Testing Theories of Social Preferences and Field Evidence

1
Testing Theories of Social Preferences and Field
Evidence

• Armin Falk

2
What All Models Achieve

• In the ultimatum game, low offers are rejected.
• Therefore, in the ultimatum game the proposers
  make higher offers than the dictators in the
  dictator game.
• In the gift exchange game higher wages are
  rewarded with higher effort. In the investment
  game they predict positive reciprocity.
• In public goods games they predict conditional
  cooperation.
• What about competition? Models predict that here
  subjects accept more inequity Intuition It is
  worthless to reject an offer, if it has no impact
  on the proposer (i.e., if the proposer cannot be
  punished).

3
Differences in Reciprocal Behavior
Falk/Fehr/Fischbacher (Ectra)

• Q1 Who is the relevant reference agent?
• individual or group
• Q2 Is all punishment driven by inequity
  aversion?
• difference reduction (inequity aversion) or
  retaliation (reciprocity)
• Q3 What is the role of intentions?
• outcomes or intentions

4
Q1 Who Is the Relevant Reference Agent?

• Three person one-shot public goods game with
  punishment opportunity
• 1st Stage public goods game
• Contribute 20 points (cooperate) or nothing
  (defect)
• Payoff
• 20 - own contribution
• 0.6 sum of all contributions

5

• 2nd stage Reduce the other player's payoff at a
  cost
• Punishing cooperators 1 point reduction costs .3
  points.
• Punishing defectors 1 point reduction costs .4
  points.
• It is cheaper to punish cooperators.

6
Q1 Prediction

• BO predict that if cooperators punish, they
  punish other cooperators.
• It is the cheapest way to reduce inequity because
  it reduces the average payoff of the other
  players most
• How does Ui depend on p-I Share pi/Spj
• Inequity measured towards the whole group and not
  individually
• The other theories predict that if cooperators
  punish, they punish defectors.
• Because fairness is evaluated for each other
  player separately, those are punished who
  deserve punishment. Either because they have a
  higher payoff (FS) or because they are unkind (DK
  and FF).

7
Q1 Experimental Result (N120)

• 61 percent of the subjects cooperate.
• From the cooperators
• 69 percent punish
• 69 percent punish defectors
• 7 percent punish cooperators
• From the defectors (39 percent)
• 49 percent punish, cooperators and defectors

8
Q2 Is All Punishment Driven by Inequity Aversion?

• One-to-one punishment
• Same three person one-shot public goods game with
  punishment opportunity, but
• 1 point reduction costs 1 points, i.e., there are
  higher costs of punishment
• Inequity aversion models predict no punishment
  because inequity cannot be reduced.

9
Q2 Is All Punishment Driven by Inequity Aversion?

• 51 percent cooperate
• of these cooperators 47 percent punish two
  defectors
• punishment behavior is incompatible with any
  equity model
• Defectors do not punish.

10
Q2 Is All Punishment Driven by Inequity Aversion?

• UG with constant relative share
• Rejection reduces payoffs to 10 percent
• Rejection cannot change the relative share
• Hence, BO predict no punishment
• The other theories predict rejections

P
x
y
R
R
a
r
a
r

8
.8
5
.5

2
.2
5
.5
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Exp 2 Is All Punishment Driven by Inequity
Aversion?

• UG with constant difference
• Rejection reduces payoffs by 2 points
• Rejection cannot change payoff differences
• Hence, FS and BO predict no punishment
• DK and FF predict rejections
• 82 is unkind and triggers punishment. Punishing
  means a reduction of the other player's payoff.

12
Q2 Experimental Results (N48)

• Punishment does not only occur to reduce
  inequity. Even if inequity cannot be reduced,
  people punish to reciprocate unkindness (20
  percent).

