WEBVTT 00:00:01.440 --> 00:00:03.840 [SQUEEKING] [RUSTLING] 00:00:03.840 --> 00:00:11.050 [CLICKING] 00:00:11.050 --> 00:00:15.280 PROFESSOR: Welcome to lecture number 12. 00:00:15.280 --> 00:00:18.530 I'm very sorry that this has to be remote. 00:00:18.530 --> 00:00:20.830 I hope all of you are doing OK. 00:00:20.830 --> 00:00:24.100 I know this is lots of trouble and stress 00:00:24.100 --> 00:00:29.200 for many of you, having to move, not knowing necessarily 00:00:29.200 --> 00:00:33.590 where to move to, financial issues and so on and so forth, 00:00:33.590 --> 00:00:38.380 lots of worries about health, of your own health and others. 00:00:38.380 --> 00:00:41.330 I hope you're doing OK. 00:00:41.330 --> 00:00:43.420 Try to take good care of yourselves and others 00:00:43.420 --> 00:00:46.330 try to look out for others, be there for each other. 00:00:46.330 --> 00:00:49.780 Try also to make use of mental health resources as you can. 00:00:49.780 --> 00:00:53.360 I'll send an email about that as well. 00:00:53.360 --> 00:00:54.730 This is lecture number 12. 00:00:54.730 --> 00:00:57.260 We talk about social preferences. 00:00:57.260 --> 00:01:00.490 So we talked about sort of broadly 00:01:00.490 --> 00:01:03.010 given introduction about social preferences. 00:01:03.010 --> 00:01:07.722 Let me just move towards where we were towards the end. 00:01:07.722 --> 00:01:09.430 I showed you, essentially, different ways 00:01:09.430 --> 00:01:12.310 in which you can experimentally elicit 00:01:12.310 --> 00:01:16.570 people's social preferences using dictator games, ultimatum 00:01:16.570 --> 00:01:18.100 games, trust games. 00:01:18.100 --> 00:01:21.160 We looked at how generous do people 00:01:21.160 --> 00:01:22.640 behave in those kinds of games? 00:01:22.640 --> 00:01:24.970 Does it look like people care about others, 00:01:24.970 --> 00:01:27.670 they're nice towards others? 00:01:27.670 --> 00:01:31.083 We then, to some degree, sort of found quite a bit of generosity 00:01:31.083 --> 00:01:32.500 in dictator games and other games. 00:01:32.500 --> 00:01:34.180 People seemed quite nice. 00:01:34.180 --> 00:01:36.790 In some pieces of evidence, it wasn't quite clear 00:01:36.790 --> 00:01:39.068 whether it was is it that people are generally 00:01:39.068 --> 00:01:41.110 nice to each other, or is it like they don't want 00:01:41.110 --> 00:01:45.400 to look like a mean person, either towards others 00:01:45.400 --> 00:01:47.270 or perhaps towards themselves. 00:01:47.270 --> 00:01:49.718 They want to think of themselves as being a nice person, 00:01:49.718 --> 00:01:51.010 and they don't want to be mean. 00:01:51.010 --> 00:01:56.770 And that might be a motivation of giving towards others. 00:01:56.770 --> 00:01:59.020 In the games that have shown you so far, 00:01:59.020 --> 00:02:03.160 it wasn't quite clear how to distinguish that. 00:02:03.160 --> 00:02:04.910 So what we're going to do in this lecture, 00:02:04.910 --> 00:02:07.090 we're going to look at some pieces of evidence 00:02:07.090 --> 00:02:11.950 where there's versions of dictator and other games 00:02:11.950 --> 00:02:15.460 that lets us look at more the underlying motivation of why 00:02:15.460 --> 00:02:18.730 people give, and perhaps detect, in some cases, 00:02:18.730 --> 00:02:22.480 that when people are giving in some situations which 00:02:22.480 --> 00:02:25.600 look like people are quite nice, in fact, 00:02:25.600 --> 00:02:27.400 that might not be because they generally 00:02:27.400 --> 00:02:28.970 care about the other person. 00:02:28.970 --> 00:02:31.480 It might be rather either because of social image 00:02:31.480 --> 00:02:34.090 concerns-- is this about what other people think about them 00:02:34.090 --> 00:02:35.740 if they give versus not-- 00:02:35.740 --> 00:02:38.030 or because of self-image concerns, 00:02:38.030 --> 00:02:40.930 these are, like, what do they think of themselves, as in you 00:02:40.930 --> 00:02:44.560 give to somebody else not necessarily because you care 00:02:44.560 --> 00:02:47.320 about the other person, or it might not even 00:02:47.320 --> 00:02:49.990 be that you care about what the other person thinks of you. 00:02:49.990 --> 00:02:51.880 It's just about you yourself want 00:02:51.880 --> 00:02:55.330 to feel good about yourself, and therefore you 00:02:55.330 --> 00:02:57.550 might be generous because you want to sort of keep 00:02:57.550 --> 00:03:01.000 or maintain the image of being a nice person to yourself 00:03:01.000 --> 00:03:02.327 as well. 00:03:02.327 --> 00:03:04.660 Some of the evidence that I'm going to show you is-- you 00:03:04.660 --> 00:03:05.740 wouldn't say depressing, but it's 00:03:05.740 --> 00:03:08.407 a little bit sort of negative in the sense that essentially what 00:03:08.407 --> 00:03:12.790 I'm going to show you is that people appear, or in fact are, 00:03:12.790 --> 00:03:16.990 if you believe that evidence, less nice than it might appear. 