Bertil Tungodden, September 24 2013
PhD minicourse organized by
The Centre Franco-Norvégian en Sciences Sociales et Humaines
In cooperation with ESOP
Centre for the study of Equality, Social Organization and Performance
Fairness & poverty:
Theory, measurement & experimental evidence
Overview of Lecture 4:
Fairness and responsibility: Experimental evidence
Part 1: What motivates moral behavior?
In this part, we discuss what motivates moral behavior, with a particular focus on whether
sharing in dictator game experiments reflects intrinsic moral motivation or extrinsic social
motivation.
Part 2: Heterogeneity in social preferences
We here consider two different heterogeneities in social preferences: (a) how people differ in the
importance attached to what is the morally right to do and (b) how people differ in what is perceived
as the morally right thing to do. In particular, we discuss how different views on responsibility affect
moral behavior and how a concern for responsibility is traded off against a concern for needs and
poverty alleviation.
Part 3: Do we pay too much attention to responsibility?
We close this lecture by discussing whether we attach to much importance to responsibility and
choice. In the modern world, the freedom to choose is highly valued, but what does it mean to have a
real choice? And for which choices should individuals be held responsible?
Literature
Andreoni, James and B. Douglas Bernheim (2009). “Social image and the 50-50 norm: A
theoretical and experimental analysis of audience effects,” Econometrica, 77(5): 1607–1636.
Battigalli, Pierpaolo and Martin Dufwenberg (2007). “Guilt in games,” American Economic
Review, 97(2): 170–176.
Broberg, Thomas, Tore Ellingsen, and Magnus Johannesson (2007). “Is generosity
involuntary?” Economics Letters, 94(1): 32–37.
Cappelen, Alexander W., Astri Drange Hole, Erik Ø. Sørensen, and Bertil Tungodden (2007).
“The Pluralism of Fairness Ideals: An Experimental Approach.” American Economic Review,
97(3), 818–827.
Cappelen, Alexander W., Erik Ø. Sørensen, and Bertil Tungodden (2010). “Responsibility for
what? Fairness and individual responsibility.” European Economic Review, 54(3), 429–441.
Cappelen, Alexander W., Karl O. Moene, Erik Ø. Sørensen, and Bertil Tungodden (2013).
“Needs vs entitlements: An international fairness experiment,” Journal of the European
Economic Association 11(3): 574-598.
Cappelen, Alexander W., James Konow, Erik Ø. Sørensen, and Bertil Tungodden (2013).
“Just luck: An experimental study of risk-taking and fairness,” American Economic Review
103(4): 1398-1413.
Charness, Gary and Matthew Rabin (2002). “Understanding Social Preferences with Simple
Tests.” Quarterly Journal of Economics, 117(3), 817–869.
Cherry, Todd L., Peter Frykblom, and Jason F. Shogren (2002). “Hardnose the dictator,”
American Economic Review, 92(4): 1218–1221.
Dana, Jason, Daylian M. Cain, and Robyn M. Dawes (2006). “What you don’t know won’t
hurt me: Costly (but quiet) exit in dictator games,” Organizational Behavior and Human
Decision Processes, 100(2): 193–201.
DellaVigna, Stefano, John A. List, and Ulrike Malmendier (2012). “Testing for altruism and
social pressure in charitable giving,” Quarterly Journal of Economics, 127(1): 1–56.
Engel, Christoph (2011). “Dictator games: A meta study,” Experimental Economics, 14(4):
583–610.
Engelmann, Dirk, and Martin Strobel. 2004. “Inequality Aversion, Efficiency, and Maximin
Preferences in Simple Distribution Experiments." American Economic Review, 94(4): 857869.
Fehr, Ernst and Klaus M. Schmidt (1999). “A Theory of Fairness, Competition and
Cooperation.” Quarterly Journal of Economics, 114(3), 817–868.
Fisman, Raymond J., Shachar Kariv, and Daniel Markovits (2007). “Individual Preferences
for Giving.” American Economic Review, 97(5), 1858–1876.
Konow, James (1996). “A Positive Theory of Economic Fairness.” Journal of Economic
Behavior and Organization, 31(1), 13–35.
Konow, James (2000). “Fair Shares: Accountability and Cognitive Dissonance in Allocation
Decisions.” American Economic Review, 90(4), 1072–1091.
Konow, James (2003). “Which is the Fairest One of All? A Positive Analysis of Justice
Theories.” Journal of Economic Literature, 41(4), 1188–1239.
Part 4 - Fairness and responsibility:
Experimental Evidence
Bertil Tungodden
The Choice Lab, NHH Norwegian School of Economics
PhD minicourse, Paris, 2013
Plan for the lecture
• Some comments on lab experiments.
• What motivates moral behavior?
• Heterogeneity in moral preferences?
• Do we assign too much importance to responsibility?
Why lab experiments?
• Control!