13
Q3 Are Intentions Important? Four Mini Ultimatum
Games
This is like the best shot game
14
Intentions (ii)
15
Predictions of the rejection rates of the 82
offer

• BO and FS predict the same rejection rate for
  both alternatives.
• These theories model fairness in a
  consequentialist way and the consequence of the
  82 offer is always the same.
• DK predict zero rejection rate for the
  alternative 100.
• Subjects do not consider the 82 offer as unkind
  because 100 is even more unkind.
• FF predict positive rejection rates in both
  cases. The rejection rate is higher in the 55
  case.
• Fairness is determined by the outcome and the
  intention of the other subject.

16
Experimental results (N45)Falk, Fehr and
Fischbacher, Economic Inquiry forthcoming)
17
Q3 Proposer Behavior

• Proposer behavior is compatible with selfishness,
  but also with preferences for fairness.

18
Moonlighting Game(Abbink et al. 2000, Falk et
al. 2000)

• 1. Stage
• Players receive an endowment of 12 points
• Player A chooses action a ? -6, -5, , 5, 6
• a ? 0 A gives B a points
• a lt 0 A takes ?a? points from B
• In case a ? 0 the experimenter triplicates a such
  that B receives 3a.
• If a lt 0 player A takes ?a? points from B and B
  loses ?a? points

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Moonlighting Game (ii)

• 2. Stage
• B realizes a und chooses b ? -6, -5, , 17, 18
• b ? 0 is a reward for A
• b lt 0 is a punishment
• A reward transfers b points to A
• A punishment costs B ?b? points and reduces As
  income at 3?b?
• Standard Prediction
• b 0 for all a
• a -6

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Results Falk et al. Testing theories of
Fairness, Intentions matter

• Reward of kind actions
• Punishment of unkind actions

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Intentions in the Moonlighting Game

• Moonlighting game as before (see above).
• But Player As decision is randomly determined
  and players B know that.
• Random mechanisms is based on a human choice
  distribution.
• Controls for the equality of choice probabilities
  across computer generated and and human generated
  first-mover action.

22
Rewards and punishments with and without
intentions

• The same consequences trigger very different
  behavior.
• Questions consequentialistic notions of fairness.
• Casts doubt on the consequentialistic practice in
  economics to define the utility of an action
  solely in terms of the consequences.

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Intentions and Random Move Games

• If the move of the first player in the ultimatum
  game is made by a random device, then
• An unfair outcome is not intended by player 1.
• Therefore, unfair offers are less likely to be
  rejected.
• (Blount 1995)
• Same idea in gift exchange game (Charness)
• Here, high wages are rewarded with similar effort
  in the treatment in which a person chooses the
  wage compared to the treatment in which the wage
  is randomly drawn. (though steeper slope)
• In both experiments reward and punishment also
  occur in the random move treatments.

24
Choice plus randomness

• In Charness/Levine (2005) firms either choose
  high or low wage
• Workers respond with low (punish), medium or high
  (reward) effort
• Idea chance move changes outcomes after first
  stage
• Most interesting combination in treatment 2

25
Best-shot Game (Mini Version) Harrison,
Hirshleifer (1989), Prasnikar/Roth (1992)
1

• Players 2 accept unequal outcome of (3.7, 0.42)
• Such distributions are rarely accepted in the
  ultimatum game.

dont
contribute
2
2
contribute
contribute
dont
dont
0.42
3.7
0
0.42
3.7
0.42
0
0.42
26
Conclusion

• Fairness can be captured by incorporating
  preferences for fairness into the utility
  function.
• Models reconcile results with equal outcomes as
  well as with unequal outcomes (e.g. UG vs.
  competitive markets).
• Fairness is evaluated individually.
• Inequity reduction is not the only reason for
  punishment.
• Intentions and outcome matter.
• Reciprocity models give a better description of
  human behavior but at a cost in tractability.

