Reputation systems can mitigate opportunistic behavior and improve efficiency on online marketplaces. However, rating fraud is a major problem on many websites. We experimentally investigate the circumstances under which rating fraud undermines the functioning of a reputation system and reduces efficiency. We find that the ability to manipulate feedback received from others generally reduces the reliability of displayed ratings compared to a control treatment where rating fraud is not possible. When manipulation is possible and costless, rating fraud is widespread, ratings become less reliable, expectations are lower, and efficiency is significantly reduced. However, when there is a cost to manipulation, there is less fraud, ratings are more reliable and efficiency increases, even when the cost is comparatively low. 

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Competitive rewards are often assigned on a regular basis, e.g., in annual salary negotiations or employee-of-the-month schemes. The repetition of competitions can imply that opponents are matched based on earlier outcomes. Using a real-effort experiment, we examine how cheating and effort evolve in two rounds of competitions in which subjects compete with different types of opponents in the second round (random/based on the first-round outcome). We find that (i) losing causes competitors to increase cheating in the second round while winning implies a tendency to reduce cheating. A similar effect is found with regard to effort, as losers increase effort to a larger extent than winners. (ii) Competitor matching does not significantly affect behavior.   

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We utilize a modified dictator game to analyze whether and how information about the need of recipients affects dictator giving behavior. Need information is presented as objective information about the recipients’ living circumstances (income, public transfers, and travel time to the lab) and subjective information about the recipients’ self-assessment of their need (stated need). The results show that information per se does not increase dictator giving. On average, dictator giving is need sensitive and acknowledges if objective and subjective needs complement each other. Classifying dictators according to their conditional transfers yields that 139 of the 246 (57%) dictators are need sensitive.   

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In many bargaining situations, the distribution of seats or voting weights does not accurately reflect bargaining power. Maaser, Paetzel and Traub (Games and Economic Behavior, 2019) conducted an experiment to investigate the effect of such nominal power differences in the classic Baron–Ferejohn model. This paper re-analyzes the data from that experiment, looking at gender differences in bargaining behavior and in the effect of nominal weights. We find that women and men differ in particular with respect to the proposed distribution of payoffs and coalition size. By contrast, nominal weights have only minor gender-specific effects.  

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Income redistribution with an efficiency loss is expected to have a twofold negative effect on support for redistribution, as it lowers egoistic support for redistribution and activates efficiency preferences. This study tests whether such a negative relationship exists, increases with the size of efficiency loss and interacts with group communication and the income position. We present a laboratory experiment in which subjects receive a randomly allocated income and must coordinate on a majority tax rate using a deliberative communication tool. The rate of money lost as a part of the redistribution process is manipulated as a treatment variable (0%, 5%, 20%, or 60%). Experimental evidence shows that efficiency loss exerts a robust negative effect on support for redistribution. The effect shows a tipping point pattern, is stronger at the lower end of the income distribution and is not fully explained by egoistic preferences. Inefficiency matters mostly for the chosen tax rate after group communication. At an efficiency loss of 60%, however, group communication does not affect support for redistribution, which implies that inefficiencies tend to play a minor role in the context of redistribution as long as they are within a moderate range. 

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Reputation systems are an important part of many markets and online platforms. One cen- tral design choice that market designers face pertains to how much feedback to collect, and how to aggregate it. To explore this matter, we vary the design of reputation systems in the lab to evaluate how aggregation choices affect (i) evaluation behavior, (ii) expectations and (iii) rates of cooperation. We find that aggregation matters, even when disaggregated information is also available. Results show that with average evaluations, incentives for reputation building are stronger, evaluations are “more extreme”, expectations are more optimistic, and contributions are about 50% higher.

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One feature of legislative bargaining in naturally occurring settings is that the distribution of seats or voting weights often does not accurately reflect bargaining power. Game-theoretic predictions about payoffs and coalition formation are insensitive to nominal differences in vote distributions and instead only depend on pivotality. We conduct an experimental test of the classical Baron-Ferejohn model with five-player groups. Holding real power constant, we compare treatments with differences in nominal power. We find that initial effects of nominal differences become small or disappear with experience. Our results also point to the complexity of the environment as having a negative impact on the speed at which this transition takes place. Finally, and of particular importance as a methodological obser-vation, giving subjects a pause accelerates learning. 

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We study the role of performance differences in a task requiring cognitive effort on in-group bias. We show that the in-group bias is strong in groups consisting of high-performing members, and it is weak in low-performing groups. This holds although high-performing subjects exhibit no in-group bias as members of minimal groups, whereas low-performing subjects strongly do. We also observe instances of low-performing subjects punishing the in-group favoritism of low-performing peers. The same does not occur in high-performing or minimal groups where subjects generally accept that decisions are in-group biased. 