• Real choices (incentives)
• Study behavior: rationality/motivational richness
• Social choice theory and experiments (normative versus positive)
• Internal validity and external validity
• Structural vs. non-structural
• A fad?
• Part 1: What motivates moral behavior?
The big question in the social sciences
The dictator game
Robust finding (students, NHH)
But what about ordinary people…?
Morality a luxury good?
But many economists are still not
convinced...
• People give away too much - doesn’t match what we see outside the
lab.
• Very sensitive to context.
• Doesn’t capture intrinsic moral motivation (Dana, Cain and Dawes
(2006), Broberg, Ellingsen and Johannesson (2007), Lazear,
Malmendier and Weber (2011)).
• Dana et al. (2006)
• After choosing how to share $10 in a dictator game, subjects are
offered an exit option where they receive $9 and the recipient stays
uninformed and receives nothing.
Social concerns important even in an
anonymous context?
“Just knowing that one is the anonymous dictator that the receiver will
think badly of can be sufficient to compel giving” (Dana, Cain and
Dawes, 2006).
The dictator game exaggerates people’s
concern for morality/fairness?
• Broberg et al. (2007): Generosity may to a considerable extent be
involuntary.
• Lazear et al. (2011): Most individuals who share with others do so
reluctantly, preferring to avoid the opportunity to share.
What explains moral behavior in the
dictator game?
• Intrinsic moral motivation versus extrinsic social motivation
• Cappelen, Halvorsen, Sorensen, and Tungodden, 2013.
Sample and an outline of design
• The sample
• 278 students at NHH Norwegian School of Economics.
• Seven sessions, six treatments randomly allocated within sessions.
• Each subject participated only in one treatment. Show up fee of 100
NOK ($17.50).
• All sessions double-blind.
• Outline of design
• Production phase. A subset of the participants completed a task.
• Distribution phase.
• Dictator: makes three choices; how much to give away, and two
further choices discussed later.
• Passive recipients.
• Post-experiment questionnaire.
Design
A 2 × 3 factorial design:
• Treatments with and without the recipient getting information.
• Three treatments manipulating the moral argument for sharing.
Basic info treatment (T1) - production
phase
• The dictators were asked to work on a task for 15 minutes.
• Tick off numbers in a matrix.
• To complete the task, need to reach a threshold (everyone did so).
• No explanation of why they should do so and no mentioning of
payment for doing the task.
Basic info treatment (T1) - dictator
decision
• Informed that they are paid 200 NOK ($35) for completing the
production phase.
• Informed that they are matched with another student at NHH,
randomly selected from the NHH administration records.
• Asked to decide how to share the money they have earned between
themselves and this other person.
• Informed that the other person, after the experiment, is sent money
and a letter providing detailed information about the decision made
by the dictator.
• Informed that they can get an anonymous copy of the transaction
from the NHH administration after the experiment.
Basic info treatment (T1) - letter to
recipent
Basic no-info treatment (T1*) - dictator
decision
• Identical to the the info treatment, except for the content of the
letter to the recipient.
• In this treatment, the letter does not give any details of the
experiment.
• No letter sent if the dictator decides to give nothing.
The moral treatments (T1-T3)
• T1: Recipient has not done any work
• T2: Recipient has done the same work
• The dictator is told that the other participant has done the same
task, and that they both have earned 100 NOK by completing it.
• This information is reflected in the informative letter.
• Recipients randomly selected among the NHH students registering
for the experiment, but placed in a separate room. They receive the
letter in the mail after the experiment is completed.
• T3: Recipient is more needy
• The dictator is told that the other participant is a poor microcredit
client from Tanzania.
• This information is reflected in the informative letter.
• Recipients randomly selected among microcredit clients in the
microcredit institution PRIDE Tanzania.
Overview - design
Information?
Recipient
Student – not working
Student – working
Client – needy
no
yes
T1* (n=35)
T2* (n=33)
T3* (n=30)
T1 (n=36)
T2 (n=34)
T3 (n=32)
The dictator decision – share given in
no-info treatments
Information?
Recipient
Student – not working
Student – working
Client – needy
Note: Standard error in parentheses.
no
0.116
(0.037)
0.210
(0.046)
0.433
(0.076)
yes
The dictator decision – What happens if
the recipient has info?
Information?
Recipient
Student – not working
Student – working
Client – needy
Note: Standard error in parentheses.
no
yes
0.116
(0.037)
0.210
(0.046)
0.433
(0.076)
0.114
(0.034)
The dictator decision – full picture of
share given
Information?
Recipient
Student – not working
Student – working
Client – needy
Note: Standard error in parentheses.
no
yes
0.116
(0.037)
0.210
(0.046)
0.433
(0.076)
0.114
(0.034)
0.293
(0.055)
0.602
(0.065)
Why does information matter?
