis (2013) demonstrates that participants in an experiment are willing to act in a way that increases their income slightly, even if doing so causes substantial negative externalities and reductions in total group welfare. Elsewhere, studies have shown that communication can improve group welfare outcomes, however, in these studies, increases in group welfare did not require a sacrifice in the earnings of decision-makers. Hence, it remains unclear whether communication will have the same effect when increasing total surplus implies a reduction in earnings of the decision-makers. Given this evidence for the positive impact of the introduction of communication opportunities on group welfare, this capstone project sheds light on whether communication can move behaviour away from the tendency to anti-social consequences in coordination problems as shown to be acute in Bland and Nikiforakis (2013). If communication opportunities do induce pro-social behaviour, the project will seek to answer why this is so. To that end, using an experimental set-up I investigate the impact of communication opportunities on the outcomes of a strategic coordination game featuring a pro-social and anti-social equilibrium.
Anirudh Sood
Raising Funds 101? Groups, Individuals, and the "Identified Victim" Effect
Many NGOs rely on empathic arousal to raise funds. A common source of such arousal is a victim’s story and image. In my paper, I study individual and group contributions made towards helping Moke, a 7-year-old child living in Democratic Republic of Congo, suffering from a dermatological condition. In my experiment, I control levels of identification by offering the image, name, and age of the victim to the treatment. My experiment confirms the existence of the “Identified Victim” effect in individuals: individuals contribute more towards helping an identified victim than an unidentified victim. Importantly, I extend the study to groups to find, surprisingly, that groups contribute more towards helping an unidentified victim than identified victim. Finally, the results also demonstrate that groups are less rational than individuals i.e. groups contribute more towards helping the unidentified victim than individuals.
Yuqi Sun
How Do Information Effects Affect Entrepreneurial Behaviours? Empirical Evidence
This research aims to understand how information effects affect individuals' decision making, individuals' productivity, and market outcome in a market setting. Information effects are defined as the knowledge of the highest-profit-earning participants’ profit-making performances and decisions. Market outcomes are defined as the market equilibrium, market prices, and individual's entrepreneurial decisions. Mas & Moretti (2009) and Falk & Ichino (2006) show that peer effects improve productivity in particular settings, especially when subjects observe each other, but there are questions to be asked about the effects in a market setting. To investigate the subject, I conducted lab experiments that simulates a capital market, in which participants can rent or lend capital at a market price, and make profits by performing real-effort tasks with their remaining capital. I expect to show that making the knowledge of best profit-making practices public encourages individuals' strategic decision making, and improves individuals' productivity.