Econ 2220: Topics in Experimental Economics. Lecture 5: Why Announce Charitable Contributions?

Transcription

1 Econ 2220: Topics in Experimental Economics Lecture 5: Why Announce Charitable Contributions?

2 Experiment: Investment Game Assigned to be RED or BLUE investor Randomly paired with an investor of opposite color Decision: Purchase Investment Units 0-20 Cost 10 cents per unit Return depends on TOTAL investment made by you and the other participant Return depends on whether you are BLUE or RED investor.

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4 Experiment Treatment 1: Red and Blue investor please make your investment decision - pass to front Treatment 2: Red investor makes investment decision first form passed to Blue investors who sees investment decision before investing. Treatment 3: Total Investment=max(investment by Red, investment by Blue). E.g. total investment equals 7 if red invest 7 and blue invest 6. Red investor makes investment decision first form passed to Blue investors who sees investment decision before investing

5 Prediction SIMULTANEOUS CONTRIBUTION: 9 Investment by RED: 9 Investment by BLUE: 0 SEQUENTIAL CONTRIBUTION (summation): 8 Investment by RED: 0 Investment by BLUE: 8 SEQUENTIAL CONTRIBUTION (Best shot): 8 Investment by RED: 0 Investment by BLUE: 8

6 Varian (1994) Compare sequential and simultaneous contributions Sequential weakly decrease contributions: first mover free-rides off of later contributors Simple example (n=2): x i : consumption of private good g i : contribution to public good G=g 1 +g 2 : sum of contributions to the public good Budget: w i = x i + g i Quasi linear preferences: U i =x i + α i ln G Best Response: g i = max{α i -g j, 0} Simultaneous giving: only person with highest α i gives Sequential giving: if α i s not too far apart only last person gives

7 Testing Varian model Andreoni, Brown and Vesterlund (GEB 2002) Use payoffs as described d Treatments: Sim Seq Seq with best shot 14 subjects play 14 rounds Randomly paired Three sessions per treatment Finding w/ summation: Contrary to prediction we do not see one party free riding on the other

8 Last five rounds

9 Assignment Data from sequential and simultaneous summation technology posted online Question: Are aggregate contributions greater with simultaneous or sequential contributions? Which results would you present to answer this question? Explain your choices. How sensitive is your finding to the manner in which you chose to answer the question?

10 Note: unequal outcomes sometimes accepted Best shot: G=max(g 1, g 2 ) SPE: g 1 = 0, g 2 = 8 Behavior consistent with equilibrium prediction

11 Why Announce? Varian (1994) Contributions greater when made simultaneously. However fundraising done sequentially Recommended strategy (e.g., Edles 1993) Door-to-door solicitations report neighbor donations Annual campaigns announce contributions to date Open collection baskets Seed money solicited prior to launching capital campaign Why sequential giving? Chairman of trustees, Johns Hopkins: Fundamentally we are all followers. If I can get somebody to be the leader, others will follow. I can leverage that gift many times over. Explanation involves increasing leader and follower contribution

12 Outline 1. Affecting the set of equilibria A: Andreoni reducing the set of equilibria - List and Lucking-Reiley il (2002) - Bracha, Menietti and Vesterlund (2009) B: Marx and Matthews expanding the set of equilibria - Duffy, Ochs, and Vesterlund (2007) 2. Signaling Vesterlund (2003) - Potters, Sefton and Vesterlund (2006, 2007) 3. Social information (field) - Frey and Meier (2004) - Shang and Croson (2009) 4. Status - Kumru and Vesterlund (2009)

13 1.A. Equilibrium Selection Andreoni (JPE 1998) Title: Toward a Theory of Charitable Fund-Raising Notes many public projects have fixed costs of production In the presences of fixed costs simultaneous giving may give rise to multiple equilibria: one that fails to provide the project others that secure provision Simultaneous giving may cause individuals to get trapped in an inefficient equilibrium Sequential fundraising eliminates zero provision as an equilibrium