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This study analyzes whether enabling people to get informed about redistributive consequences is an effective measure to prevent equivalence framing in the domain of voting on redistribution. Utilizing the redistribution mechanism of the Meltzer-Richard model, an equivalent frame is induced by letting subjects vote either on a proportional tax rate or an outcome equivalent minimum net income. In a series of laboratory experiments, we find that framing effects both on the individually preferred and collectively agreed level of redistribution are tremendously strong if the information tool is not available (low transparency condition). Once subjects have access to the information tool (high transparency condition), the framing effect on individually preferred tax rates is significantly reduced, and after group communication, the framing effect is washed out from the collective decision. High transparency increases redistribution if subjects have to set a redistributive tax rate and lowers redistribution if subjects have to set a minimal income. Thus, the availability of the information tool has an asymmetric effect on the level of redistribution.  

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Utilizing a simplified version of the Meltzer–Richard redistribution mechanism, we designed a laboratory experiment to test whether it matters if voters were asked to decide on a tax rate or a minimum income, leaving the redistribution mechanism itself unchanged. Framing the vote about redistribution as a decision about a minimal income increases the individually and ideally preferred level of redistribution. This effect outlives the groups’ deliberation processes and leads to the implementation of a higher level of redistribution. 

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In this paper, we model social preferences as a function of the skewness of the distribution of initial endowments. Skewness is a measure of the asymmetry of the distribution of endowments around the mean. We argue that skewness reflects the social distance between ‘elite’ players with high initial endowments and other players with lower endowments, better than variance and concentration measures like the Gini-coefficient. We hypothesize that elite players become more selfish with increasing skewness and therefore contribute less to a public good in the framework of a one-shot non-linear public good game. The results of an experimental test, in which we systematically vary the distribution of endowments between treatments, confirm that the model is able to correctly explain the observed pattern of contribution behavior. We find that cooperation and efficiency are lowest with right-skewed distribution of endowments. Our paper therefore improves the understanding of the behavioral link between inequality and efficiency. 

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We investigate a repeated public good game with group size two and stranger matching. Contributions are public information and each participant evaluates her partner's contribution. At the beginning of each period, participants receive information regarding the evaluation of the previous period. Evaluations are subjective judgments, hence our reputation system allows for some degree of noise. There are two information treatments: Each participant receives information either about her partner's evaluation, or about her own and her partner's evaluation. The results show that although participants condition their contributions on their partners' evaluations, this information alone is insufficient to raise contributions. Only if participants also know their own evaluations, we find an increase in contributions. 

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We study the effect of competition on income distribution by means of a two-stage experiment. Heterogeneous endowments are earned in a contest, followed by a surplus-sharing task. The experimental test confirms our initial hypothesis that the existence of a middle class is as effective as institutional hurdles in limiting the power of the less able in order to protect the more able players from being expropriated. Furthermore, majoritarian voting with a middle class involves fewer bargaining impasses than granting veto rights to the more able players and, therefore, is more efficient. 

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We present a theoretical model of a public good game in which the expression of social approval induces pro‐social behavior. Using a laboratory experiment with earned heterogeneous endowments, we test our model. The main hypothesis is that the expression of social approval increases cooperative behavior even if reputation building is impossible. We vary the information available and investigate how this affects the expression of social approval and individual contributions. The expression of social approval significantly increases contributions. However, the increase is smaller if additional information is provided, suggesting that social approval is more effective if subjects receive a noisy signal about others' contributions 

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Debating over efficiency-enhancing but inequality-increasing reforms accounts for the routine business of democratic institutions. Fernandez and Rodrik (1991) hold that anti-reform bias can be attributed to individual-specific uncertainty regarding the distribution of gains and losses resulting from a reform. In this paper, we experimentally demonstrate that anti-reform bias arising from uncertainty is mitigated by social preferences. We show that, paradoxically, many who stand to lose from reforms vote in favor because they value efficiency, while many who will potentially gain from reforms oppose them due to inequality aversion. 

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We demonstrate by mathematical analysis and systematic computer simulations that redistribution can lead to sustainable growth in a society. In accordance with economic models of risky human capital, we assume that dynamics of human capital is modeled as a multiplicative stochastic process which, in the long run, leads to the destruction of individual human capital. When agents are linked by fully redistributive taxation the situation might turn to individual growth in the long run. We consider that a government collects a proportion of income and reduces it by a fraction as costs for administration (efficiency losses). The remaining public good is equally redistributed to all agents. Sustainable growth is induced by redistribution despite the losses from the random growth process and despite administrative costs. Growth results from a portfolio effect. The findings are verified for three different tax schemes: proportional tax, taking proportionally more from the rich, and proportionally more from the poor. We discuss which of these tax schemes performs better with respect to maximize growth under a fixed rate of administrative costs, and the governmental income. This leads us to general conclusions about governmental decisions, the relation to public good games with free riding, and the function of taxation in a risk-taking society. 

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