Reciprocity, inequity aversion, and oligopolistic competition

This paper studies how reciprocity and inequity aversion influence the behavior of firms in imperfectly competitive markets. The paper shows that if reciprocal firms compete à la Cournot, then they are able to sustain “collusive” outcomes under a positive reciprocity equilibrium. By contrast, Stackelberg warfare outcomes may emerge under a negative reciprocity equilibrium. The results for inequity aversion are similar. Cournot competition between inequity averse firms can be harmful to consumers if it leads to equilibria where firms feel compassion toward each other. However, in equilibria where inequity averse firms are envious of each other consumers are better off than if firms were selfish. The paper also shows that only under very restrictive conditions does reciprocity or inequity aversion have an impact on Bertrand competition. Finally, the paper shows that non-selfish preferences have a greater impact on equilibrium outcomes in markets with a small number of firms.

Experimental Cournot oligopoly and inequity aversion

This paper explores the role of inequity aversion as an explanation for observed behavior in experimental Cournot oligopolies. We show that inequity aversion can change the nature of the strategic interaction: quantities are strategic substitutes for sufficiently asymmetric output levels but strategic complements otherwise. We find that inequity aversion can explain why: (i) some experiments result in higher than Cournot-Nash production levels while others result in lower, (ii) collusion often occurs with only two players whereas with three or more players market outcomes are very close to Cournot-Nash, and (iii) players often achieve equal profits in asymmetric Cournot oligopoly.

Making sense of the experimental evidence on endogenous timing in duopoly markets

The prediction of asymmetric equilibria with Stackelberg outcomes is clearly the most frequent result in the endogenous timing literature. Several experiments have tried to validate this prediction empirically, but failed to find support for it. By contrast, the experiments find that simultaneous-move outcomes are modal and that behavior in endogenous timing games is quite heterogeneous. This paper generalizes Saloner’s (1987) and Hamilton and Slutsky’s (1990) endogenous timing games by assuming that players are averse to inequality in payoffs. We explore the theoretical implications of inequity aversion and compare them to the empirical evidence. We find that this explanation is able to organize most of the experimental evidence on endogenous timing games. However, inequity aversion is not able to explain delay in Hamilton and Slutsky’s endogenous timing games.

Inequality, Happiness and Relative Concerns: What Actually is their Relationship?

This paper briefly and informally surveys different theoretical models of relative concerns and their relation to inequality. Models of inequity aversion in common use in experimental economics imply a negative relation between inequality and happiness. In contrast, empirical studies on happiness typically employ models of relative concerns that assume that increases in others’ income always have a negative effect on own happiness. However, in these latter models, the relation between inequality and happiness can be positive. One possible solution is a rivalry model where a distinction is made between endowment and reward inequality which have respectively a negative and positive effect on happiness. These different models and their contrasting results may clarify why the empirical relationship between inequality and happiness has been difficult to establish.

Unionism and Peer-Referencing

This study assesses the 'fair-wage-effort' hypothesis, by examining (a) the relationship between relative wage comparisons and job satisfaction and quitting intensions, and (b) the relative ranking of stated effort inducing-incentives, in a novel dataset of unionised and non-unionised European employees. By distinguishing between downward and upward-looking wage comparisons, it is shown that wage comparisons to similar workers exert an asymmetric impact on the job satisfaction of union workers, a pattern consistent with inequity-aversion and conformism to the reference point. Moreover, union workers evaluate peer observation and good industrial relations more highly than payment and other incentives. In contrast, non-union workers are found to be more status-seeking in their satisfaction responses and less dependent on their peers in their effort choices The results are robust to endogenous union membership, considerations of generic loss aversion and across different tenure profiles. They are supportive of the individual egalitarian bias of collective wage determination and self-enforcing effort norms.

The role of role uncertainty in modified dictator games

We compare behavior in modified dictator games with and without role uncertainty. Subjectschoose between a selfish action, a costly surplus creating action (altruistic behavior) and acostly surplus destroying action (spiteful behavior). While costly surplus creating actions are themost frequent under role uncertainty (64%), selfish actions become the most frequent withoutrole uncertainty (69%). Also, the frequency of surplus destroying choices is negligible with roleuncertainty (1%) but not so without it (11%). A classification of subjects into four differenttypes of interdependent preferences (Selfish, Social Welfare maximizing, Inequity Averse andCompetitive) shows that the use of role uncertainty overestimates the prevalence of SocialWelfare maximizing preferences in the subject population (from 74% with role uncertainty to21% without it) and underestimates Selfish and Inequity Averse preferences. An additionaltreatment, in which subjects undertake an understanding test before participating in theexperiment with role uncertainty, shows that the vast majority of subjects (93%) correctlyunderstand the payoff mechanism with role uncertainty, but yet surplus creating actions weremost frequent. Our results warn against the use of role uncertainty in experiments that aim tomeasure the prevalence of interdependent preferences.

