We use laboratory experiments to test for one of the foundations of the rational voter paradigm - that voters respond to probabilities of being pivotal.
We exploit a setup that entails stark theoretical effects of information concerning the preference distribution (as revealed through polls) on costly participation decisions. The data reveal several insights. First, voting propensity increases systematically with subjects' predictions of their preferred alternative's advantage. Consequently, pre-election polls do not exhibit the detrimental welfare effects that extant theoretical work predicts. They lead to more participation by the expected majority and generate more landslide elections. Finally, we investigate subjects' behavior in polls and identify when Bandwagon and Underdog Effects arise.
Rewards may be due to skill, effort, and luck, and the social perception of inequality in rewards among individuals may depend on what produced the inequality. Rewards due to skill produce a conflict: higher outcomes of others in this case are considered deserved, and this counters incentives to reduce inequality. However, they also signal superior skill and for this reason induce strong negative affect in those who perform less, which increases the incentive to reduce the inequality. The neurobiological mechanisms underlying evaluation of rewards due to skill, effort, and luck are still unknown. We scanned brain activity of subjects as they perceived monetary rewards caused by skill, effort, or luck. Subjects could subtract from others. Subtraction was larger, everything else being equal, in luck but increased more as the difference in outcomes grew in skill. Similarly, reward-related activation in medial orbitofrontal cortex was more sensitive to the difference in relative outcomes in skill trials. Orbitofrontal activation reflecting comparative reward advantage predicted by how much subjects reduced unfavorable reward inequality later on in the trial. Thus medial orbitofrontal cortex activity reflects the causes of reward and predicts actions that reduce inequality.
Monetary rewards are uniquely human. Because money is easy to quantify and present visually, it is the reward of choice for most fMRI studies, even though it cannot be handed over to participants inside the scanner. A typical fMRI study requires hundreds of trials and thus small amounts of monetary rewards per trial (e.g. 5p) if all trials are to be treated equally. However, small payoffs can have detrimental effects on performance due to their limited buying power. Hypothetical monetary rewards can overcome the limitations of smaller monetary rewards but it is less well known whether predictors of hypothetical rewards activate reward regions. In two experiments, visual stimuli were associated with hypothetical monetary rewards. In Experiment 1, we used stimuli predicting either visually presented or imagined hypothetical monetary rewards, together with non-rewarding control pictures. Activations to reward predictive stimuli occurred in reward regions, namely the medial orbitofrontal cortex and midbrain. In Experiment 2, we parametrically varied the amount of visually presented hypothetical monetary reward keeping constant the amount of actually received reward. Graded activation in midbrain was observed to stimuli predicting increasing hypothetical rewards. The results demonstrate the efficacy of using hypothetical monetary rewards in fMRI studies.
This study investigates how acoustic change-events are represented in a listener's brain when attention is strongly focused elsewhere. Using magneto-encephalography (MEG) we examine whether cortical responses to different kinds of changes in stimulus statistics are similarly influenced by attentional load, and whether the processing of such acoustic changes in auditory cortex depends on modality-specific or general processing resources. We investigated these issues by examining cortical responses to two basic forms of acoustic transitions: (1) Violations of a simple acoustic pattern and (2) the emergence of a regular pattern from a random one. To simulate a complex sensory environment, these patterns were presented concurrently with streams of auditory and visual decoys. Listeners were required to perform tasks of high- and low-attentional-load in these domains. Results demonstrate that while auditory attentional-load does not influence the cortical representation of simple violations of regularity, it significantly reduces the magnitude of responses to the emergence of a regular acoustic pattern, suggesting a fundamentally skewed representation of the unattended auditory scene. In contrast, visual attentional-load had no effect on either transition response, consistent with the hypothesis that processing resources necessary for change detection are modality-specific.
In this issue of Neuron, Steinbeis et al. (2012) show that DLPFC structure and functions are associated with strategic social choices during an economic task and relate to impulse control abilities in both age dependent and independent manners.
We introduce an incentivized elicitation method for identifying social norms that uses simple coordination games. We demonstrate that concern for the norms we elicit and for money predict changes in behavior across several variants of the dictator game, including data from a novel experiment and from prior published laboratory studies, that are unaccounted for by most current theories of social preferences. Moreover, we find that the importance of social norm compliance and of monetary considerations is fairly constant across different experiments. This consistency allows prediction of treatment effects across experiments, and implies that subjects have a generally stable willingness to sacrifice money to take behaviors that are socially appropriate.
Although monitoring and regulation can be used to combat socially costly unethical conduct, their intended targets can often avoid regulation or hide their behavior. This surrenders at least part of the effectiveness of regulatory policies to firms’ and individuals’ decisions to voluntarily submit to regulation. We study individuals’ decisions to avoid monitoring or regulation and thus enhance their ability to engage in unethical conduct. We conduct a laboratory experiment in which participants engage in a competitive task and can decide between having the opportunity to misreport their performance or having their performance verified by an external monitor. To study the effect of social factors on the willingness to be subject to monitoring, we vary whether participants make this decision simultaneously with others or sequentially, as well as whether the decision is private or public. Our results show that the opportunity to avoid being submitted to regulation produces more unethical conduct than situations in which regulation is either exogenously imposed or entirely absent.
This chapter reviews research in which economic laboratory experiments are used to shed light on the processes that influence organizational formation and change. An organization, in these experiments, is represented by an abstract collective production activity that takes place in a controlled laboratory setting with incentivized human subjects. The studies typically attempt to identify factors that enhance efficient production and coordination. Our review focuses on studies that explore key features of how organizations originate, grow, and implement change, and the roles of communication and leadership in managing these processes. Our survey concludes that laboratory experiments of this type present a useful way to identify important factors that influence the relationship between individual behaviors and organizational performance at critical stages, which might otherwise be difficult to isolate outside the laboratory. Moreover, this research presents a valuable complement to traditional approaches in organizational research.
This paper develops a theory in which oligarchic ownership of land or other
natural resources may impede entrepreneurship in the manufacturing sector and
may thereby retard structural change and economic development. We show that,
due to oligopsony power of owners in the agricultural labor market, higher ownership
concentration depresses entrepreneurial investments by landless, creditconstrained
households, whose investment possibilities depend on the income
earned in the primary sector. We discuss historical evidence from Latin America,
India, Taiwan and South Korea which supports our theory.
Key words: Credit Constraints; Entrepreneurship; Oligopsony Power; Land
Concentration; Structural Change.