14 Simultaneous w/ FC=0: unique NE G=f(3g i ) NE provision G* 3g i * 3g i

15 Simultaneous w/ FC>0 G=f(3g i ) NE provision G* FC 3g i * 3g i

16 Simultaneous w/ FC>0: Multiple equilibria G=f(3g i ) NE provision G* FC 3g i * 3g i

17 Sequential w/ FC>0: Unique equilibrium G=f(3g i ) NE provision G* FC 3g i * 3g i

18 List and Lucking-Reiley (JPE 2002) Title: The Effects of Seed Money and Refunds on Charitable Giving: Experimental Evidence from a University Capital Campaign Motivation: Testing two theories Seed money increases giving g (Andreoni 1998 JPE) Refunds can secure efficient outcomes (Bagnoli and Lipman REStud1989) Solicit funds for UCF Environmental lab Treatments: 3 variations on Seed money: 10%, 33% or 67% Refund vs No Refund Six conditions: 10, 10R, 33, 33R, 67, 67R Solicit money for six different $3000 computers

19 Experimental Design Buy list of 3,000 names from fund-raising consultant. Send 500 solicitation letters per experimental condition. Send a brochure to each household that is identical except for a few lines explaining seeds or refund SEED: We have already obtained funds to cover 10 (33, 67) percent of the cost of this computer, so we are soliciting donations to cover the remaining $2,700 (2,000/1,000) REFUND if we fail to raise the $2,700 from this group of 500 individuals, we will not be able to purchase the computer, so we will refund your donation to you

20 Results

21 Participation rate differences significant? Test difference in participation rate: Does the participation rates differ with seed of 10% vs. 33%? H 0 : p 1 = p 2 H A : p 1 p 2 With a sample of n 1 and n 2 from each of the two populations under the null the estimated standard error equals σ = (p (1 p )/ n 1 + p (1 p )/ n 2 ) ½ where p =(n 1 p 1 +n 2 p 2 )/(n 1 +n) 2 The test statistic becomes z= (p 1 p 2 ) - (p 1 p 2 )/σ which is approximately distributed as the standard normal if the null hypothesis is true

22 Participation rate differences significant? The data consists of responses of 1,000 individuals with a seed of 10 pct and 1,000 individuals with a seed of 33 pct. The participation rate in the first is 3.7 pct and 6.4 pct. in the second. Do these data provide sufficient evidence that the participation rate between the two differ (note pool refund and no refund)? Compute p = Assume under the null and when sample estimates are pooled that the sampling distribution p 1 p 2 is approximately normally distributed with mean p 1 p 2 = 0 and estimated standard error Test statistic: Z = 2.76 If the null is true the test statistic is distributed approximately as the standard normal The probability that the null is true is given by the area under the standard normal above and below -2.76

23 What is the probability of finding no difference in the contribution rate when seed of 10 versus 33 pct?

24 What is the probability of finding no difference in the contribution rate when seed of 33 versus 67 pct?

25 Increasing seed shifts contributions to the right Increases mean contribution from $291, $834, to $1,630

26 Result Increasing seed from 10 to 67 percent increases contributions six fold Consistent with the prediction by Andreoni (1998) Also consistent with other models signaling, reciprocity etc Concerning that effect arises both with and without refund The unique feature of Andreoni is not that seeds increase contributions, but rather that it increases contributions when there are sufficiently high fixed costs. Difficult to vary fixed costs in the field and have comparable treatments

27 Bracha, Menietti, Vesterlund (2009) Title: Seeds to Succeed: Sequential Giving to Public Projects Purpose Directly examine role of fixed costs in Andreoni s model Questions Does the introduction of fixed costs give rise to inefficient outcomes? Do sequential moves eliminate inefficient outcomes? Is the role of sequential moves greater in the presence of fixed costs? 2x2 Design Fixed costs x no fixed costs Sequential x simultaneous Not only difference between sim and seq: info on first mover

28 Experimental payoffs Paired in groups of two $4 endowment Can keep or invest in group account Group account payoff depends on sum invested by group [Provided the total amount invested by you and by your group member equals or exceeds 6 units,] you and your group member will each get a payoff of 50 cents per unit invested in the group account. Investment cost depends on individual s investment 40 cents per unit for units cents per unit for units 4-7 $1.1 1 per unit for units 8 and greater Earnings: initial $4 plus payoff from the group account minus the cost of individual investment. Sequential treatments t t known what first mover gives

29 Equilibria Payoffs: Return from provided public good: 50 cents per unit Cost of public good: 40 cents 1-3, 70 cents 4-7, $ w/ FC=0: Simultaneous: (g 1 *, g 2 *) = (3,3) Sequential: (g 1 *, g 2 *) = (3,3)

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32 Changing payoffs to reflect FC=6

33 Changing payoffs to reflect FC=6

34 Equilibria w/ FC=6?

35 Two NE of the simultaneous move game

36 SPE?

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38 Unique SPE of the sequential move game