Elicited beliefs and social information in modified dictator games: What do dictators believe other dictators do?

We use subjects actions in modified dictator games to perform a within-subject classification ofindividuals into four different types of interdependent preferences: Selfish, Social Welfaremaximizers, Inequity Averse and Competitive. We elicit beliefs about other subjects actions inthe same modified dictator games to test how much of the existent heterogeneity in others actions is known by subjects. We find that subjects with different interdependent preferences infact have different beliefs about others actions. In particular, Selfish individuals cannotconceive others being non-Selfish while Social Welfare maximizers are closest to the actualdistribution of others actions. We finally provide subjects with information on other subjects actions and re-classify individuals according to their (new) actions in the same modified dictatorgames. We find that social information does not affect Selfish individuals, but that individualswith interdependent preferences are more likely to change their behavior and tend to behavemore selfishly.

Nouvelle approche en théorie des jeux comportementale

Il a été démontré en laboratoire que l’équilibre de Nash n’était pas toujours un bon indicateur du comportement humain. Différentes théories alternatives (aversion à l’inégalité, réciprocité et norme sociale) ont vu le jour pour combler les lacunes de la théorie classique, mais aucune d’elles ne permet d’expliquer la totalité des phénomènes observés en laboratoire. Après avoir identifié les lacunes de ces modèles, ce mémoire développe un modèle qui synthétise dans un tout cohérent les avancées de ceux-ci à l’aide de préférences hétérogènes. Afin d’augmenter la portée du modèle, une nouvelle notion d’équilibre, dite comportementale, est ajoutée au modèle. En appliquant le nouveau modèle à des jeux simples, nous pouvons voir comment il élargit le nombre de comportements pouvant être modélisé par la théorie des jeux.

Capuchin Monkeys (Cebus apella) Fail to Be Equitable in an Ultimatum Game

The ultimatum game is a commonly used economics game testing humans' sense of fairness. In the game, a "proposer" is given a sum of money and is told they can split it however they want with another human partner. The partner can then either accept the division and both proposer and responder receive the proposed amounts, or the responder can reject the offer and neither player will get anything. Human subjects from most western cultures typically share almost half of an allotted amount, but it remains unknown whether our close primate relatives share this generosity. Recent attempts to present chimpanzees with the ultimatum game have provided inconclusive results, with some studies finding the animals share humans' disposition to behave 'fairly' and others concluding that chimpanzees act selfishly to maximize their own rewards. Capuchin monkeys are known to share many human and chimpanzee social and cooperative behaviors, and this study was the first to present capuchin monkeys with a version of the ultimatum game. Subjects were presented with two differently colored tokens representing different qualitative reward contingencies, one equitable and the other inequitable in favor of the subject proposer. Subjects could select and place one of the tokens in a transfer container. The capuchins were first tested with a "dictator game" where, after the subject monkey selected a token, the rewards (equitable or inequitable) were distributed to the subject and a nearby partner monkey that was not an active participant. The capuchins were then tested on an ultimatum game in which after the subject selected and placed a token in the container, the container was moved to the partner. The partner needed to remove the token and transfer it back to the experimenter for the rewards to be distributed. As such, the partner could reject the subject's offer by refusing to participate and neither would receive a reward. The experiment was conducted to determine if the subject monkey would select the equitable reward option rather than the selfish option in order to maintain the partner's cooperation in the task. Capuchin subjects behaved selfishly and selected the inequitable token significantly more often than the equitable token in both the dictator and ultimatum game with no significant difference in preference between the two games. Interestingly, despite the occasional occurrence of rejection by the partner monkeys (resulting in no reward for the subject), subjects never altered their strategy, continuing to prefer the selfish token. The study may indicate that capuchin monkeys have an inability to judge the effect of their behavior on a conspecific's reward outcome, or an indifference to the outcome if there is an individual cost associated with behaving prosocially.