00:03:16.990 --> 00:03:18.850 So it says that last time, at first sight, 00:03:18.850 --> 00:03:21.520 it looks like that's a little depressing or little negative 00:03:21.520 --> 00:03:27.137 in the sense of we might be disappointed that we thought 00:03:27.137 --> 00:03:28.720 everybody was really nice and friendly 00:03:28.720 --> 00:03:30.012 and cared so much about others. 00:03:30.012 --> 00:03:32.150 Maybe that's not quite true. 00:03:32.150 --> 00:03:34.720 On the other hand, however, if we sort of understand 00:03:34.720 --> 00:03:37.840 the conditions under which people are nice and friendly 00:03:37.840 --> 00:03:39.243 to each other-- 00:03:39.243 --> 00:03:40.910 and in some ways, you might sort of say, 00:03:40.910 --> 00:03:43.180 well, it's not obvious that we really 00:03:43.180 --> 00:03:46.040 care that much about whether people are generally nice 00:03:46.040 --> 00:03:46.540 versus not. 00:03:46.540 --> 00:03:47.998 What we really care about, perhaps, 00:03:47.998 --> 00:03:49.530 is how people, in fact, behave. 00:03:49.530 --> 00:03:52.510 Are they friendly and prosocial and support each other? 00:03:52.510 --> 00:03:55.300 And perhaps if we understand the conditions under which people 00:03:55.300 --> 00:03:57.580 are nice and friendly to each other, 00:03:57.580 --> 00:04:01.360 perhaps that allows us, then, to think about policies, 00:04:01.360 --> 00:04:02.350 how do we set up-- 00:04:02.350 --> 00:04:06.250 in firms or in organizations or in society as a whole-- 00:04:06.250 --> 00:04:08.050 how do we set up policies that might make 00:04:08.050 --> 00:04:10.090 people more prosocial overall. 00:04:10.090 --> 00:04:12.340 So this lecture, we're going to talk about more trying 00:04:12.340 --> 00:04:15.760 to detect different motivations for people's prosociality. 00:04:15.760 --> 00:04:17.950 And then the next lecture, we're going 00:04:17.950 --> 00:04:22.510 to talk about now what are some field evidence So all I'm 00:04:22.510 --> 00:04:24.667 going to show you for now is essentially mostly lab 00:04:24.667 --> 00:04:26.500 evidence, but we're going to show some field 00:04:26.500 --> 00:04:28.300 evidence in real world situations 00:04:28.300 --> 00:04:31.210 in companies and so on, or in field experiments, 00:04:31.210 --> 00:04:32.210 how people are behaving. 00:04:32.210 --> 00:04:33.835 And in particular, we're going to think 00:04:33.835 --> 00:04:35.890 about some policies that might get people to be 00:04:35.890 --> 00:04:37.870 more prosocial versus not. 00:04:40.930 --> 00:04:44.442 So we already talked about this as a whole. 00:04:44.442 --> 00:04:46.150 So the first thing we want to think about 00:04:46.150 --> 00:04:48.340 is essentially social recognition. 00:04:48.340 --> 00:04:50.350 This is essentially social image. 00:04:50.350 --> 00:04:54.790 How do others think about you when you give versus not? 00:04:54.790 --> 00:04:58.780 So then I'm going to show you now several papers, 00:04:58.780 --> 00:05:01.060 or evidence from several papers, that essentially does 00:05:01.060 --> 00:05:04.660 different modifications, mostly of the Dictator Game, that 00:05:04.660 --> 00:05:09.435 allows us to disentangle these different motivations. 00:05:09.435 --> 00:05:11.060 So the first one is the very nice paper 00:05:11.060 --> 00:05:14.630 by Lazear et al that conduct an experiment to study motives 00:05:14.630 --> 00:05:17.630 for giving, as of many dictator games do. 00:05:17.630 --> 00:05:24.220 And they have essentially a very simple design, two treatments. 00:05:24.220 --> 00:05:25.970 One of them is the standard dictator game. 00:05:25.970 --> 00:05:27.827 This is what you have seen before. 00:05:27.827 --> 00:05:29.660 The only difference is this one is in euros. 00:05:29.660 --> 00:05:32.750 It's sort of, I think, done in Europe. 