39 Predictions: Equilibria w/ FC=0: Simultaneous and sequential NE: (g 1 *,g 2 *) = (3,3) w/ FC>6: Simultaneous NE: (3,3) & (0,0) Sequential SPE: (1,5) Other regarding preferences may cause deviations Altruism: us deviate aefrom (g 1 *,g 2 *) = (3,3) Reciprocity: sequential play particularly sensitive Inequity aversion: (1,5) may be difficult

40 Predictions: In testing insights provided by the theory focus on comparative static predictions: 1. FC=0: sequential moves do not affect contributions 2. Simultaneous giving smaller w/ FC>0 3. FC>0: sequential moves increase contributions more than w/ FC=0 Caution? Only valid if zero provision equilibrium played with positive probability but premise of theory

41 Experimental Design Treatments 2x2: FC=0 or FC=6 Simultaneous or sequential Sim and seq only differ in revealed information 14 participants p per session Three sessions per treatment (n=168) 14 rounds per session: randomly paired with another participant each round (strangers)

42 FC=0: Do sequential moves affect contributions? 5 Mean Individual Contribution by Round 4 Cont tribution 3 2 FC=0 Sim FC=0 Seq

43 GLS Random-Effects Regression Dependent Variable: Individual Contribution, FC=0 All rounds 1 14 First seven 1 7 Lastseven 8 14 Sequential Round Constant t (.001) (.002) (.002) (.001) (.238) (.017) (.000) (.000) (.000) N Participants What is the attraction of looking at the regression?

44 Findings when FC=0 Sequential moves increase contributions (FC=0) Why? Positive reciprocity First Mover Investment Mean Second Mover Response Frequency % % % First mover contribution: Sequential: 3.85 Simultaneous: In testing merit of the fixed cost argument - need to see even greater increase with announcements with FC

45 Are simultaneous contributions smaller with FC>0? 5 Mean Individual Contribution by Round 4 Con ntribution 3 2 FC=0 Sim FC=6 Sim

46 Mean Individual Contribution, Simultaneous Game Standard Errors in Parenthesis FC=0 All rounds 1 14 First seven 1 7 Last seven 8 14 Session Session Session Average 2.87(0.07) 2.92(0.10) 2.83(0.09) FC=6 Session Session Session Average 4.08(0.08) 4.38(0.12) 3.78(0.10)

47 Is the difference significant? All rounds 1 14 First seven 1 7 Last seven 8 14 FC=0 Session (1) Session (2) Session (3) FC=6 Session (4) Session (5) Session (6) Wilcoxon-Mann-Whitney rank sum statistics: - m=3 cases where FC=0, n=3 cases where FC=6 - Assume two samples are independent. - Rank from highest to lowest, the value W is the sum of ranks from the first group. i.e. W=6. With 3 observations for each the sum of ranks equals 25. -Under the null we expect that the distribution with FC=6 is stochastically smaller than with FC=0. Thus under the null the sum of ranks should be smaller for FC=6. The likelihood of seeing W=6 under the null is p=0.05. I.e. reject the null that FC=6 decreases contributions.

48 PDF Simultaneous Round Sim FC=0 Sim FC=

49 PDF Simultaneous Round Sim FC=0 Sim FC=

50 PDF Simultaneous Round Sim FC=0 Sim FC=

51 Why contribute 6 in sim w/ FC=6? Possible loss worst case scenario: zero contribution by the other group member Loss of $0.3 relative to the safe option of $4 g i = 6 is a best response if Opponent expected to contribute 0 or 3, where the probability of contributing 0 is between 40 and 80 percent Uncertainty should decrease over the course of the game. Frequency of contributions of 3 units increase and 6 units decrease The introduction of fixed costs increases contributions in the simultaneous game

52 Sequential play with FC=6? Recall: SPE: (g 1 *,g 2 *) = (1,5) Sequential moves predicted to eliminate inefficient equilibria Reason to be skeptical: Limited room to improve on simultaneous move: 10 % contribute less than 3 Sequential play removes one player s uncertainty over the opponent s contribution

53 Sequential moves do not increase giving when FC=6 5 Mean Individual Contribution 4 Cont tribution 3 2 FC=6 Sim FC=6 Seq

54 Probability of Provision w/ FC= SEQ FC=6 SIM FC=

55 FC=6: sequential moves decrease earnings GLS Random Effect Regression Dependent Variable: Individual Earnings, FC=6 Round 1 14 Round 1 7 Round 8 14 Constant Sequential Round N Participants 5.969(.000) 6.024(.000) 6.014(.000) (.004) (.008) (.000) 0.018(.033) 0.030(.253) 0.023(.323) Note: p value in parenthesis