Optimal irrigation depth for bean crops considering water constraints and farmer`s risk aversion level

Nowadays, the rising competition for the use of water and environmental resources with consequent restrictions for farmers should change the paradigm in terms of irrigation concepts, or rather, in order to attain economical efficiency other than to supply water requirement for the crop. Therefore, taking into account the social and economical role of bean activity in Brazil, as well as the risk inherent to crop due to its high sensibility to both deficit and excessive water, the optimization methods regarding to irrigation management have become more interesting and essential. This study intends to present a way to determine the optimal water supply, considering different combinations between desired bean yield and level of risk, bringing as a result a graph with the former associated with the latter, depending on different water depths.

Overshadowing in conditioned taste aversion or in conditioned emotional response after neonatal ventral hippocampal lesions in rats

The neonatal hippocampus lesion thought to model schizophrenia should show the same modifications in behavioural tests as other models, especially pharmacological models. namely decreased latent inhibition, blocking and overshadowing. The present study is set out to evaluate overshadowing in order to complement our previous studies, which had tested latent inhibition. ""Overshadowing"" refers to the decreased conditioning that occurs when the to-be-conditioned stimulus is combined with another stimulus at the conditioning stage. We used the same two Pavlovian conditioning paradigms as in our previous works, namely conditioned taste aversion (CTA) and conditioned emotional response (CER). A sweet taste overshadowed a salty conditioned stimulus, and a tone overshadowed a flashing light. Totally different stimuli were used to counter possible sensory biases. The protocols were validated with two groups of Sprague Dawley rats. The same two protocols were then applied to a cohort of rats whose ventral hippocampus had been destroyed when they were 7 days old. Only rats with extended ventral hippocampus lesions were included. The overall effect of Pavlovian conditioning was attenuated, significantly so in the conditioned emotional response paradigm, but overshadowing appeared not to be modified in either the conditioned emotional response or the conditioned taste aversion paradigm. (C) 2008 Elsevier B.V. All rights reserved.

Food aversion: A critical balance between allergen-specific IgE levels and taste preference

Animals sensitized to allergens change their feeding behavior and avoid drinking the otherwise preferred sweetened solutions containing the allergens. This phenomenon, known as food aversion, appears to be mediated by allergen-specific IgE antibodies. Here we investigated food aversion in BALB/c and C57BL/6 mice, which differ in their allergic responses to the allergen ovalbumin as well as in their preference for sweet taste. BALB/c mice present higher levels of IgE and a natural lower preference for sweet flavors when compared to C57BL/6 mice. Specifically, we studied a conflicting situation in which animals simultaneously experienced the aversive contact with the allergen and the attractive sweet taste of increasing concentrations of sucrose. We found that BALB/c mice were more prone to develop food aversion than C57BL/6 mice and that this aversive behavior could be abolished in both strains by increasing the palatability of the solution containing the allergen. In both strains food aversion was positively correlated with the levels of allergen-specific IgE antibodies and inversely correlated with their preference for sucrose sweetened solutions. (C) 2009 Elsevier Inc. All rights reserved.

Pharmacological Manipulation of Immune-Induced Food Aversion in Rats

Background: Mice allergic to ovalbumin (OVA) avoid drinking a solution containing this antigen. This was interpreted as related to IgE-dependent mast cell degranulation and sensory C fiber activation. Methods: We employed pharmacological manipulation to further investigate the mediators involved in immune-induced food aversion. Results: While nonimmunized rats preferred a sweetened OVA solution, immunized rats avoided it. We also employed a paradigm in which rats are conditioned to drink water for two 10-min sessions a day. Tolerant rats presented lower IgE titers, and this manipulation abrogated food aversion. Dexamethasone (1.0 mg/kg) prevented the aversion of OVA-immunized rats to the antigen-containing solution. Combined blockade of H(1) and 5-hydroxytryptamine (5-HT)(2) receptors by promethazine (3.0 mg/kg) plus methysergide (5.0 mg/kg) was unable to alter food aversion. Blockade of 5-HT(3) receptors by ondansetron (1.0 mg/kg) caused a twofold increase in the ingestion of the sweetened OVA solution by immunized rats, suggesting the involvement of 5-HT(3) receptors in food aversion. Finally, we showed that dexamethasone or promethazine plus methysergide, but not ondansetron, effectively prevented the IgE-dependent mast-cell-degranulation-induced increase in vascular permeability in rats. Conclusion: We suggest that regardless of whether or not they cause edema, IgE-mediated mast cell degranulation and consequent 5-HT(3) signaling are involved in the process that triggers avoidance to the source of the allergen in allergic rats. Copyright (C) 2008 S. Karger AG, Basel