Search results for: Author=Engel, Christoph [406]

Pages

2013
Deterrence by Imperfect Sanctions – A Public Good Experiment
2013/09
Max Planck Institute for Research on Collective Goods
Bonn
2013
Abstract
Sanctions are often so weak that a money maximizing individual would not be deterred. In this paper I show that they may nonetheless serve a forward looking purpose if sufficiently many individuals are averse against advantageous inequity. Using the Fehr/Schmidt model (QJE 1999) I define three alternative channels: (a) identical preferences are common knowledge, but inequity is not pronounced enough to sustain cooperation; (b) heterogeneous preferences are common knowledge; (c) there is preference uncertainty. In a linear public good with punishment meted out by a disinterested participant, I test two implications of the model: (a) participants increase contributions in reaction to imperfect punishment; (b) imperfect punishment helps sustain cooperation if participants experience free-riding
Do Explicit Reasons Make Legal Intervention More Effective? An Experimental Study
2013/16
Max Planck Institute for Research on Collective Goods
Bonn
2013
Abstract
When judges or public authorities intervene in citizens' lives, they normally must give explicit reasons. Justification primarily serves the sense of justice. The law's subjects want to understand the intervention. But does justification also have a forward-looking effect? Are individuals more likely to change their behavior in the legally desired direction if the intervention is accompanied by explanation? And do authorities correctly anticipate the effect? To answer these questions under controlled conditions, we use a standard tool from experimental economics. We introduce central punishment to a public goods experiment. In the Baseline, authorities are requested to justify punishment decisions, but the reasons are kept confidential. In the Private treatment, only the addressee learns the justification. In the Public treatment, reasons are made public. Whenever reasons are communicated, there is less monetary punishment. Experimental authorities partly substitute words for action. Yet this is only effective, in the sense of mitigating the dilemma, if reasons are made public.
Legal Experiments: Mission Impossible?
Erasmus Law Lectures
28
Eleven
Den Haag
2013
Maverick – Making Sense of a Conjecture of Antitrust Policy in the Lab
2013/14
Max Planck Institute for Research on Collective Goods
Bonn
2013
Abstract
Antitrust authorities all over the world are concerned if a particularly aggressive competitor, a "maverick", is bought out of the market. Yet there is a lack of theoretical justification. One plausible determinant of acting as a maverick is behavioral: the maverick derives utility from acting competitively. We test this conjecture in the lab. In a pretest, we classify participants by their social value orientation. Individuals who are rivalistic in an allocation task indeed bid more aggressively in a laboratory oligopoly market. This disciplines incumbents. In our setting, this does not create sufficient incentives for buying out mavericks, though.
Nudged to Be Consistent
Journal of Institutional and Theoretical Economics
169
45-48
2013
Role Induced Bias in Court: An Experimental Analysis
Journal of Behavioral Decision Making
26
272-284
2013
Selfishness As a Potential Cause of Crime. A Prison Experiment
2013/05
Max Planck Institute for Research on Collective Goods
Bonn
2013
Abstract
For a rational choice theorist, the absence of crime is more difficult to explain than its presence. Arguably, the expected value of criminal sanctions, i.e. the product of severity times certainty, is often below the expected benefit. We rely on a standard theory from behavioral economics, inequity aversion, to offer an explanation. This theory could also explain how imperfect criminal sanctions deter crime. The critical component of the theory is aversion against outperforming others. To test this theory, we exploit that it posits inequity aversion to be a personality trait. We can therefore test it in a very simple standard game. Inequity averse individuals give a fraction of their endowment to another anonymous, unendowed participant. We have prisoners play this game, and compare results to findings from a meta-study of more than 100 dictator games with non-prisoners. Surprisingly, results do not differ, not even if we only compare with other dictator games among close-knit groups. To exclude social proximity as an explanation, we retest prisoners on a second dictator game where the recipient is a charity. Prisoners give more, not less.
The Coevolution of Behavior and Normative Expectations. Customary Law in the Lab
American Law and Economics Review
15
2
578-609
2013
Who is Afraid of Pirates? An Experiment on the Deterrence of Innovation by Imitation
2013/07
Max Planck Institute for Research on Collective Goods
Bonn
2013
Abstract
In the policy debate, intellectual property is often justified by what seems to be a straightforward argument: if innovators are not protected against others appropriating their ideas, incentives for innovation are suboptimally low. Now in most industries for most potential users, appropriating a foreign innovation is itself an investment decision fraught with cost and risk. Nonetheless standard theory predicts too little innovation. Arguably the problem is exacerbated by innovators’ sensitivity to fairness; imitators get a free lunch, after all. We model the situation as a game and test it in the lab. We find more appropriation but also more innovation than predicted by standard theory. In the lab, the prospect of giving imitators a free lunch does not have a chilling effect on innovation. This even holds if innovation automatically spills over to an outsider, and if successful imitation reduces the innovator’s profit. Post-experimental tests and the analysis of experiences in the repeated game demonstrate that participants are sensitive to the fairness problem. But this concern is not strong enough to outweigh the robust propensity to invest even more into innovation than predicted by standard theory. The data suggest that this behavior results from the intention not to be outperformed by one’s peers.

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Win Shift Lose Stay – An Experimental Test of Non-Compete Clauses
2013/17
Max Planck Institute for Research on Collective Goods
Bonn
2013
Abstract
We experimentally test the effect of enforceable non-compete clauses on working efforts. The employee can invest into the probability of making a profitable innovation. After a successful innovation (Win) the employee may want to leave the firm (Shift) whereas after an innovation failure (Lose) he may remain (Stay) . In the treatments with non-compete clause, but not in the baseline, the employer can prevent successful innovators from leaving the firm. With standard preferences, effort should be lower if the worker cannot leave the firm, except if compulsory compensation for having to stay is very high. By contrast we find no reduction in effort even if compensation is low. Employers anticipate the incentive problem and pay a higher wage which employees reciprocate by higher effort.