Avoiding the sharp tongue: Anticipated written messages promote fair economic exchange

Abstract

Abstract:Research in economics and psychology has established that informal nonmonetary sanctions, particularly expressions of negative emotion or disapproval, can enforce fair economic exchange. However, scholars are only beginning to understand the reasons non-monetary sanctions affect economic outcomes. Here we provide evidence that a preference to avoid written expression of disapproval, or negative emotion, plays an important role in promoting fair decision making. We study one-shot Dictator games where one subject has the right to determine a division of an amount of money between herself and her receiver. In relation to the standard game, we find significantly fewer earning-maximizing decisions when receivers can react to offers with ex post written messages. We further find that credible threats of monetary sanctions, while economically inefficient, are significantly more effective than written messages in deterring selfishness. Our data provide new perspectives on the role of communication in promoting economic efficiency in social environments, and support economic theories of decision incorporating psychological factors such as guilt, shame, and self-deception.

Inequality-seeking punishment

“…) In turn, this is consistent with the possibility that revenge is a key motive for punishment decisions. Since retaliatory punishment can lead to a downward spiral in cooperation and economic efficiency (Dreber et al, 2008), our results emphasize the importance of designing institutions to promote fairness (Xiao and Houser, 2009), while also encouraging tolerance in those cases when inequality unavoidably emerges. …”

What Behaviors are Disapproved? Experimental Evidence from Five Dictator Games

“…Exiting might reflect a desire to not violate the other's expectations, or possibly a desire to not feel disapproved of. In [6,7] ex post messages significantly foster generous behavior in the dictator game. Also, [29] observe that cursing a cheater is a widely-used and effective method to deter cheating in collusive agreements.…”

“…Further, theories based on ideas like altruism [19]; also the "maximin" model of [20], reciprocity [21], or spite [22] predict the same choices as the standard model in all games. 7. the Maximin rule predicts disapproval at a ∈ {l, r} if, and only if, min{x…”

“…6 We also consider the reverse spite rule for completeness and to check that people do not act incoherently. 7 Observe that f r k may not be unique, as there can be several rules j in r k that fit i's behavior best. 8 We posit that choices across allocations and games are independent-i.e., the probability of following a rule at any allocation does not depend on what the subject did before.…”

“…Indeed, a growing experimental literature shows that the availability of approval/disapproval increases contributions in public goods games (see, for instance, [2][3][4]), cooperation in social dilemmas [5], or generosity in dictator games [6,7]. Given this evidence, it seems important to understand which kind of behavior tends to be disapproved, as this could clarify further how (and when) social disapproval affects cooperation and generous behavior.…”