• Guilt aversion: people suffer from guilt if they let others down
relative to what they believe they will get (Dufwenberg and Gneezy,
2000).
• Pride and shame: desire for social esteem (Ellingsen and
Johanneson, 2008; Andreoni and Bernheim, 2009).
Extrinsic social motivation: Pride versus
guilt
Both pride and guilt
• Part 2: Heterogeneity in moral behavior?
How do people differ?
Our framework
U(y ; ·) = y − β(y − m)2 /2X ,
y ∗ = m + X /β,
Standard approach
• Great focus on heterogeneity in level of selfishness, β.
• Much less focus on heterogeneity in how people differ in their
fairness perceptions, m.
• We believe that the latter in many cases is much more important (for
example when studying how institutions shape social preferences)
Do people dislike all inequalities?
•
“It seems unfair that footballers, bankers, and tycoons earn more money
than they know what to do with whereas jobless folk and single parents
struggle to pay the rent...Yet it also seems unfair to take money from those
who have worked hard and give it to those who have not, or to take away
the profits of those who have risked their life savings to bring a new
intervention to market in order to help those who have risked nothing.
Different societies choose to deal with this conflict in different ways.”
Choice and responsibility
• Choice and responsibility are probably the most powerful ideas in the
political and philosophical discourse on distributive justice.
• People make choices in all spheres of life, and the outcomes of these
choices fundamentally affect the distribution of income and wealth
in society.
• Education, occupation, life style, financial decisions, etc.
• Heated political debates about whether people should be held
responsible for their choices, that is, whether the resulting
inequalities are fair or unfair.
• A corresponding debate in political philosophy and social choice
theory.
Two extreme positions
• Strict egalitarianism: The standard approach - does not hold
individuals responsible for anything!
• Libertarianism: All inequalities are fair - holds individuals
responsible for everything that affects their situation.
Intermediate positions
• Liberal/Choice egalitarianism: People should be held responsible
for factors that are within their control, but not for factors that are
beyond their control.
• Meritocratism: People should be held for their own performance,
but not for pure luck.
How can we study people’s views on
responsibility?
• Real effort dictator games: create different inequalities and study
how people respond to them when making distributive choices.
• Konow (2000, AER), Cappelen, Hole, Sorensen, and Tungodden
(2007, AER), Cappelen, Sorensen, and Tungodden (2010, EER),
Cappelen, Konow, Sorensen, and Tungodden (2013, AER)
Responsibility for what: Fairness and
individual responsibility, 2010, EER
• Production phase:
• Copying a text for 10 or 30 minutes in different computer labs
• Time chosen when registering for experiment
• Earnings: number of correct words × price / per word (0.5 or 1.0 kr).
• Earnings determined by apq, where a: productivity, p: price, q: time.
• Two persons matched in a sequence of four to six dictator decisions.
• For each match, the full vector (a, p, q) is observed, and a
distribution of y to self and X − y to the other is proposed.
• For each person, we randomly draw one of the decisions.
• 284 student participants at NHH.
Estimated population shares; Great
heterogeneity!
Type
Strict egalitarian
Choice egalitarian
Meritocratic
Libertarian
Share
0.204
(0.036)
0.060
(0.026)
0.478
(0.048)
0.258
(0.042)
Risk and heterogeneity in social
preferences (AER, 2013)
• Hot topic!
• People make choices involving risk in all spheres of life, and the
outcomes of these choices fundamentally affect the distribution of
income and wealth in society.
• Education, occupation, life style, financial decisions, etc.
• Heated political debates about how to deal with such inequalities in
a fair manner.
• Generates inequalities reflecting differences in choices and luck.
An example
• Consider a situation where two individuals both have made a choice
between:
• A safe alternative of value 200 USD.
• A risky alternative consisting of two equally likely outcomes of 0
USD and 800 USD.
• Equal opportunities, costly to avoid risk.
An example
• Consider a situation where two individuals both have made a choice
between:
• A safe alternative of value 200 USD.
• A risky alternative consisting of two equally likely outcomes of 0
USD and 800 USD.
• Equal opportunities, costly to avoid risk.
An example
• Consider a situation where two individuals both have made a choice
between:
• A safe alternative of value 200 USD.
• A risky alternative consisting of two equally likely outcomes of 0
USD and 800 USD.
• Equal opportunities, costly to avoid risk.
An example
• Consider a situation where two individuals both have made a choice
between:
• A safe alternative of value 200 USD.
• A risky alternative consisting of two equally likely outcomes of 0
USD and 800 USD.
• Equal opportunities, costly to avoid risk.
Unfair inequalities?
• Do people consider the inequality between the risk-taker and the
person choosing the safe alternative as unfair?
• Do people consider the inequality between the lucky and unlucky
risk-taker as unfair?
Ex ante or ex post?
• The ex ante view: Focus on opportunities, both inequalities are
fair.
• The ex post view (standard inequality aversion): Focus on
outcomes, both inequalities are unfair.