00:05:32.750 --> 00:05:36.660 Think of euros as just being the same as dollars. 00:05:36.660 --> 00:05:42.230 So people can decide to split 10 euros between themselves 00:05:42.230 --> 00:05:44.360 and another subject. 00:05:44.360 --> 00:05:47.180 In another treatment, subjects decide 00:05:47.180 --> 00:05:49.760 whether to even participate in the Dictator Game. 00:05:49.760 --> 00:05:53.510 So essentially, what's being allowed here is an exit option. 00:05:53.510 --> 00:05:56.242 You could essentially say either you're 00:05:56.242 --> 00:05:57.950 going to participate in the dictator game 00:05:57.950 --> 00:06:00.860 with another person, or you could just decide 00:06:00.860 --> 00:06:03.530 you don't even play this game. 00:06:03.530 --> 00:06:06.260 And you get just get some fixed payout. 00:06:06.260 --> 00:06:11.930 Now then, if the dictator chooses to participate, 00:06:11.930 --> 00:06:14.030 the recipient is informed of the game 00:06:14.030 --> 00:06:16.250 and the choice of the dictator. 00:06:16.250 --> 00:06:18.500 So the recipient will be informed 00:06:18.500 --> 00:06:23.130 and know about there was a dictator game that was played. 00:06:23.130 --> 00:06:25.370 Here's the amount that the dictator chose. 00:06:25.370 --> 00:06:28.100 Here's the amount that you got. 00:06:28.100 --> 00:06:31.900 And then the standard dictator game commences, and then 00:06:31.900 --> 00:06:33.770 the recipient just gets the money, 00:06:33.770 --> 00:06:36.900 and the recipient is essentially informed of the action. 00:06:36.900 --> 00:06:40.520 So if you choose, for example, 9 euros for yourself and one 00:06:40.520 --> 00:06:43.760 euros for the other person, the other person will know that 00:06:43.760 --> 00:06:48.830 the one euro that they got came from a dictator game, 00:06:48.830 --> 00:06:54.020 and there was somebody who chose $9.00 for themselves and gave 00:06:54.020 --> 00:06:55.340 $1.00 for them. 00:06:55.340 --> 00:06:59.030 So then one option of this, or one version of this game, 00:06:59.030 --> 00:07:01.940 was essentially just like a costless exit option. 00:07:01.940 --> 00:07:03.440 That is essentially the option where 00:07:03.440 --> 00:07:06.950 you say you receive 10 euros without the option 00:07:06.950 --> 00:07:08.660 of distributing the money. 00:07:08.660 --> 00:07:10.580 Notice that that's exactly the same 00:07:10.580 --> 00:07:13.970 as choosing to opt into the game and choosing 10-0 00:07:13.970 --> 00:07:15.382 in terms of payouts. 00:07:15.382 --> 00:07:17.090 If I just say I want 10 euros for myself, 00:07:17.090 --> 00:07:18.740 I give nothing to the other person, 00:07:18.740 --> 00:07:22.130 that's exactly the same as saying you opt out 00:07:22.130 --> 00:07:23.930 of the dictator game. 00:07:23.930 --> 00:07:27.030 The difference, of course, is that if you opt out, 00:07:27.030 --> 00:07:31.040 the participant will never know that you opted out. 00:07:31.040 --> 00:07:32.720 So the other person will never find out 00:07:32.720 --> 00:07:36.540 that somebody was kind of mean to them. 00:07:36.540 --> 00:07:40.280 And so you might sort of choose the opt out option, perhaps 00:07:40.280 --> 00:07:42.830 because you think the other person will feel bad. 00:07:42.830 --> 00:07:46.610 And if the other person feels bad, you try and avoid that 00:07:46.610 --> 00:07:48.080 and you might opt out. 00:07:48.080 --> 00:07:50.030 This is kind of the exit option. 00:07:50.030 --> 00:07:54.350 So the first option here, the subject line of the slides, 00:07:54.350 --> 00:07:56.270 is costly exit. 00:07:56.270 --> 00:07:59.600 In this version of the game, the exit is actually not costly. 00:07:59.600 --> 00:08:00.860 It's costless to do so. 00:08:00.860 --> 00:08:03.560 You can just essentially take the $1.00 and run, 00:08:03.560 --> 00:08:07.430 and you don't have to actually play the dictator game. 00:08:07.430 --> 00:08:10.970 Now when you think about distributional preferences, 00:08:10.970 --> 00:08:13.130 what do distributional preferences predict? 00:08:13.130 --> 00:08:17.360 Well, dictators who want to give some money strictly 00:08:17.360 --> 00:08:19.430 prefer to play the dictator game. 00:08:19.430 --> 00:08:22.723 If you think you prefer 9-1 over 10-0 well, 00:08:22.723 --> 00:08:24.140 then you're going to play the game 00:08:24.140 --> 00:08:27.170 and say I'm going to choose 9-1 because otherwise, there's 00:08:27.170 --> 00:08:29.930 no way to actually give this person money. 