Work in progress

Selfish players in common pool resources games (CPR) prevent to reach socially efficient outcomes. To solve this CPR dilemma, we investigate further the approval mechanism (AM) in a three-player CPR game. Adding a third player is useful to test the efficiency of approval rules, i.e. majority versus unanimity, in the second stage of the AM. We find that the AM mitigates over-exploitation 

in three player CPR games, and that unanimity performs better than majority. Nevertheless, with three players, the mechanism surprisingly works better in case of approval failure rather than approval success. However, most approvals are predicted.

We assess the impact of signed environmental externalities on individual portfolio decisions in a lab-in-the-field experiment on finance professionals and students. Participants are prone to accept lower returns for positive environmental impact but will not bear increased risk. They show asymmetric pro-environmental preferences depending on the sign of the externality. Finance professionals are more pro-environment than students, particularly regarding positive externalities, and less influenced by a ranking signal about environmental performance. Control tasks show that experimental measures of pro-social and environmental preferences are significant predictors for students, while actual market practices for professionals explain a significant part of professionals portfolio composition.

Based on a representative sample of the French population (n = 1,154 ) we show that there is a positive association between risk tolerance and trust. We rely on two measures of stated trust, the World Value Survey WVS binary trust measure, and a “0−10” scale that we decline in three domains: trust in general, family and coworkers. We also vary the measure of risk tolerance, by considering an incentivized investment task, and a “0 − 10” stated preference scale that we decline in three domains: risk tolerance in general, in finance and health. These variations allow us to test 16 different relations, by crossing four dependent trust variables with four different risk tolerance covariates. All combinations, except four, show a highly significant positive association between risk tolerance and trust at the population level.

We conducted a study to assess the impact of a delegation option on moral decision-making using an online questionnaire based on the "moral machine" paradigm1. Interestingly, the inclusion of a delegation option did not significantly alter individuals' moral tradeoffs. Nevertheless, when presented with the option, most participants opted for delegation as a means to avoid the moral burden of challenging decisions, regardless of the delegate's profile. Factors influencing this choice included gender (favoring females), occupation (doctors), education level (lower), a strong sense of fairness, less frequent driving, and greater risk aversion. Additionally, participants displayed a preference for saving more lives, with particular emphasis on babies, pregnant women, doctors, and law-abiding victims, indicating a general aversion to death.

We summarize the experimental evidence about the risk-vulnerability hypothesis according to which individuals who are exposed to exogenous background risk become less risk-tolerant.

We study theoretically and experimentally the approval mechanism (Masuda et al., 2013, 2014) in the case of a three-player voluntary contribution game with the minimum disapproval benchmark. The three-player game raises the issue of aggregating approval votes. We compare the unanimity and the majority approval rules. Backward elimination of weakly dominated strategies predicts null contributions under the majority rule and any contribution vector under the unanimity rule. The experimental results show that the approval mechanism is less efficient in three-player than in two-player voluntary contribution games. Furthermore, the unanimity rule is more effective at increasing contributions than the majority rule. Overall, our results suggest that the efficiency of the AM is mitigated in the case of three-player public goods games.

We study experimentally a three player sequential and symmetric coalition formation game with empty core. In each round a randomly chosen proposer must choose between a two players coalition or a three players coalition and decide about the payoff division among the coalition members. Players who receive a proposition can accept or reject it. In case of acceptance the game ends. If it is rejected, a new proposer is randomly selected. The game was played repeatedly, with randomly rematched groups. We observe that over 86% of the realized coalitions are two-players coalitions. Three players coalitions are often observed in early rounds but are frequently rejected. Equal splits are the most frequently observed divisions among coalition members, and their frequency increases sharply over time. We propose an extension of von Neumann and Morgenstern (1944)’s notion of stable set to account for our results.

We study the effectiveness of delegation as a conflict resolution mechanism for managing common pool resources (CPR). Delegation involves empowering stakeholders to make collective decisions on behalf of resource users. We investigate, theoretically and experimentally, a delegation approval mechanism (DAM) in a three-player common-pool resource (CPR) game in which players can vote for extractions. In case of disapproval, in stage 2, one player is randomly selected to choose authoritatively the uniform extraction for the group, putting the disapproval arbitration at an endogenous level. Backwards elimination of weakly dominated strategies (BEWDS) predicts the socially optimum extraction under unanimity, but not under majority. Our experimental findings show that the DAM strongly reduces extractions and that most selected delegates choose the optimal extraction.

Conventional finance models assume that stock price magnitude should not influence portfolio choices or future returns. This view is contradicted, however, by empirical evidence. In this paper, we show that trading prices, in experimental markets, are processed differently by participants depending on their magnitude. Our experiment has two consecutive treatments. One where the fundamental value is a small number (small price market) and one where the fundamental value is a large number (large price market). Small price markets exhibit greater mispricing than large price markets. We obtain this result both between-participants and within-participants. Our findings indicate that price magnitude has a direct impact on how individuals perceive the distribution of future returns. This result is at odds with standard finance theory but is consistent with: (1) evidence in neuropsychology on the use of different mental scales for small and large numbers, and (2) empirical results in the finance and accounting literature.