• An intermediate view (choice egalitarianism): Inequalities
reflecting differences in choices are fair, inequalities reflecting
differences in luck are unfair.
Ex ante or ex post?
• The ex ante view: Focus on opportunities, both inequalities are
fair.
• The ex post view (standard inequality aversion): Focus on
outcomes, both inequalities are unfair.
• An intermediate view (choice egalitarianism): Inequalities
reflecting differences in choices are fair, inequalities reflecting
differences in luck are unfair.
Ex ante or ex post?
• The ex ante view: Focus on opportunities, both inequalities are
fair.
• The ex post view (standard inequality aversion): Focus on
outcomes, both inequalities are unfair.
• An intermediate view (choice egalitarianism): Inequalities
reflecting differences in choices are fair, inequalities reflecting
differences in luck are unfair.
Approach
• Conducted a modified version of the dictator game to study people’s
fairness preferences on inequalities generated by risk-taking.
• Studied both the choices of stakeholders and spectators.
• Both approaches commonly used in the literature.
• May differ in the importance they assign to choices.
Experimental design: Sample and
procedures
• Sample: 119 students at the Norwegian School of Economics and
Business Administration.
• Randomly assigned to be stakeholders (78 subjects) or spectators (41
subjects).
• Four sessions that lasted for 40 minutes, all took place on the same
day.
• Double-blind, computer-based.
• Average payment, 472 NOK (about 75 USD).
• Stakeholders: Randomly drew one of the situations a person had
been involved in to determine payment.
• Spectators: Fixed payment of 350 NOK.
Experimental design: Sample and
procedures
• Sample: 119 students at the Norwegian School of Economics and
Business Administration.
• Randomly assigned to be stakeholders (78 subjects) or spectators (41
subjects).
• Four sessions that lasted for 40 minutes, all took place on the same
day.
• Double-blind, computer-based.
• Average payment, 472 NOK (about 75 USD).
• Stakeholders: Randomly drew one of the situations a person had
been involved in to determine payment.
• Spectators: Fixed payment of 350 NOK.
Experimental design
• Stakeholders: A risk-taking phase and a distribution phase.
• Spectators: Only a distribution phase.
Experimental design (stakeholders):
risk-taking phase
• Risk-taking phase: Made four choices between a safe alternative and
a risky alternative.
• Risky alternative: Always consisted of two equally likely outcomes of
800 NOK and 0 NOK.
• Safe alternative: Took on the values 400 NOK, 300 NOK, 200 NOK
or 25 NOK.
• Situations presented in random order.
• No information about outcomes in this phase.
Experimental design (stakeholders):
risk-taking phase
• Risk-taking phase: Made four choices between a safe alternative and
a risky alternative.
• Risky alternative: Always consisted of two equally likely outcomes of
800 NOK and 0 NOK.
• Safe alternative: Took on the values 400 NOK, 300 NOK, 200 NOK
or 25 NOK.
• Situations presented in random order.
• No information about outcomes in this phase.
Experimental design (stakeholders):
risk-taking phase
• Risk-taking phase: Made four choices between a safe alternative and
a risky alternative.
• Risky alternative: Always consisted of two equally likely outcomes of
800 NOK and 0 NOK.
• Safe alternative: Took on the values 400 NOK, 300 NOK, 200 NOK
or 25 NOK.
• Situations presented in random order.
• No information about outcomes in this phase.
Experimental design (stakeholders):
risk-taking phase
• Risk-taking phase: Made four choices between a safe alternative and
a risky alternative.
• Risky alternative: Always consisted of two equally likely outcomes of
800 NOK and 0 NOK.
• Safe alternative: Took on the values 400 NOK, 300 NOK, 200 NOK
or 25 NOK.
• Situations presented in random order.
• No information about outcomes in this phase.
Experimental design (stakeholders):
distribution phase
• Distribution phase: Made choices in eight different distributive
situations.
• Each situation: Randomly paired with one of the other participants,
and one of the risk-taking situations randomly chosen (equal
opportunities).
• Complete information: Informed about the choices and outcomes of
this risk-taking situation for both parties, no uncertainty about the
source of inequality in earnings.
• Asked to distribute the total earnings of the pair.
• One-shot experiment, no incentive considerations.
Experimental design (stakeholders):
distribution phase
• Distribution phase: Made choices in eight different distributive
situations.
• Each situation: Randomly paired with one of the other participants,
and one of the risk-taking situations randomly chosen (equal
opportunities).
• Complete information: Informed about the choices and outcomes of
this risk-taking situation for both parties, no uncertainty about the
source of inequality in earnings.
• Asked to distribute the total earnings of the pair.
• One-shot experiment, no incentive considerations.
Experimental design (stakeholders):
distribution phase
• Distribution phase: Made choices in eight different distributive
situations.