00:08:29.930 --> 00:08:31.670 Notice distributional preferences, 00:08:31.670 --> 00:08:33.380 just to remind you, are preferences 00:08:33.380 --> 00:08:35.122 were only the outcomes matter. 00:08:35.122 --> 00:08:37.039 It doesn't matter how the outcomes come about. 00:08:37.039 --> 00:08:39.390 Only the actual outcome matters. 00:08:39.390 --> 00:08:43.250 Now there are some people who want to just keep everything 00:08:43.250 --> 00:08:44.059 to themselves. 00:08:44.059 --> 00:08:46.370 Well, those people who should just 00:08:46.370 --> 00:08:47.810 be indifferent-- they will just be 00:08:47.810 --> 00:08:50.930 like, it doesn't really matter whether I just opt out. 00:08:50.930 --> 00:08:52.390 Maybe that's easier to opt out. 00:08:52.390 --> 00:08:53.432 It doesn't really matter. 00:08:53.432 --> 00:08:57.020 I would give 10-0 anyway, either opt out or just 00:08:57.020 --> 00:09:00.200 stay in the game and choose 10-0 anyway. 00:09:00.200 --> 00:09:02.810 But in either case, the option to exit the game 00:09:02.810 --> 00:09:06.447 should have no effect on how much the dictators share. 00:09:06.447 --> 00:09:07.280 It shouldn't matter. 00:09:07.280 --> 00:09:09.260 If you want to give some positive amount, 00:09:09.260 --> 00:09:10.640 if you opt that option, it doesn't really 00:09:10.640 --> 00:09:12.432 matter because you're not going to opt out. 00:09:12.432 --> 00:09:13.610 You're going to just opt in. 00:09:13.610 --> 00:09:16.440 You stay in the game and just give the money to that person. 00:09:16.440 --> 00:09:17.840 And if you want to give 0 anyway, 00:09:17.840 --> 00:09:19.460 it doesn't matter whether you opt out or not. 00:09:19.460 --> 00:09:21.470 You just give 0 anyway, and if you opt out, 00:09:21.470 --> 00:09:24.600 it's essentially effectively giving 0 to the other person. 00:09:24.600 --> 00:09:28.320 So either way, the option to exit 00:09:28.320 --> 00:09:30.890 should have no effect on how much dictators share. 00:09:30.890 --> 00:09:33.350 In particular, it should not reduce 00:09:33.350 --> 00:09:35.415 how much dictators share. 00:09:35.415 --> 00:09:36.290 Does that make sense? 00:09:39.210 --> 00:09:40.050 OK. 00:09:40.050 --> 00:09:43.410 The limited audience seems to understand. 00:09:43.410 --> 00:09:45.840 Hope this is clear to everybody else as well. 00:09:45.840 --> 00:09:47.850 By the way, I should have said the lectures now 00:09:47.850 --> 00:09:53.260 will be recorded currently with a very limited audience, 00:09:53.260 --> 00:09:56.700 but in general, with no audience. 00:09:56.700 --> 00:09:58.500 What I'm going to do is try to keep 00:09:58.500 --> 00:10:01.890 sort of what I very much miss in this format is 00:10:01.890 --> 00:10:04.380 sort of the interactive form of the lectures. 00:10:04.380 --> 00:10:06.630 So what are we're going to do is trying to figure out, 00:10:06.630 --> 00:10:08.400 in particular, after spring break, 00:10:08.400 --> 00:10:10.440 trying to record the lectures and then finding 00:10:10.440 --> 00:10:14.460 some other ways of allowing students to interact, perhaps 00:10:14.460 --> 00:10:15.840 by having a version of, well, you 00:10:15.840 --> 00:10:17.730 can watch the lectures online, and then we 00:10:17.730 --> 00:10:20.910 have essentially either online office hours or discussions 00:10:20.910 --> 00:10:21.630 of the slides. 00:10:21.630 --> 00:10:23.850 Or if there are particular issues that you may, 00:10:23.850 --> 00:10:25.710 may answer some questions over Zoom 00:10:25.710 --> 00:10:30.030 or other formats we can then discuss some issues that 00:10:30.030 --> 00:10:31.050 perhaps aren't clear. 00:10:31.050 --> 00:10:33.360 Or you can ask these questions, and then I 00:10:33.360 --> 00:10:35.130 try to respond to that. 00:10:35.130 --> 00:10:36.630 Anyway, getting back to this game, 00:10:36.630 --> 00:10:38.310 essentially we have now the comparison 00:10:38.310 --> 00:10:42.180 between standard dictator games and the option 00:10:42.180 --> 00:10:46.170 of, in this case, a free exit. 00:10:46.170 --> 00:10:48.630 So in this case, the exit option lowers giving, 00:10:48.630 --> 00:10:52.440 and the standard dictator game, dictators shared about one euro 00:10:52.440 --> 00:10:54.990 $0.87 on average. 