27
Field Evidence on Social PreferencesMoving
fairness research out of the lab

• Most evidence comes from the laboratory
• Delivers best and most controlled evidence
  (repeated games, payoffs known, details of social
  preferences etc.)
• Problems
• Generalizability
• Representativeness
• Applications, economic consequences
• Types of non-laboratory evidence
• Field experiments
• Questionnaire evidence (managers, SOEP etc.)
• Observational data (work environment, donations
  etc.)

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Gift-exchange in the field

• Armin Falk
• Econometrica 2006

29
Contributions of the paper

• Extending the research on reciprocity and social
  preferences to the field
• Social preferences important for many public
  economics applications
• Social preferences research almost exclusively
  confined to laboratory studies
• Better understanding of the motives behind
  charitable giving
• Warm glow vs. gift-exchange
• Amount of donated money is substantial in many
  nations
• US 70 percent of all households donate,
  exceeding 1 percent of GDP (Andreoni et al. 1996)

30
Why conducting a field experiment ?

• In contrast with traditional field studies, it is
  possible to create an exogenous variation in the
  variables of interest
• In contrast to lab experiments people take their
  actions in their natural environment
• Related literature
• List and Lucking-Reiley (JPE, 2002) importance
  of seed money and refund policies
• Frey and Meier (2005) donations to a social fund
  administered by the University of Zurich

31
The field experiment

• International charitable organization that helps
  children in need
• Active in 38 countries and engaged in long-term
  development projects as well as in short-term
  emergency projects
• Shortly before Christmas organization sends out
  roughly 10,000 solicitation letters in the area
  of Zurich
• 2001 mailing for homeless children in Dhaka
  (Bangladesh)

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Three treatments

• No gift
• Solicitation letter
• Small gift
• Solicitation letter one postcard and envelope
• Large gift
• Solicitation letter four postcards and
  envelopes
• Letter gift from the children from Dhaka,
  which can be kept or given to others.
• Except for gifts and remark on gifts, everything
  was exactly the same across treatments.

33

• A sample postcard

34
Procedure

• Random allocation of donators to treatments
• All letters were sent out on December 5, 2001
• Donations routinely recorded by organization

35
Hypotheses

• Warm glow feelings of internal satisfaction that
  arise from helping people who are in need
  (Andreoni 1989, 1995).
• Willingness to donate unaffected by treatments
• Reciprocity we are obligated to the future
  repayment of favors, gifts, invitations, and the
  like (Cialdini 1992) support from numerous lab
  experiments (Falk/Fischbacher 1999, Fehr/Gächter
  2000)
• Donations no gift lt small gift lt large gift

36
Table 1 Donation frequencies in all treatment
conditions
37
Table 1 Donation frequencies in all treatment
conditions
38
Table 1 Donation frequencies in all treatment
conditions
39
Table 2 Treatment differences of donation
probability
40
Histogram of donations
41
The organizations perspective

• Total donations 92,655 CHF
• Hypothetical total donations if all receive
• No gift 74,472 CHF
• Large gift 120,248 CHF
• Cost of gifts ?2,000 CHF
• Actual net gain 92,655 74,472 2,000 16,183
  CHF (22 percent)
• Hyp. net gain 120,248 - 74,472 4,800 40,976
  CHF (55 percent)

42
Some final thoughts

• Intertemporal substitution?
• No.
• Does gift exchange work over and over again?
• We do not know.
• Does any gift do the job?
• Probably not.

43
Conclusions

• Field experiment
• Relevance of gift-exchange on top of warm glow
• Confirmation of relevance of reciprocity with
  field data
• Important for many public economics applications,
  e.g.,
• Tax evasion
• Design of welfare state
• Incentive schemes

44
Trust and Discrimination A Citywide Experiment

• Armin Falk
• University of Bonn
• Christian Zehnder
• University of Zurich

45
Trust is important

• Economic importance of trust derives from the
  fact that it enhances efficiency in the presence
  of limited contract enforcement
• Virtually every commercial transaction has
  within itself an element of trust . (Arrow,
  1972, p.357)
• Trust is part of a groups social capital
• Related to level of foreign investments, growth
  and efficiency of institutions (Guiso/Sapienza/Zin
  gales (2006), Knack/Keefer (1997), La
  Porta/Silanes/Schleifer/Vishny (1997))
• Experimental literature on economic relevance of
  trust
• But little is known with respect to trust and
  discrimination