• Each situation: Randomly paired with one of the other participants,
and one of the risk-taking situations randomly chosen (equal
opportunities).
• Complete information: Informed about the choices and outcomes of
this risk-taking situation for both parties, no uncertainty about the
source of inequality in earnings.
• Asked to distribute the total earnings of the pair.
• One-shot experiment, no incentive considerations.
Experimental design (stakeholders):
distribution phase
• Distribution phase: Made choices in eight different distributive
situations.
• Each situation: Randomly paired with one of the other participants,
and one of the risk-taking situations randomly chosen (equal
opportunities).
• Complete information: Informed about the choices and outcomes of
this risk-taking situation for both parties, no uncertainty about the
source of inequality in earnings.
• Asked to distribute the total earnings of the pair.
• One-shot experiment, no incentive considerations.
Experimental design (stakeholders):
distribution phase
• Distribution phase: Made choices in eight different distributive
situations.
• Each situation: Randomly paired with one of the other participants,
and one of the risk-taking situations randomly chosen (equal
opportunities).
• Complete information: Informed about the choices and outcomes of
this risk-taking situation for both parties, no uncertainty about the
source of inequality in earnings.
• Asked to distribute the total earnings of the pair.
• One-shot experiment, no incentive considerations.
Experimental design (spectators):
distribution phase
• Distribution phase: Made choices in eight different distributive
situations.
• A randomly selected subsample of the distributive situations faced by
the stakeholders.
• Provided with the same information as the stakeholders.
• Asked to distribute the total earnings of the pair.
Risk choices made by participants
Risk choice
Value of safe alternative
safe alternative
risky alternative
Total
25
200
300
400
0
5
28
71
78
73
50
7
78
78
78
78Â
104
208
312
Redistribution when a lucky risk-taker
meets an unlucky risk-taker (spectators)
Value of safe alternative
Average share redistributed
25
0.338
(0.041)
n = 41
200
0.321
(0.045)
n = 36
300
0.319
(0.053)
n = 18
A model of distributive choice
• Assume that stakeholders make a trade-off between self-interest and
fairness
k(i)
Vi
(yi ; ·) = yi − βi (yi − F k(i) )2 /(2X ).
(1)
• Optimal choice (interior solution):
yi∗ = F k(i) + (1/βi )X .
(2)
• Allow for two heterogeneities: People may differ both in what they
consider fair and in the weight they assign to fairness.
• Assume that spectators choose what they consider a fair distribution.
A model of distributive choice
• Assume that stakeholders make a trade-off between self-interest and
fairness
k(i)
Vi
(yi ; ·) = yi − βi (yi − F k(i) )2 /(2X ).
(1)
• Optimal choice (interior solution):
yi∗ = F k(i) + (1/βi )X .
(2)
• Allow for two heterogeneities: People may differ both in what they
consider fair and in the weight they assign to fairness.
• Assume that spectators choose what they consider a fair distribution.
A model of distributive choice
• Assume that stakeholders make a trade-off between self-interest and
fairness
k(i)
Vi
(yi ; ·) = yi − βi (yi − F k(i) )2 /(2X ).
(1)
• Optimal choice (interior solution):
yi∗ = F k(i) + (1/βi )X .
(2)
• Allow for two heterogeneities: People may differ both in what they
consider fair and in the weight they assign to fairness.
• Assume that spectators choose what they consider a fair distribution.
The fairness views
• Assume that the participants are motivated by one of the following
three fairness views:
1
X,
2
= xi ,
(
1
X
= 2
xi
FiEP =
(3)
FiEA
(4)
FiCE
if Ci = Cj ,
if Ci =
6 Cj ,
where xi is individual i’s earnings and Ci takes the value 1 if the
individual chooses the risky alternative and the value 0 otherwise.
(5)
The empirical choice model
• Estimate the following random utility model:
k(i)
Ui (y ; ·) = Vi
(y ; ·) + yi ,
for y = 0, 25, . . . , X .
• Estimate the population share motivated by each of the fairness
views and the distribution of the weight assigned to fairness.
(6)
The empirical choice model
• Estimate the following random utility model:
k(i)
Ui (y ; ·) = Vi
(y ; ·) + yi ,
for y = 0, 25, . . . , X .
• Estimate the population share motivated by each of the fairness
views and the distribution of the weight assigned to fairness.
(6)
Estimates of the choice model
(1)
parameter
EP
CE
EA
log L
Stakeholder
(2)
Spectator
0.288
(0.061)
0.293
(0.066)
0.419
(0.064)
-1807.19
Stakeholder
Spectator
0.274
(0.086)
0.315
(0.095)
0.411
(0.091)
0.302
(0.119)
0.272
(0.136)
0.427
(0.090)
-1807.13
Distribution of responses on political views
1.
2.
3.
4.
5.
6.