00:10:54.990 --> 00:10:58.170 That's, again, sort of in line with the 20%, 25% 00:10:58.170 --> 00:11:01.230 that people tend to give in dictator games in the very 00:11:01.230 --> 00:11:02.490 simplest form. 00:11:02.490 --> 00:11:06.630 But when you allow people to exit, the share given 00:11:06.630 --> 00:11:08.760 goes down to $0.58. 00:11:08.760 --> 00:11:09.450 OK? 00:11:09.450 --> 00:11:15.390 And so that's essentially to say there are many people who, 00:11:15.390 --> 00:11:18.750 when they're getting into the dictator game, 00:11:18.750 --> 00:11:23.280 they feel compelled to give at least some money because either 00:11:23.280 --> 00:11:24.870 they feel bad themselves somehow, 00:11:24.870 --> 00:11:27.510 or they feel that the other person will feel bad. 00:11:27.510 --> 00:11:29.520 So you kind of want to choose 10-0. 00:11:29.520 --> 00:11:32.760 But you feel bad about the other person feeling bad 00:11:32.760 --> 00:11:36.600 if you choose 10-0, so you might be inclined to choose 8-2, 7-3, 00:11:36.600 --> 00:11:38.400 or the like. 00:11:38.400 --> 00:11:41.760 Now if you allow the costless exit option, 00:11:41.760 --> 00:11:43.800 the person who in the standard dictator game 00:11:43.800 --> 00:11:48.060 would choose like 7-3, 6-4, or 8-2 or the like, 00:11:48.060 --> 00:11:52.170 that person, in fact, wants to choose the 10-0 00:11:52.170 --> 00:11:57.780 but feels bad in the standard dictator game, so chooses 7-3. 00:11:57.780 --> 00:12:00.390 Once you allow the costless exit, 00:12:00.390 --> 00:12:04.780 the person just chooses the 10-0 and essentially, then, 00:12:04.780 --> 00:12:09.690 by opting out, effectively is choosing 10-0. 00:12:09.690 --> 00:12:12.600 Now a different version of this-- so what I showed you 00:12:12.600 --> 00:12:14.370 so far was costless exit. 00:12:14.370 --> 00:12:16.110 It essentially was free to exit. 00:12:16.110 --> 00:12:19.380 You could just choose the 10-0 and just run. 00:12:19.380 --> 00:12:22.500 There was no cost of doing so. 00:12:22.500 --> 00:12:23.880 The pie stayed the same. 00:12:23.880 --> 00:12:25.740 There was no subtraction of that. 00:12:25.740 --> 00:12:28.500 Now different versions of that games 00:12:28.500 --> 00:12:31.290 were the exit is actually costly. 00:12:31.290 --> 00:12:34.080 That is to say, instead of choosing a dictator game where 00:12:34.080 --> 00:12:38.500 you can share 10 euros between the dictator and the recipient, 00:12:38.500 --> 00:12:40.140 now you can choose the exit option. 00:12:40.140 --> 00:12:42.750 You have to pay, essentially, one euro for the exit option 00:12:42.750 --> 00:12:46.290 so you get 9 euros if you exit, and the other person still 00:12:46.290 --> 00:12:48.150 gets 0. 00:12:48.150 --> 00:12:54.370 So that's now to say people then choose the costly exit, which 00:12:54.370 --> 00:12:57.400 is to say they say, I'd rather do the 9 euros 00:12:57.400 --> 00:13:00.010 and not play the dictator game with this other person. 00:13:00.010 --> 00:13:02.560 Rather than playing the dictator game 00:13:02.560 --> 00:13:04.990 where you get 10 euros potentially, 00:13:04.990 --> 00:13:08.740 you could choose 10 euros and 0 for the other person. 00:13:08.740 --> 00:13:14.140 But there seem to be quite a few people who choose, essentially, 00:13:14.140 --> 00:13:17.950 the costly exit, the 9 euros, without playing the game. 00:13:17.950 --> 00:13:20.030 And so they're here. 00:13:20.030 --> 00:13:23.290 Say average subjects are willing to take 82% of the pie 00:13:23.290 --> 00:13:26.230 rather than split the full pie in the dictator game. 00:13:26.230 --> 00:13:27.640 That is to say people essentially 00:13:27.640 --> 00:13:29.890 are willing to forgo quite a bit of money 00:13:29.890 --> 00:13:31.480 to face the situation where you have 00:13:31.480 --> 00:13:33.103 to deal with this other person. 00:13:33.103 --> 00:13:35.020 Notice that you could choose exactly the same. 00:13:35.020 --> 00:13:37.840 You could choose 10-0 or 9-0 or the like. 00:13:37.840 --> 00:13:39.480 People don't want to do that. 00:13:39.480 --> 00:13:43.600 Instead, they choose the costly exit option 00:13:43.600 --> 00:13:45.280 so the other person never finds out. 00:13:45.280 --> 00:13:46.660 So in some ways, you don't have to deal 00:13:46.660 --> 00:13:48.368 with yourself or the other person feeling 00:13:48.368 --> 00:13:51.430 bad about your not being nice. 00:13:51.430 --> 00:13:52.900 And so that reveals, in some sense, 00:13:52.900 --> 00:13:56.140 saying if you see people being nice in dictator games, 00:13:56.140 --> 00:13:58.300 it seems to be, at least to some degree, 00:13:58.300 --> 00:14:00.400 that's not coming from people generally 00:14:00.400 --> 00:14:02.290 wanting to be nice to the other person 00:14:02.290 --> 00:14:05.860 and generally wanting to improve people's payout for the sake 00:14:05.860 --> 00:14:07.390 of making them richer. 