We study the association among different sources of individual differences such as personality, cognitive ability and risk attitudes with trust and reciprocate behavior in an incentivized experimental binary trust game in a sample of 220 (138 females) undergraduate students. The game involves two players, player 1 (P1) and player 2 (P2). In the first stage, P1 decides whether to trust and let P2 decide, or to secure an egalitarian payoff for both players. If P1 trusts P2, the latter can choose between a symmetric payoff that is double than the secure alternative discarded by P1, and an asymmetric payoff in which P2 earns more than in any other case but makes P1 worse off. Before the main experiment, we obtained participants’ scores for Abstract Reasoning (AR), risk attitudes, basic personality characteristics, and specific traits such as psychopathy and impulsivity. During the main experiment, we measured Heart Rate (HR) and ElectroDermal Activity (EDA) variation to account for emotional arousal caused by the decision and feedback processes. Our main findings indicate that, on one hand, P1 trust behavior associates to positive emotionality and, specifically, to the extraversion’s warmth facet. In addition, the impulsivity facet of positive urgency also favors trust behavior. No relation to trusting behavior was found for either other major personality aspects or risk attitudes. The physiological results show that participants scoring high in psychopathy exhibit increased EDA and reduced evoked HR deceleration at the moment in which they are asked to decide whether or not to trust. Regarding P2, we find that AR ability and mainly low disagreeable disinhibition favor reciprocal behavior. Specifically, lack of reciprocity significantly relates with a psychopathic, highly disinhibited and impulsive personality. Thus, the present study suggests that personality characteristics would play a significant role in different behaviors underlying cooperation, with extraversion/positive emotionality being more relevant for initiating cooperation, and low disagreeable disinhibition for maintaining it.
Cooperative behavior is often assumed to depend on individuals' characteristics, such as altruism and reasoning ability. Evidence is mixed about what the precise impact of these characteristics is, as the subjects of study are generally randomly paired, generating a heterogeneous mix of the two characteristics. In this study we ex-ante create four different groups of subjects by factoring their higher or lower than the median scores in both altruism and reasoning ability. Then we use these groups in order to analyze the joint effect of the two characteristics on the individual choice of cooperating and on successful paired cooperation. Subjects belonging to each group play first 10 one-shot prisoner's dilemma (PD) games with ten random partners and then three consecutive 10-round repeated PD games with three random partners. In all games, we elicit players' beliefs regarding cooperation using an incentive compatible method. Individuals with high altruism are more optimistic about the cooperative behavior of the other player in the one-shot game. They also show higher individual cooperation and paired cooperation rates in the first repetitions of this game. Contrary to the one-shot PD games where high reasoning ability reduces the probability of playing cooperatively, the sign of the relationship is inverted in the first repeated PD game, showing that high reasoning ability individuals better adjust their behavior to the characteristics of the game they are playing. In this sense, the joint effect of reasoning ability and altruism is not linear, with reasoning ability counteracting the cooperative effect of altruism in the one-shot game and reinforcing it in the first repeated game. However, experience playing the repeated PD games takes over the two individual characteristics in explaining individual and paired cooperation. Thus, in a (PD) setting, altruism and reasoning ability significantly affect behavior in single encounters, while in repeated interactions individual and paired cooperation reach similarly high levels independently of these individual characteristics.
We report experimental results on duopoly pricing with and without price beating guarantees (PBG). In two control treatments, price beating is either imposed as an industry-wide rule or offered as a business strategy. Our major finding is that when price beating guarantees are imposed as a rule or offered as an option, effective prices are equal to or lower than those in a baseline treatment in which price beating is forbidden. Also, when price beating is treated as a business strategy, less than 50% of subjects adopted the guarantee, suggesting that, subjects realize the pro-competitive effects of the guarantee. Copyright Springer 2005experimental oligopolies, price beating guarantees,
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