46
Research questions

• Discrimination Do people trust strangers from
  different groups differently?
• Is trust discrimination taste driven or
  statistical discrimination?
• In-group favoritism, i.e., do people trust
  strangers from their own group more than
  strangers of other groups?
• Individual determinants of discrimination,
  in-group favoritism, trust and trustworthiness?

47
Our study

• The city as a laboratory
• We study discrimination using districts of a city
  as groups
• Districts are natural groups, have a social
  meaning and are sufficiently heterogeneous
• District affiliation is relevant for economic
  transactions
• Social dynamics of cities and city development

48
Related literature

• Discrimination
• Fershtman/Gneezy (2001)
• Bouckaert/Dhaene (2004), Haile et al. (2006), and
  others
• In-group favoritism
• Bernhard et al. (2006)
• Goette et al. (2005)
• Focus on ethnic discrimination
• No individual determinants
• No representative subject pool

49
Design of the field experiment

• One-shot, sequential, two-player trust game
  experiment
• (Berg, Dickhaut and McCabe 1997)
• First and second mover receive endowment of CHF
  20
• First mover
• Investment of CHF 0, 2, 4, , up to 20
• ? Money is tripled and transferred to the second
  mover
• Second mover
• Back transfer of CHF 0, 1, , up to CHF 80

50
Design (2) Payoffs

• First mover
• 20 investment back transfer
• Second mover
• 20 3 x investment back transfer

51
Design (3) District specific social capital

• Each first mover made 12 decisions (plus
  beliefs), one for each of the 12 districts of
  Zurich

Provides information of in-group favoritism and
discrimination on an individual level
52
Zurich and its districts map shown to subjects
53
Design (4) Strategy method

• Second movers responses elicited with help of
  strategy method
• Pay back decision for each possible investment
• Allows
• Specification of types
• Individual determinants of trustworthiness

54
Design (5) Procedures

• 4000 letters sent out
• 984 subjects took part in the study
• Addresses delivered by the statistical office of
  Zurich
• Representative with respect to age, income and
  foreigner status per district
• Ss received letter, instructions, questionnaire
  credible procedure
• Matched and paid out in cash (letters) according
  to their decisions
• Mean earnings per subject about CHF 33.2
• Total spending about CHF 32,600
• We deleted addresses after payment
• Additional newspaper study (see below)

55
Questionnaire plus information from statistical
office

• Socioeconomics
• Gender, age, yearly taxable income, marital
  status, profession, foreigner, number of
  siblings, religion, skill level (isco), district
• Social capital measures and district/city
  specific information
• Trust question (GSS, WVS)
• Club membership (how many)
• Most people are fair or selfish
• Most people helpful or self-serving
• Most people are reliable (yes/no)
• Help provided by unknown in district
• How many friends in district
• Connected to district and city
• How many years in district and city
• How often private phone calls
• Save when walking alone in district at night
• Other
• Political orientation
• Happiness

56
Results

• Discrimination
• Level and distribution of investments
• Do investments differ significantly across
  districts?
• Determinants
• Reciprocation
• Level and distribution
• Are investments and back transfers correlated?
  Statistical discrimination
• In-group favoritism
• Prevalence
• Individual determinants
• Individual determinants of trust and reciprocity

57
Level and distribution of investments

• Mean 13.16 Std. dev 7.07 Median 16

58
District specific discrimination

• Districts differ significantly regression of
  investments on district dummies F-test prob. gt
  F 0.000
• Variation investment 11 percent, coincides with
  expected trustworthiness (Spearmans Rho 0.88,
  plt0.001)

59
Pair-wise comparison of investments in districts
p-values of pair-wise Wilcoxon-signed rank tests
60
Investment ranks are correlated across districts
Consensus among districts about which are the
good and bad districts
Spearmans Rhos, excluding own district Out of 66
correlations, 61 are positive
61
Additional data from a newspaper experiment how
systematic is discrimination?