00:14:07.390 --> 00:14:08.890 But it's rather they want to avoid 00:14:08.890 --> 00:14:10.810 the other person feels bad about them, 00:14:10.810 --> 00:14:13.120 or getting mad or the like. 00:14:13.120 --> 00:14:14.830 Now do let me just repeat that. 00:14:14.830 --> 00:14:17.590 Why do people subject want to exit? 00:14:17.590 --> 00:14:21.023 Well, simply put, they want to take the money for themselves, 00:14:21.023 --> 00:14:23.440 but they don't want to indicate to the potential recipient 00:14:23.440 --> 00:14:25.270 that she's been treated unfairly. 00:14:25.270 --> 00:14:28.030 So exiting allows them to satisfy their greed 00:14:28.030 --> 00:14:31.225 and not to worry about the participant's reaction. 00:14:34.210 --> 00:14:35.589 Do you have any questions? 00:14:42.300 --> 00:14:43.010 OK. 00:14:43.010 --> 00:14:45.440 So that's the first piece of evidence. 00:14:45.440 --> 00:14:51.170 That's Lazear et al on costly exit in a dictator game. 00:14:51.170 --> 00:14:53.600 Now we discussed already very last time 00:14:53.600 --> 00:14:55.820 another version of that, which essentially 00:14:55.820 --> 00:15:00.380 is a different version, which is providing excuses 00:15:00.380 --> 00:15:03.080 or covers to be selfish. 00:15:03.080 --> 00:15:05.210 This is a very nice paper by Andreoni and Bernheim, 00:15:05.210 --> 00:15:07.130 where essentially the short summary of this 00:15:07.130 --> 00:15:10.400 is what they do is they allow for a computer option. 00:15:10.400 --> 00:15:12.980 They allow for an option where essentially, the computer 00:15:12.980 --> 00:15:17.660 decides in some cases, which gives 00:15:17.660 --> 00:15:20.470 people cover to be not nice. 00:15:20.470 --> 00:15:22.850 So if there's a chance that you will decide yourself 00:15:22.850 --> 00:15:25.640 and a chance that the computer decides, and the recipient 00:15:25.640 --> 00:15:29.150 doesn't know whether I chose or the computer decided-- 00:15:29.150 --> 00:15:31.160 say it's 50% or the like-- 00:15:31.160 --> 00:15:35.660 I might choose a very mean choice 00:15:35.660 --> 00:15:39.327 because I can always say, well, you know, I didn't do this. 00:15:39.327 --> 00:15:40.160 It was the computer. 00:15:40.160 --> 00:15:41.850 I wanted to be really nice to you. 00:15:41.850 --> 00:15:43.970 The computer happened to be just mean. 00:15:43.970 --> 00:15:45.850 Sorry about that. 00:15:45.850 --> 00:15:47.790 I really tried to be nice to you. 00:15:47.790 --> 00:15:50.480 And so people essentially use the computer as cover. 00:15:50.480 --> 00:15:53.010 Let me show you what this exact evidence looks like. 00:15:53.010 --> 00:15:56.160 So this is a different version of a non-anonymous dictator 00:15:56.160 --> 00:15:56.660 game. 00:15:56.660 --> 00:15:59.103 So this game is sort of set up in a way 00:15:59.103 --> 00:16:00.770 that you actually know the other person, 00:16:00.770 --> 00:16:03.500 so you have to sort of face the other person, at least 00:16:03.500 --> 00:16:04.590 in some way. 00:16:04.590 --> 00:16:09.080 And so the way this is set up is that the dictator's choice was 00:16:09.080 --> 00:16:11.390 forced with some probability. 00:16:11.390 --> 00:16:17.360 So this is a dictator game with $20. 00:16:17.360 --> 00:16:23.000 Now in the simplest version, the computer chooses 20-0 or 0-20 00:16:23.000 --> 00:16:25.100 with equal probability. 00:16:25.100 --> 00:16:26.870 So if the computer chooses, the computer 00:16:26.870 --> 00:16:30.470 chooses either 20-0 or 0-20 with 50% chance each 00:16:30.470 --> 00:16:32.810 if it's the computer's turn. 00:16:32.810 --> 00:16:34.850 The dictator observes the allocation 00:16:34.850 --> 00:16:36.080 chosen by the computer. 00:16:36.080 --> 00:16:38.450 The recipient does not. 00:16:38.450 --> 00:16:42.575 If I'm the dictator, I can see what the computer does, 00:16:42.575 --> 00:16:44.450 and then I'm sort of asked to make my choice. 