56 Did we give the theory a decent chance?

57 Behavior not consistent with prediction Failure driven by Higher than predicted contributions in simultaneous FC=6 New treatment with higher FC Deter people from covering the FC single handedly Secure that it is not a best response to cover the FC when opponent is thought to either contribute 0 or FC/2 Consider FC=8

58 Payoffs w/ FC=8

59 Payoffs w/ FC=8 b

60 Payoffs w/ FC=8 b

61 FC=8 sessions Sessions: 2 sequential & 2 simultaneous 14 subjects in each session (n=56)

62 PDF of Individual Contributions Sim FC=

63 Mean individual contributions FC=8 Sim FC=8 Seq

64 FC=8 Probability of Provision SEQ FC=8 SIM FC=

65 FC=8: sequential moves increase earnings GLS Random Effect Regression Dependent Variable: Individual Earnings, FC=8 Round 1 14 Round 1 7 Round 8 14 Constant Sequential Round N Participants 4.414(.000) 4.565(.000) 4.069(.000) (.000) (.000) (.000) 0.013(.390) 0.074(.102) 0.026(.545) Note: p value in parenthesis

66 Frequency of (g 1,g 2 )w/fc=6

67 Frequency of (g 1,g 2 )w/fc=8

68 Conclusion FC=0: In contrast to previous VCM limited evidence of altruism: behavior consistent with NE FC=6: Simultaneous moves increase giving and earnings FC=8: Consistent with theory: Simultaneous: provision frequently fails Sequential moves increase likelihood of provision and earnings Size of seed: Sequential moves with FC introduces a substantial first mover advantage Perhaps the fundraisers recommendation for a sufficiently large seed (15-25%) is an attempt to reduce the first mover s ability to free ride on subsequent donors

69 Changing the set of equilibria Andreoni: sequential moves reduced the set of equilibria Marx and Matthews (Review of Economic Studies, 2000): Sequential contributions may expand the set of equilibria and this may increase overall contributions Multiple, but finite, contribution rounds Static: donors unaware of contribution of others Dynamic: donors can condition giving on that of others

70 Simple Symmetric Example 3 identical individuals i { 1, 2,3 } contribute g i (t) in any period t { 1,...,T} 3 G ( t ) = g i ( t ) i= 1 i s history at t : h t ( g 1 i ( τ ), G( τ )) τ = 1 t 1 i = g τ payoffs π i = 6 T g ( t) G( t) i t= 1 t= 1 T independent of T: zero-provision unique equilibrium outcome

71 Why might dynamic and static giving differ? Hypothesis I: Small Price of Trust Even if the future will bring no recurrence, it may be possible to create the equivalence of continuity by dividing the bargaining issue into consecutive parts. If each party agrees to send a million dollars to the Red Cross on condition the other does, each may be tempted to cheat if the other contributes first, and each one s anticipation of the other s cheating will inhibit agreement. But if the contribution is divided into consecutive small contributions, each can try the other s good faith for a small price. Furthermore, since each can keep the other on short tether to the finish, no one ever need risk more than one small contribution at a time. Shelling, Hypothesis II: Marx and Matthews, 2000 Wh di t ff j i li d l ti f j t When a discrete payoff jump is realized upon completion of a project then dynamic play may sustain equilibria that complete the project even when no such equilibria exist in the static, simultaneous-move game.

72 Simple Symmetric Example (Cont.d) payoffs: π = + i 6 gi ( t) f ( T T t= 1 t= 1 G( t)) where f ( T t= 1 G( t)) = T i= G( t) if G( t) < G = G if T t=1= 1 T t= 1 G( t) G = 12

73 Payoff from the public good

74 Static (T = 1) Individual contribution decision: contribute to complete project complete if 6 g i maximum individual contribution g = Best response g i b 1 λ = = = 2 { if 0 G i < 10 max( 0,12 G i ) Gif 10 i Zero-provision unique equilibrium ( n=3 ) G i

75 Dynamic (T = 4) Let g 4 ' = {( g ' 1 ( t), g ' 2 ( t), g ' 3 ( t)} t = 1 where 4 3 t= 1 i= 1 g ' i ( t ) = G grim-g strategy: { g' i ( t) g i (t) = 0 otherwise 3 i=1 if G( t 1) = g' i ( t 1) this strategy leads to a contribution level where an additional small contribution causes a discrete jump in payoffs. Eventually the individual will have an incentive to complete the project single handedly y( b > 0 crucial).