• Widely read newspaper of Zurich (Tagesanzeiger),
  two articles
• First reporting the idea of the study, not
  showing results
• Invitation to a quiz Which are the two districts
  that received
• the lowest investments?
• the highest investments?
• Among those readers whose answers are correct,
  three are randomly chosen to receive CHF 300
• Second a week later, results of the study were
  reported, together with interviews (president/me)
• 281 readers of the Tagesanzeiger took part

62
Results from the newspaper readers
Corr inv/high Spearman's rho 0.8932, p
0.0000 Corr inv/low Spearman's rho -0.8807, p
0.0002
63
Determinants of trust (discrimination)

• Economic and social status
• Income (?), education and wealth (?) (Alesina and
  Ferrara (2000) Knack and Keefer (1997))
• Heterogeneity
• Ethnic heterogeneity (?) (Costa and Kahn (2002)
  Alesina and Ferrara (2000))
• Religious heterogeneity (?) (Costa and Kahn
  (2002) Alesina and Ferrara (2000))
• Mobility (?) (Glaeser et al. (2001) DiPasquale
  and Glaeser (1998) Alesina and Ferrara (2000))
• Home ownership (?) DiPasquale/Glaeser (1998)
• Political participation (?) Feld/Frey (2000)
• Hierarchical religion (?) (Putnam 2000)
• Own district, in-group bias

64
Descriptive statistics of districts

• Notes Statistical Office of Zurich and
  Statistical Yearbook of the City of Zurich 2003
• Income median per capita income in 1000 Swiss
  Francs
• High education population fraction with at least
  a college degree
• Foreigners population fraction of foreigners
• Religious heterogeneity fragmentation index 1
  - sum of squared population fractions of all
  religions
• Years of residency average number of years with
  residency in the same district per person
• Home ownership fraction of apartments owned by
  inhabitants
• Catholics fraction of Catholics

65
Income
Spearman's rho 0.9161 p 0.0000
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55 percent discriminate 45 percent dont
68
2. Back transfers

• How trustworthy are people from Zurich?
• Are there differences across districts?
• Is discrimination statistical or taste driven?
• Correlation between trust and trustworthiness on
  the district level

69
Investments and (expected) back transfers
70
Distribution of individual mean reciprocal
inclination
71
Back transfers

• Back transfers differ significantly across
  districts regression on district dummies prob.
  gt F 0.0206

72
Comparison of ranks for investments and back
transfers statistical discrimination
Spearman's rho 0.6853 p 0.0139
73
Trustworthiness investments and mean reciprocal
inclination by district
Spearman's rho 0.6713 p 0.0168
74
3. In-group Favoritism

• Do people favor strangers from their own
  district?
• Is that driven by taste or the expectation of
  higher trustworthiness?
• Individual characteristics of in-group favoritism

75
In-group favoritism

• Out of the 12 districts, 11 invest higher amounts
  to their own district than they invest on average
  into the other districts

0.003
76
Individual determinants
77
4. Individual determinants of trust (investments)
and trustworthiness (back transfers)

• Largely unknown, since existing evidence almost
  exclusively confined to lab experiments with
  homogenous subject pool
• Bellemare and Kröger (2004) use a Dutch sample
• Fehr et al. (2003) combine experiment with survey
  (441 Ss in Germany)
• Carpenter et al. (2003) cooperation experiments
  in Asian urban slums
• Gächter et al. (2004) cooperation experiments
  with non-student subjects in urban and rural
  Russia
• Dohmen/Falk/Huffman/Sunde (2006) questionnaire
  data, using the GSOEP