00:16:44.450 --> 00:16:49.580 The recipient does not know what the computer actually chose. 00:16:49.580 --> 00:16:52.160 The dictator then makes a dictator game allocation 00:16:52.160 --> 00:16:54.380 with a pie of $20 such as before. 00:16:54.380 --> 00:16:57.050 Just happens to be $20 rather than $10. 00:16:57.050 --> 00:17:00.470 And the computer's forced allocation 00:17:00.470 --> 00:17:04.369 implemented with probability p is known both to the dictator 00:17:04.369 --> 00:17:05.569 and to recipient. 00:17:05.569 --> 00:17:09.230 So the recipient knows what the chance of p 00:17:09.230 --> 00:17:12.920 is that I'm choosing versus the computer choosing. 00:17:12.920 --> 00:17:17.420 So the computer chooses with probability p. 00:17:17.420 --> 00:17:21.230 The dictator chooses with probability 1 minus p. 00:17:21.230 --> 00:17:28.030 That is known to both the recipient and to the dictator. 00:17:28.030 --> 00:17:35.980 And now the game will vary the probability p. 00:17:35.980 --> 00:17:38.800 So if the probability p is like a 0, 00:17:38.800 --> 00:17:41.380 if the computer never chooses, and only the dictator chooses, 00:17:41.380 --> 00:17:43.990 then we're back to the typical dictator game. 00:17:43.990 --> 00:17:46.270 Then I cannot hide behind the computer. 00:17:46.270 --> 00:17:48.280 It's obvious that I'm choosing. 00:17:48.280 --> 00:17:52.000 If I'm choosing 20-0, you know that, 00:17:52.000 --> 00:17:55.840 so I have no way of blaming the computer. 00:17:55.840 --> 00:18:01.300 If, in contrast, the probability is larger than 0-- 00:18:01.300 --> 00:18:04.220 suppose the probability is 50%, 60%, 70%-- 00:18:04.220 --> 00:18:06.790 it's very likely that the computer chose. 00:18:06.790 --> 00:18:10.990 So now I can also choose 20-0 and just say, well, sorry, 00:18:10.990 --> 00:18:13.210 it happens to be that the computer implemented 00:18:13.210 --> 00:18:14.440 this choice. 00:18:14.440 --> 00:18:15.880 Sorry that you got 0. 00:18:15.880 --> 00:18:18.430 So I can essentially hide behind the computer. 00:18:18.430 --> 00:18:20.230 And the larger the probability p is, 00:18:20.230 --> 00:18:23.350 the more credible is this hiding behind the computer 00:18:23.350 --> 00:18:26.740 because you know if the chance is only 5% or 10%, 00:18:26.740 --> 00:18:29.440 you might not believe me that the computer actually chose. 00:18:29.440 --> 00:18:31.270 You're like, yeah, yeah, Frank, you're 00:18:31.270 --> 00:18:32.110 telling me it was the computer. 00:18:32.110 --> 00:18:32.860 Really it was you. 00:18:32.860 --> 00:18:35.500 But if the chance is 90% or the like, 00:18:35.500 --> 00:18:38.290 then it's actually very likely, very plausible 00:18:38.290 --> 00:18:41.170 that the computer chose the main outcome. 00:18:41.170 --> 00:18:43.325 And then I might also just choose the mean outcome 00:18:43.325 --> 00:18:44.950 because you're never going to find out. 00:18:44.950 --> 00:18:47.350 You're not going to suspect that this was me as opposed 00:18:47.350 --> 00:18:49.640 to the computer. 00:18:49.640 --> 00:18:53.050 And then at the end, the recipient 00:18:53.050 --> 00:18:57.120 only learns the allocation, not the dictator's choice. 00:18:57.120 --> 00:18:59.590 The recipient only learns what they get. 00:18:59.590 --> 00:19:02.680 They do not learn what I chose or whether it was 00:19:02.680 --> 00:19:05.050 the computer or me who chose. 00:19:05.050 --> 00:19:09.490 They only know the probability p with which the computer or I 00:19:09.490 --> 00:19:10.690 made that choice. 00:19:10.690 --> 00:19:12.390 Yeah. 00:19:12.390 --> 00:19:13.904 AUDIENCE: Does the dictator know p 00:19:13.904 --> 00:19:15.800 before he makes his allocation? 00:19:19.120 --> 00:19:19.820 PROFESSOR: Yes. 00:19:19.820 --> 00:19:20.320 Yes. 00:19:20.320 --> 00:19:22.270 So exactly. 00:19:22.270 --> 00:19:23.740 The dictator knows p. 00:19:23.740 --> 00:19:26.890 The dictator even knows, I think, the actual choice 00:19:26.890 --> 00:19:29.590 that the computer made, yeah. 00:19:29.590 --> 00:19:31.160 But that's key here. 00:19:31.160 --> 00:19:34.840 So both the dictator and the recipient know p. 00:19:34.840 --> 00:19:38.590 That's really important because only if I know what p is, 00:19:38.590 --> 00:19:40.720 I can actually react to it and hide. 00:19:40.720 --> 00:19:43.165 So the prediction here will be that if p 00:19:43.165 --> 00:19:46.210 is very high, if the computer chooses with high probability, 00:19:46.210 --> 00:19:51.280 people will be more likely to be mean in the 10-0 case 00:19:51.280 --> 00:19:53.530 because I could just essentially emulate the computer 00:19:53.530 --> 00:19:54.490 and hide behind it. 00:19:54.490 --> 00:19:58.030 But for that I need to know exactly what p is. 00:19:58.030 --> 00:20:00.520 So now what do distributional preferences here predict? 