Social comparison processes have potentially far reaching consequences for many economic domains. We conducted a randomized field experiment to examine how social comparison affects workers' effort provision if their own wage or the wage of a co-worker is cut. Workers were assigned to groups of two, performed identical individual tasks, and received the same performanceindependent hourly wage. Cutting both group members' wages caused a decrease in performance. But when only one group member's wage was cut, the affected workers decreased their performance more than twice as much as when both workers' wages were cut. This finding indicates that social comparison processes among workers affect effort provision because the only difference between the two wage-cut treatments is the other group member's wage level. In contrast, workers whose wage was not cut but who witnessed their group member's pay being cut displayed no change in performance relative to the baseline treatment in which both workers' wages remained unchanged. This indicates that social comparison exerts asymmetric effects on effort. Abstract: Social comparison processes have potentially far reaching consequences for many economic domains. We conducted a randomized field experiment to examine how social comparison affects workers' effort provision if their own wage or the wage of a co-worker is cut. Workers were assigned to groups of two, performed identical individual tasks, and received the same performanceindependent hourly wage. Cutting both group members' wages caused a decrease in performance. But when only one group member's wage was cut, the affected workers decreased their performance more than twice as much as when both workers' wages were cut. This finding indicates that social comparison processes among workers affect effort provision because the only difference between the two wage-cut treatments is the other group member's wage level. In contrast, workers whose wage was not cut but who witnessed their group member's pay being cut displayed no change in performance relative to the baseline treatment in which both workers' wages remained unchanged. This indicates that social comparison exerts asymmetric effects on effort. JEL classification:C93, J33, M53
Reputation formation pervades human social life. In fact, many people go to great lengths to acquire a good reputation, even though building a good reputation is costly in many cases. Little is known about the neural underpinnings of this important social mechanism, however. In the present study, we show that disruption of the right, but not the left, lateral prefrontal cortex (PFC) with low-frequency repetitive transcranial magnetic stimulation (rTMS) diminishes subjects' ability to build a favorable reputation. This effect occurs even though subjects' ability to behave altruistically in the absence of reputation incentives remains intact, and even though they are still able to recognize both the fairness standards necessary for acquiring and the future benefits of a good reputation. Thus, subjects with a disrupted right lateral PFC no longer seem to be able to resist the temptation to defect, even though they know that this has detrimental effects on their future reputation. This suggests an important dissociation between the knowledge about one's own best interests and the ability to act accordingly in social contexts. These results link findings on the neural underpinnings of self-control and temptation with the study of human social behavior, and they may help explain why reputation formation remains less prominent in most other species with less developed prefrontal cortices.decision making ͉ social interaction ͉ transcranial magnetic stimulation
Strong reciprocity is characterized by the willingness to altruistically reward cooperative acts and to altruistically punish norm-violating, defecting behaviours. Recent evidence suggests that subtle reputation cues, such as eyes staring at subjects during their choices, may enhance prosocial behaviour. Thus, in principle, strong reciprocity could also be affected by eye cues. We investigate the impact of eye cues on trustees' altruistic behaviour in a trust game and find zero effect. Neither the subjects who are classified as prosocial nor the subjects who are classified as selfish respond to these cues. In sharp contrast to the irrelevance of subtle reputation cues for strong reciprocity, we find a large effect of explicit, pecuniary reputation incentives on the trustees' prosociality. Trustees who can acquire a good reputation that benefits them in future interactions honour trust much more than trustees who cannot build a good reputation. These results cast doubt on hypotheses suggesting that strong reciprocity is easily malleable by implicit reputation cues not backed by explicit reputation incentives.
Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractWe propose that heterogeneous asset trading behavior is the result of two distinct, non-convertible mental dimensions: analytical ("quantitative") capability and mentalizing ("perspective-taking") capability. We develop a framework of mental capabilities that yields testable predictions about individual trading behavior, revenue distribution and aggregate outcomes. The two-dimensional structure of mental capabilities predicts the existence of four mental types with distinguishable trading patterns and revenues. Individuals will trade most successfully if and only if they have both capabilities. On the other hand, subjects who can mentalize well but have poor analytical capability will suffer the largest losses. As a consequence, being able in just one dimension does not assure trading success. We test these implications in a laboratory environment, where we first independently elicit subjects' capabilities in both dimensions and then conduct a standard asset market experiment. We find that individual trading gains and patterns are consistent with our theoretical predictions. Our results suggest that two mental dimensions are necessary to encompass the complex heterogeneous behaviors in asset markets; a one-dimensional measure of mental capability will lead to biased conclusions. The findings have potential implications for financial institutions, which can use the measures to select successful traders, or for policy-makers, helping them to prevent the formation of asset bubbles. Finally, our conceptual framework and the empirical screening method could be applied to explain heterogeneous behavior in other games.
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