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Behavioral vs. questionnaire measures of social
capital

• Glaeser et al. (2000), Lazzarini et al. (2003)
• Harvard students, U. of Sao Paolo students
• No relation between general trust question and
  first mover behavior in a trust experiment
• Second movers behavior is correlated
• Similar Burks et al. (2000), Ben-Ner/Putterman
  (1999)

80
VariablesGSS/The World Bank Integrated
Questionnaire for the measurement of Social
Capital/Glaeser et al. (2000)

• trust
• Generally speaking would you say that most people
  can be trusted or that you cant be too careful
  in dealing with people?
• reliable
• Today one cannot rely on strangers anymore. (1 to
  4, binary code)
• fair
• Do you think that most people would exploit you
  or that they would try to be fair to you?
• egoist
• Do you think that most people most of the time
  try to be helpful or only follow their own
  interest?
• help
• If you need help, do you think that a stranger
  from your district would help you? (yes, no)
• phone calls
• How often have you made a private phone call last
  week? (approximate number)
• unsafe
• How safe from crime and violence do you feel when
  walking in your district alone after dark (four
  levels, binary coded)
• club memberships
• In how many clubs are you a member? (number)

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Why differences to previous findings?

• More observations
• Non student subject pool
• Responses immediately after decisions

86
Concluding remarks

• Behavioral measure to study trust discrimination
  Significant discrimination
• Determinants economic and social status, ethnic
  heterogeneity
• Differences endogenously reinforced
  segmentation?
• Higher income ? higher social capital ? higher
  income
• If policies want to counteract this segmentation
  they must be able to diagnose the reputation
  differences field experiment
• Trust and trustworthiness correlated statistical
  discrimination
• Strong evidence for in-group favoritism
• Strong correlation of behavioral and survey
  measures of trust
• Important individual heterogeneity and
  determinants regarding trust and trustworthiness,
  discrimination and in-group favoritism
• Age, education, family status, political
  orientation, religion, foreigner

87
Success and Prevalence of Homo ReciprocansIZA
DP 2205

• Thomas Dohmen, Armin Falk, David Huffman and Uwe
  Sunde
• IZA and University of Bonn

88
Questions

• How prevalent is Homo Reciprocans?
• Individual determinants of reciprocity?
• Correlation of positive and negative reciprocity?
• Consequences of reciprocity for economic and
  social outcomes (wages, subjective well-being,
  friendships)?
• Answering these questions requires
• Leaving the lab, and using a large,
  representative samples
• Combine measures of reciprocity with demographic
  variables

89
Data

• Large sample SOEP (2005 wave)
• About 22,000 individuals (age 17), 12,000
  households
• Representative of the population
• Each adult household member is interviewed
• Extensive socio-demographic information
• Individual characteristics
• Family and household background
• First time using questionnaire for large sample,
  complements experiments with non-student
  populations
• Bellemare and Kröger (2004) use a Dutch sample
• Fehr et al. (2003) combine experiment with survey
• Carpenter et al. (2003) cooperation experiments
  in urban slums
• Gächter et al. (2004) cooperation experiments
  with non-student subjects in urban and rural
  Russia
• Falk and Zehnder (2006) Citizens of Zurich

90
Reciprocity measures

• Positive reciprocity
• If someone does me a favor, I am prepared to
  return it
• I go out of my way to help somebody who has been
  kind to me before
• I am ready to undergo personal costs to help
  somebody who helped me before
• Negative reciprocity
• If I suffer a serious wrong, I will take revenge
  as soon as possible, no matter what the cost
• If somebody puts me in a difficult position, I
  will do the same to him/her
• If somebody insults me, I will insult him/her
  back
• 7-point scales
• 1 means does not apply to me at all 7 means
  applies to me perfectly
• Two questions ask explicitly whether the
  respondent would incur costs in order o be
  reciprocal
• 20,774 individuals responded to all six
  reciprocity measures

91
Positive Reciprocity Measures
Negative Reciprocity Measures
92
Distributions of Positive and Negative Reciprocity
93
Is positive and negative reciprocity correlated
within subject?