7.
very left wing
left wing
slightly left wing
moderate
slightly right wing
right wing
very right wing
frequency
share
cumulative share
0
7
9
24
40
33
6
0
0.059
0.076
0.202
0.336
0.277
0.050
0.0
0.059
0.135
0.336
0.672
0.950
1.0
Fairness views and political beliefs
Political view (PV)
P(EP|PV )
P(CE |PV )
P(EA|PV )
N
left
moderate
right
0.368
(0.052)
0.319
(0.045)
0.313
(0.049)
0.246
(0.050)
0.304
(0.050)
0.451
(0.059)
0.250
(0.046)
0.255
(0.045)
0.495
(0.061)
40
40
39
Potentially of great importance
• Redistributive policies and paradox (Almas, Cappelen, and
Tungodden; work in progress).
• Tax evasion (work in progress)
• Inequality-Unfairness measurement (Almas, Cappelen, Lind,
Sorensen, and Tungodden, 2011, JPubEc).
• Bargaining (Birkeland and Tungodden, 2013).
• Understanding incentives.
What can explain the heterogeneity?
• How are we shaped by the institutions we face?
• Experiment run at NHH with 486 kids aged 10-19 randomly sampled
from schools in Bergen (Almas, Cappelen, Sorensen, and
Tungodden, 2010, Science).
• Production as before (no choice of time, 45 minutes for everyone)
The rise of meritocracy
Rewarding performance
Selfishness
Responsibility versus other moral motives
• Why do we not give away more money to people in developing
countries?
Needs vs entitlements – an international
fairness experiment (JEEA, 2013)
• Same production setup as before.
• Participants were students at four universities: Oslo, Mannheim,
Makerere, Dar-es-Salaam.
• Web-interaction
• Participants know the university the other participant is at in the
distribution phase.
• We extend utility function to incorporate needs
V k (y ; ·) = y −
β (y − me )2
δα (y − mn )2
−
.
2
X
2
X
• Now τ = β/(β + α) is the relative weight on entitlements.
• Cappelen, Moene,Sorensen, and Tungodden, JEEA, 2013
The relative weight on entitlements
share of participants
.4
.2
0
0
.2
share of participants
.4
.6
LI−participants
.6
HI−participants
0
.25
.5
.75
relative weight on entitlements
1
0
.25
.5
.75
relative weight on entitlements
1
HI-countries: Norway, Germany; LI-countries: Uganda, Tanzania.
• Summary
Social preferences
• First generation of social preference models: Focus on how people
trade off selfish concerns and a dislike for inequalities (Fehr and
Schmidt, QJE, 1998; Bolton and Ockenfels, AER, 2000; Charness
and Rabin, QJE, 2002).
• Approach: Study distributive behavior in a dictator game, where
the money to be distributed is “manna from heaven”.
• Main finding: There is substantial heterogeneity in the importance
attached to avoiding inequality, where a large share deviates from
the standard model of selfish individuals.
Social preferences and responsibility
• In a series of papers, we have studied the role of responsibility in shaping
distributive behavior (Cappelen, Hole, Sørensen, and Tungodden, AER, 2007;
Cappelen, Sørensen, and Tungodden, EER, 2010; Almaas, Cappelen, Sørensen,
and Tungodden, Science, 2010; Cappelen, Moene, Sørensen, and Tungodden,
JEEA, forthcoming; Cappelen, Konow, Sørensen, and Tungodden, AER,
forthcoming).
• Approach: Study distributive behavior in real-effort dictator games, where the
money to be distributed is created in a production phase. We thus create
distributive situations where pre-redistribution inequality reflects differences in
choices, talent, and luck.
• Main finding: There is substantial heterogeneity in what people consider fair in
any particular situation, where the majority of individuals typically seem to find
find fair inequalities reflecting differences in choices. We also show that with this
approach, we get distributive behavior in the lab aligned with distributive
behavior outside the lab.
• Part 3: Do we assign too much importance to responsibility?
Do people attach too much importance to
holding people responsible for their
choices?
Paper in progress (Cappelen, Reme,
Sorensen, and Tungodden)
• Studies experimentally distributive situations where it clearly does
not make sense to hold people responsible for their choices.
• Nominal choice: The other alternative in the choice set is
“identical”.
• Forced choice: The other alternatives in the choice set is clearly
worse.
• In both cases, the participants do not face a real choice. But are
they still held responsible?
• Both a methodological and substantive justification for the design.
A number of real-life situations where we
maybe do not have a real choice
Experimental design
• The experiment had three phases: a work phase, an earnings phase
and a distribution phase.
• After the experiment: Participants did a cognitive reflection test and
answered questions about age, gender, political voting, and attitudes
towards income redistribution in society.
• The experiment had three treatments: Base, Nominal Choice, and
Forced Choice.
• Spectator design (Cappelen, Konow, Sørensen, and Tungodden,
AER, 2013).
