The Allures of Power (job market paper; reject and resubmit at Games and Economic Behavior)

Abstract: This paper investigates intrinsic preferences for power over others' outcomes using a laboratory experiment. I decompose the intrinsic value of power into three components: self-recognition (the power-holder's awareness of her own power), other-recognition (others' awareness of the power-holder's power), and having options over others' outcomes. Using a combination of experimental games, including a novel "Points Power Game" in which subjects can pay to control an outcome that has no material consequences for their partner, I find that a substantial majority (86%) of subjects exhibit behavior consistent with intrinsic preferences for power by at least one criterion. While intrinsic preferences for power are widespread, I find little evidence that self- or other-recognition increase willingness to pay for power. The estimates are precise enough to rule out moderate effects, although this may reflect limitations of the recognition manipulation rather than a true absence of effects. In contrast, I find suggestive evidence that subjects intrinsically value having options over others' outcomes: 49% of subjects purchased more power than needed to achieve their chosen outcome. Subjects appear to place greater intrinsic value on options to increase others' outcomes than on options to decrease them. These findings offer preliminary evidence that the mere possession of options over others carries value beyond what distributional preferences alone can explain.

A Bliss Point Model of Distributional Preferences

Abstract: I propose a new model of distributional preferences, the "Bliss Point" model. According to this model, each person has a preferred payoff for others which is a linear function of his own payoff, and he suffers a utility penalty proportional to the distance between this bliss point for his co-players and the actual payoffs. To evaluate the empirical relevance of this model, I create an experiment in which subjects play several games which affect both their own payoff and that of an anonymous partner. I used their behavior to estimate individual-level parameters of my model as well as three others: inequality aversion (Fehr & Schmidt, 1999), quasi-maximin (Charness & Rabin, 2002), and constant elasticity of substitution (Andreoni & Miller, 2002). I then compare the models' ability to predict behavior out-of-sample. I find that the Bliss Point model generally predicts about as well as the other models. Further, it is a better predictor than the other models for up to 7% of subjects, depending on the task. This suggests that the Bliss Point model is a useful alternative to existing models. 

The Value of Choice

Abstract: I investigate whether the out-of-sample predictive accuracy of existing distributional preference models can be improved by appending a “discretion” term which captures the intrinsic value of choosing for others (i.e., valuing control over others as distinct from caring about their outcomes). I propose a specific functional form for the discretion term that distinguishes between positive discretion (options to increase another’s payoff) and negative discretion (options to decrease it), with diminishing marginal utility. I append this term to four distributional preference models, and estimate individual-level parameters using the Power Game (in which subjects spend their own earnings to gain control over a partner’s payoff). I then assess predictive accuracy on non-estimation data using the root mean squared error. I find that the discretion term improves spending prediction accuracy for approximately 18–23% of subjects across all four distribution models. Importantly, the discretion term rarely worsens prediction (1–4% of subjects). These findings suggest that incorporating the intrinsic value of decision rights over others into utility models can meaningfully improve economists’ ability to predict behavior in social contexts.