• Only weakly
• Within-person correlation between positive and
  negative reciprocity 0.024
• Suggests that positive and negative reciprocity
  are distinctive behavioral concepts
• World more complicated than just selfish vs.
  reciprocal
• Different emotional responses?
• Anger appears to be important for explaining
  punishment behavior in experiments (Fehr and
  Gächter, 2002)
• Candidates for positive reciprocity include
  gratitude, or possibly anticipated guilt
  associated with not rewarding
• Different determinants?

94
Determinants of Reciprocity
0.01
Other controls marital status, number of
children, religion, region, student, occupation,
health status, month of interview.
95
Determinants of Reciprocity
0.01
Other controls marital status, number of
children, religion, region, student, occupation,
health status, month of interview.
96
Determinants of Reciprocity
0.01
Other controls marital status, number of
children, religion, region, student, occupation,
health status, month of interview.
97
What about students?

• Lab experiments are often criticized
• Selected student sample
• Do we overestimate the importance of social
  preferences when using students?
• In the GSOEP sample students are significantly
  less reciprocal than non-students (both positive
  and negative reciprocity)
• Field experiment (Falk and Zehnder 2007)
  Investment game, strategy method
• Students are significantly less reciprocal, no
  difference in trust

98
Consequences of reciprocity

• Effort in employment relationships
• Experiments and questionnaires positive relation
  between wages and effort on the job, even when
  not enforceable
• Hypothesized to reflect positive reciprocity
  among workers
• Fehr, Kirchsteiger and Riedl (1993), Fehr and
  Falk (1998), Bewley (1999), Agell and Lundborg
  (1997) etc.
• Do we find evidence from the field that Homo
  Reciprocans works harder?
• Three measures of effort
• Total weekly hours, overtime hours
• Absenteeism

99
Reciprocity and Work Effort
100
Reciprocity and Work Effort
101
Consequences of reciprocity

• Sustaining employment relationships
• Experimental evidence suggests positive
  reciprocity helps sustain long-term relationships
• Brown, Falk, and Fehr (2004) on endogenous
  relations
• Experimental and field evidence suggests workers
  retaliate against employers in response to unfair
  treatment
• Bewley (1999) Mas and Kreuger (2004)
• Does positive reciprocity increase ability to
  stay employed?
• Does negative reciprocity make unemployment more
  likely?
• Firms fire workers to prevent retaliation
• Workers quit as a form of retaliation
• More unemployment among negatively reciprocal
  workers

102
Reciprocity and Unemployment
Additional controls are marital status, number of
children in the household, and religious
background.
103
Success of Homo Reciprocans

• Strategic disadvantage?
• Wasting resources to engage in costly rewards and
  sanctioning
• Strategic advantage?
• Credible signal of reward or retaliation leads to
  better treatment
• Social competence friendships and networks
• Three measures of success
• Number of close friends (SOEP question)
• Income (Mincerian wage regression)
• Happiness (SOEP question)
• Important goal of human life and summarizing
  success and achievement in a general way (see
  Frey and Stutzer 2002)

104
Success of Homo Reciprocans
105
Success of Homo Reciprocans
106
Success of Homo Reciprocans
107
Summary

• Reciprocity rule rather than exception
• Heterogeneity and surprisingly weak correlation
  between positive and negative reciprocity
• Suggests that positive and negative reciprocity
  are distinctive behavioral concepts
• Corroborated by asymmetry in determinants
  (gender, age and height)
• Positive relation between positive reciprocity
  and higher work effort
• Positively reciprocal people report having more
  close friends and a higher overall level of life
  satisfaction.
• In this sense, Homo Reciprocans - in the positive
  domain - is in fact more successful than his or
  her non-reciprocal fellows