Cognitive reflection test
• We measure cognitive ability using the three-item ”Cognitive
Reflection Test” proposed by Frederick (2005, JEP).
• ”A bat and a ball cost $1.10. The bat costs $1.00 more than the
ball. How much does the ball cost? ”
• The test measures the ability to correct incorrect intuitive answers
through reflection.
Political voting and attitudes towards
redistribution
• We asked them:
• - which party they voted for in the previous election in Norway (2011)
• - to state their opinion on the following question: “We should do less
to reduce income inequality in Norway” (1 = Disagree, 10 = Agree)
Sample and procedures
• Recruited 422 students from the University of Bergen and NHH
Norwegian School of Economics.
• Between-design. Participants randomly assigned to treatment within
each session.
• Double blind design and payments made in cash at the end of the
experiment.
• Average payments 475 NOK (approximately 85 USD), including a
100 NOK show-up fee.
Sample summary and treatment balance
Age
Female
CRT
PA
Treatment
Mean (se)
Mean (se)
Mean (se)
Mean (se)
1:Base
2:Nominal choice
3:Forced choice
All
22.8
22.7
22.5
22.7
0.44
0.47
0.47
0.46
1.6
1.6
1.8
1.6
0.54
0.58
0.50
0.54
(0.27)
(0.26)
(0.25)
(0.15)
(0.04)
(0.04)
(0.04)
(0.02)
(0.09)
(0.10)
(0.09)
(0.05)
(0.04)
(0.04)
(0.04)
(0.02)
N
145
140
137
422
Base treatment - work phase
• In the work phase, the participants did a real effort task for 30
minutes.
• Descrambled English sentences (IS SALTY SKY THE BLUE).
• No production requirement, only asked to work continuously on the
task.
• Not informed that they would be paid for the work.
Base treatment - earnings phase
• In the earnings phase, the participants were informed that they
would be paid for the work they had done and that their earnings
would be determined by a lottery.
• ”Your payment will be determined by a lottery in which you with
equal probability earn either 800 NOK or 0 NOK. In the lottery, a
ball will be randomly drawn from an urn containing an equal number
of yellow and green balls. If a yellow ball is drawn, you earn 800
NOK and if a green ball is drawn, you earn 0 NOK.”
• Importantly, participants were not asked to make any choices in the
earnings phase.
• Participants were told that there also would be a distribution phase
and that they would get more information about this later in the
experiment.
Base treatment - distribution phase
• In the distribution phase, two participants, a winner and a loser,
were anonymously paired.
• A third participant, a spectator, was given the opportunity to
transfer any amount of the winning participant’s 800 NOK to the
loser.
• Spectators were told that their decision could determine the income
from the experiment for the two participants.
• Spectators took part in the same treatment, but did not get any
information about their own earnings and final income before they
made their decision as spectator.
Base treatment - main idea
• Spectators have to evaluate a situation where the pre-redistribution
inequality in earnings only reflects differences in brute luck.
• We expected a large share of the spectators to find this inequality
unfair, and thus to redistribute money from the lucky participant to
the unlucky participant.
Treatment design - main features
• The treatments only differ in how the earnings are determined.
• Base treatment: participants make no choices and any inequality in
earnings is a result of brute luck.
• Nominal Choice treatment: introduce a nominal choice in the
earnings phase.
• Forced Choice treatment: introduce a forced choice in the earnings
phase.
• Does the introduction of a nominal or forced choice change the
evaluation of the earnings inequality between the lucky and unlucky
participant?
Nominal Choice treatment
• In the Nominal Choice treatment the participants were told that
their earnings would be determined by a lottery and then asked to
choose between two identical lotteries.
• ”We will now ask you to choose between two colors, yellow and
green. Your choice will determine the outcome of a lottery in which
you with equal probability earn either 800 NOK or 0 NOK. In the
lottery, a ball will be randomly drawn from an urn containing an
equal number of yellow and green balls. If you choose the color of
the ball that is drawn, you will earn 800 NOK, if you choose the
other color, you earn 0 NOK.”.
• Importantly, the two alternatives, yellow and green, are identical in
the sense that the distribution of outcomes is the same.
• 69 participants chose a yellow ball and the remaining 71 a green ball.
Forced Choice treatment
• In the Forced Choice treatment, the participants could choose
between a lottery (identical to the lottery in the other treatments)
and a fixed payment of 25 NOK.
• ”You can choose between two different forms of payments. You can
either choose to earn 25 NOK or let your earnings be determined by
a lottery in which you with equal probability earn either 800 NOK or
0 NOK. In the lottery, a ball will be randomly drawn from an urn
containing an equal number of yellow and green balls. If a yellow ball
is drawn, you earn 800 NOK and if a green ball is drawn, you earn 0
NOK”
• The expected value of the lottery was 16 times higher than the value
of the fixed payment.
• 133 chose the lottery, 4 participants chose the fixed payment.