76 Example Consider: g 4 ' = {( g' 1 ( t) = 1, g' 2 ( t) = 1, g' 3 ( t) = 1} t= 1 Completion payoffs: = 9 Payoff from deviating Round = 7 Round = 7.5 Round = 8 Round = In the dynamic game there are completion and zero-provision equilibria

77 Duffy, Ochs, and Vesterlund (JPubE, 2007) Title: Giving Little by Little: Dynamic Voluntary Contribution Games Objective of study: What are the effects of increasing the number of contribution rounds? Are these potential effects caused by the expanded set of equilibria? Design Round T=1 T=4 Completion benefit b=0 4 sessions 4 sessions b>0 4 sessions 4 sessions Predictions Static ti (b = 0, > 0) same as dynamic (b=0) Dynamic ( b > 0 ) possibly larger contributions

78 Experimental Design Parameters: 3 people per group Allocate 6 chips between group and private account 10 cents per chip in private account 5 cents per chip in public account up to 12 Completion benefit b = 10 or b = 0 15 participants per session 15 iterations of the game each iteration randomly and anonymously paired with two subjects never play another subject twice in a row

79 1. Results: Dynamic vs. Static b >0 Number of 75 Observations where Group Contribution Exceeds Specified level Groups with 12 or more chips 10 or more chips Static Dynamic Static Dynamic Session Session Session Session Average More likely to reach the threshold in the dynamic game

80 Frequency of Group Contributions (b>0)

81 Average Group Contribution by Session All 15 games First 5 games Last 5 games Static Dynamic Static Dynamic Static Dynamic Session Session Session Session Average contributions ti are greater in the dynamic game

82 Frequency of Group Contributions

83 Conditional Giving (b>0) Determine frequency with which players contribute in round t group s contribution, excluding own contribution, increased in previous round G -i >0 group s contribution, excluding own contribution, did not change in previous round, G -i =0 More likely to give when others give Frequency with which Players make Non Zero Contributions in Period t Round 2 Round 3 Round 4 All Rounds G i = G i >

84 Result 1: With Completion Benefit Dynamic play increases contributions makes it more likely that the threshold is reached makes it more likely that the threshold is reached individuals condition contributions on that of others

85 2. Results: Dynamic vs. Static b =0 Number of 75 Observations where Group Contribution i Exceeds Specified dlevell Groups with 12 or more chips 10 or more chips Static Dynamic Static Dynamic Session Session Session Session Average It is more likely that the threshold is reached in the dynamic game

86 Average Group Contribution by Session b=0 0 All 15 games First 5 games Last 5 games Static Dynamic Static Dynamic Static Dynamic Session Session Session Session Average contributions greater in the dynamic game

87 Frequency of Group Contributions (b=0) % Group Contribution dynamic static

88 Frequency with which Players make Non-Zero Contributions in Period t (b=0) Round 2 Round 3 Round 4 All Rounds G i = G i > Contributions more likely when others give

89 Result 2: Without Completion Benefit Dynamic play increases contributions makes it more likely that the threshold is reached contributions more likely when others give

90 Result 3: Effect of Completion Benefit Irrespective of b: larger contribution in dynamic than static games Static games (b = 0, b > 0) equally likely to reach threshold equally likely to come close to threshold same average contributions Dynamic games (b = 0, b > 0) more likely to reach threshold with b > 0 equally likely to come close to threshold larger average contributions with b>0 The effect of dynamic play is not greater when b>0 Is the small price of trust hypothesis the right one? How would you test it?

91 Result 4: A further test of the small price of trust hypothesis Fifth Treatment t identical to dynamic, b = 0 donors receive no feedback, at end of game informed of cumulative group contribution information equivalent to static game, b = 0 four sessions (60 participants) Hypothesis, b = 0: If small-price of trust is true then we should see a decrease relative to contribution from the dynamic game with feedback

92 No Feedback Result No sign. Difference in contributions between FB vs. NFB w/ b = 0 g Sign. Difference in contributions between dynamic NFB vs. static, b = 0

93 Conclusion (DOV, 2007) Multiple contribution rounds increase the probability that the threshold is reached increase average contributions Questionable whether this increase in contributions is due to the expanded set of equilibria. Completion benefit does not play the predicted d role Dynamic contributions without feedback similar to dynamic game with feedback greater than static game The best predictor of an increase in contributions is that the game is dynamic rather than static See also Sequential Equilibrium in Monotone Games: Theory-Based Analysis of Experimental Data, Choi, Gale, Kariv, JET 2008.