Does the introduction of a nominal or
forced choice make inequality between the
participants more acceptable?
• In all treatments, the spectators face an earnings distribution of
(0, 800); 0 NOK to the unlucky participant and 800 NOK to the
lucky participant.
• In all treatments, the earnings inequality reflects de facto a
difference in luck.
• Does it still matter that the participants have exercised a nominal or
forced choice in two of the treatments?
Inequality
To provide an aggregate picture of the treatment differences, we measure
the inequality chosen by the spectator in the following way:
Inequality =
|Income Person A − Income Person B|
Total Income
If the spectator does not change the distribution, the inequality measure
equals 1. If the spectator transfers 400 NOK, then the inequality measure
equals 0.
Treatment effects
(1)
(2)
Nominal choice
0.164∗∗∗
(0.044)
0.166∗∗∗
(0.046)
Forced choice
0.120∗∗∗
(0.044)
0.129∗∗∗
(0.044)
Age
0.005
(0.006)
-0.121∗∗∗
(0.040)
Female
CRT
0.004
(0.017)
PA
0.048
(0.037)
Constant
Observations
R2
0.204∗∗∗
(0.028)
0.122
(0.149)
422
0.033
422
0.066
Note: Robust standard errors in parentheses (∗ : p < 0.1, ∗∗ : p < 0.05, ∗ ∗ ∗ : p < 0.01).
Main finding: Huge effect of introducing a
nominal or forced choice!
• Spectators on average eliminate 80 percent of the inequalities in
earnings when inequalities are a result of brute luck and when there
is no exercise of choice.
• Introducing a forced choice results in an increase in inequality by 60
percent relative to the base treatment.
• Introducing a nominal choice results in an increase in inequality by
80 percent relative to the base treatment.
Does the main finding reflect a
misunderstanding of the situation?
• Illusion of control? Do the spectators believe that people have
some control over their luck when exercising a choice in the Nominal
Choice or Forced Choice treatment?
• Consider whether the treatment effects is driven by the participants
with low score on the CRT.
• Collapse the two choice treatments, but same result with separate
interaction effects.
Heterogenous treatment effects Cognitive ability
(1)
(2)
Choice
∗∗
0.115
(0.053)
0.105∗∗
(0.053)
High CR
0.005
(0.056)
-0.055
(0.062)
High CR × Choice
0.048
(0.074)
0.078
(0.075)
Constant
0.202∗∗∗
(0.041)
0.152
(0.148)
no
422
0.034
yes
422
0.167
Additional controls
Observations
R2
Note: Robust standard errors in parentheses (∗ : p < 0.1, ∗∗ : p < 0.05, ∗ ∗ ∗ : p < 0.01).
Does over-attribution of responsibility
relate to political preferences?
• Consider whether the treatment effects is driven by the participants
who voted for the liberal-right parties.
• Collapse the two choice treatments, but same result with separate
interaction effects.
Heterogenous treatment effects Political preferences
(1)
(2)
Choice
0.052
(0.056)
0.045
(0.056)
PA
-0.042
(0.057)
-0.076
(0.058)
PA × Choice
0.168∗∗
(0.074)
0.191∗∗
(0.074)
Constant
0.227∗∗∗
(0.044)
0.197
(0.148)
no
422
0.049
yes
422
0.078
Additional controls
Observations
R2
Note: Robust standard errors in parentheses (∗ : p < 0.1, ∗∗ : p < 0.05, ∗ ∗ ∗ : p < 0.01)).
Alternative explanation - in-group effect?
• Nominal Choice treatment: Do spectators favor a participant if he or
she chose the same color in the earnings phase?
• Transfer more to the loser if you chose the same color as the loser,
less if you chose the same color as the winner.
• Could not explain the treatment effect.
No in-group effect
Same color as loser
Constant
Additional controls
Observations
R2
(1)
(2)
21.076
(31.939)
20.771
(31.822)
276.812∗∗∗
(24.351)
243.751∗∗
(122.009)
no
140
0.003
yes
140
0.038
Note: Robust standard errors in parentheses (∗ : p < 0.1, ∗∗ : p < 0.05, ∗ ∗ ∗ : p < 0.01).
Alternative explanation - priming?
• Did the spectators in the choice treatments become more reluctant
to redistribution since they had made a choice themselves in the
earning phase?
• Consider how they motivate their choice and whether there are
treatment effects on their attitudes towards redistribution.
Summary
• Our results suggest that people assign too much importance to
choice and personal responsibility.
• Closely related to political preferences, which suggests that these
ideas are used heuristically in moral reasoning.
• A possible tension between the liberal ideal that people should be
given the freedom to choose and the fairness ideal that inequalities
due to luck should be eliminated.
• Note: We considered over-attribution of responsibility among
spectators, thus there is no self-serving bias involved in the choices.
Probably of great importance if we did a similar study with
stakeholders.