94 What may explain greater giving in the dynamic game? Trembles hypothesis: if players strategies are subject to occasional trembles : e.g., g, randomly contributes one more or one less chip than strategy prescribes for that round. If most strategies prescribe contributing zero chips, then the associated trembles will consist of positive deviations in terms of chips. in support of trembles hypothesis: independent of treatment when G -i = 0, an average of around 10-15% of subjects contribute in every round

95 Frequency with Which Players Make Non-Zero Contributions in Period t Conditional on G -i (t-1)

96 2: Signaling Potters, Sefton & Vesterlund, (2006, 2007) Covered in intro lecture Allocate one chip between group and private account g i = 0 or g i = 1, i = 1, 2 Payoffs: π i = 1 g i +m(g A + g B ) m= 0, 0.75, or 1.5 Information: A knows m, B only knows distribution Simultaneous giving: g A =1 when m=1.5, g i = 0 otherwise Sequential giving (A first): g B =1 & g A =1 when m=1.5 and 0.75 g B =0 & g A =0 when m=0

97 Announcements increase contributions when there is asymmetric information 120 Average Contribution Per Session Asymmetric Information Sequential Simultaneous Leader Follower Total

98 Reciprocity cannot account for announcement effect Average Contribution Per Session Full Information Sequential Simultaneous 20 0 Leader Follower Total

99 3: Social Information Frey and Meier (AER 2004) Mail fundraising campaign to show that social information influences participation rates in fundraising campaigns Asked to contribute to one or two charitable funds No contribution Contribute CHF7 to one fund Contribute CHF5 to another fund Contribute t CHF12 to both funds Information: 64% already contributed (data previous year) 46% already contributed (data last 10 years)

100 Frey and Meier (AER 2004) Findings: 64% info: 77% contribute to at least one fund 46% info: 74.7% contribute to at least one fund Difference not significant Controlling for past behavior find greater giving in 64% info treatment Conclude: information on other giving increases contributions but mostly for those who have not previously made a contribution decision Conclude: we don t know why.

101 Shang and Croson (Economic Journal forthcoming Inform on amount given ( treatments: control, $75, $180, $300) Design: We had another member, they contributed X How much would you like to pledge today? Findings: $300: mean giving = Control: mean giving = i.e., 12% increase in giving ($75 no different, $180 in some specifications significant) Effect only significant for new members not for renewing members Year later effect: new donors more likely to give in subsequent year if given information, and when they give they give more. Conclude: Evidence of conformity theory Shang and Croson as well as Frey and Meier find result for new donors perhaps more sensitive to conformity or.signaling or

102 4. Status Status an example of a private benefit from giving Can concerns for status explain why people give sequentially? Brook Astor s philanthropic endeavors: News about her donation triggers donations from others Bakal (1979): Leadership contributions by wealthy individuals can be influential in encouraging more and larger contributions by others

103 4: Status and Sequential Giving Kumru and Vesterlund, forthcoming JPET Let individual status s i (s A >s B ) i s concern for status (s j s i ) g A g B Payoffs π i = 1 g i + m(g i + g j )+(s j s i ) g i g j B contributes first or simultaneously with A if g B taken as given then g A =0 (g A, g B )=(0,0) A contributes first: g B (g A =1)=1 if s A s B > 1- m g A =1 if s A s B < 2m-1 (g A, g B )=(1,1) if 1-m < s A s B < 2m-1 Prediction: Giving greater when high status gives first

104 Status Experimental Design Two treatments: High status contributes first High status s contributes tes second Status inducement Participants take a 10 question trivia quiz Assigned to star or no star group Star group: wears ribbon, given shinny folders with stars, public applause, seated towards front of lab Decision making experiment: First mover chooses A (1 to self) or B (0.75 to both) Second mover sees first mover s choice Second mover chooses A (1 to self) or B (0.75 to both)

105 The effect of announcement w/ concerns for status (Kumru and Vesterlund) Contributions Contribution ns G g1 g2 Star First Star Second

106 Is follower more likely to mimic leader when leader has high rather than low status? High Status First: Pr(g F = 1 g L = 1) Pr(g F =1 g L = 0) = = 0.39 Low Status First: Pr(g F = 1 g L = 1) Pr(g F =1 g L = 0) = = 0.25