00:20:00.520 --> 00:20:02.050 Again, distributional preferences 00:20:02.050 --> 00:20:05.150 are preferences such that you only care about the outcome. 00:20:05.150 --> 00:20:08.570 You don't care about how this came about. 00:20:08.570 --> 00:20:11.110 So the dictator here should only think about the case 00:20:11.110 --> 00:20:13.060 in which her choice counts. 00:20:13.060 --> 00:20:15.185 That is to say, the computer is entirely irrelevant 00:20:15.185 --> 00:20:17.810 because again, I can't influence what the computer does anyway. 00:20:17.810 --> 00:20:20.530 It doesn't matter whether the computer chooses with 5% or 10% 00:20:20.530 --> 00:20:24.160 or a 20% chance, or 50%, even 70% chance. 00:20:24.160 --> 00:20:25.960 The only thing I should care about 00:20:25.960 --> 00:20:30.040 is well, for the chance of 1 minus p when I choose myself, 00:20:30.040 --> 00:20:31.030 what am I going to do? 00:20:31.030 --> 00:20:32.822 And what are my distributional preferences? 00:20:32.822 --> 00:20:36.160 How much do I want to give you versus the other person? 00:20:36.160 --> 00:20:37.930 And that's essentially the only case 00:20:37.930 --> 00:20:41.380 in which she can, in fact, affect the distribution. 00:20:41.380 --> 00:20:47.437 And so p should have essentially no effect in people's choices. 00:20:47.437 --> 00:20:49.270 So that's a very straightforward prediction. 00:20:49.270 --> 00:20:51.310 Essentially, you only care about the case 00:20:51.310 --> 00:20:52.870 when you can make a difference. 00:20:52.870 --> 00:20:54.790 And in that case, you just choose 00:20:54.790 --> 00:20:58.600 whatever you want to choose between 20-0 and 0-20, 00:20:58.600 --> 00:21:01.367 whatever you want to give the other person. 00:21:01.367 --> 00:21:03.700 The other cases are just irrelevant because they are out 00:21:03.700 --> 00:21:05.440 of the person's control. 00:21:05.440 --> 00:21:07.390 Now why might p matter anyway? 00:21:07.390 --> 00:21:08.380 I already said that. 00:21:08.380 --> 00:21:10.690 Essentially p might matter because you 00:21:10.690 --> 00:21:14.940 can hide behind the computer if p is particularly high. 00:21:14.940 --> 00:21:15.720 Yes. 00:21:15.720 --> 00:21:18.510 AUDIENCE: So the recipient knows that the computer can only 00:21:18.510 --> 00:21:21.353 choose 20 or 0? 00:21:21.353 --> 00:21:22.020 PROFESSOR: Yeah. 00:21:22.020 --> 00:21:24.780 There's different versions of that, exactly. 00:21:24.780 --> 00:21:25.380 Exactly. 00:21:25.380 --> 00:21:29.550 In some case, the computer could choose 20-0, 00:21:29.550 --> 00:21:31.750 0-20 with equal probability. 00:21:31.750 --> 00:21:33.360 So the recipient knows that. 00:21:33.360 --> 00:21:35.160 That's known. 00:21:35.160 --> 00:21:37.612 AUDIENCE: If it's like a 80-20 and the recipient 00:21:37.612 --> 00:21:39.388 knows automatically. 00:21:39.388 --> 00:21:40.180 PROFESSOR: Exactly. 00:21:40.180 --> 00:21:41.055 That's exactly right. 00:21:41.055 --> 00:21:43.330 I'm going to show you exactly that evidence. 00:21:43.330 --> 00:21:45.890 In fact, what the game will do is-- 00:21:45.890 --> 00:21:46.390 sorry. 00:21:46.390 --> 00:21:47.860 The question was does the recipient 00:21:47.860 --> 00:21:52.440 know whether it's 20-0 versus 18-two or something else? 00:21:52.440 --> 00:21:54.130 And that's exactly right. 00:21:54.130 --> 00:21:57.280 The only plausible way in which I can hide behind the computer, 00:21:57.280 --> 00:22:00.550 in this case, is if I want to be selfish, is 20-0. 00:22:00.550 --> 00:22:03.048 If I choose 19-one, you know it was me. 00:22:03.048 --> 00:22:05.590 It can't end up in the computer because the computer can only 00:22:05.590 --> 00:22:07.750 do 20-0-0-20. 00:22:07.750 --> 00:22:08.825 And that's key here. 00:22:08.825 --> 00:22:10.450 And there's going to be some variation. 00:22:10.450 --> 00:22:13.270 And that variation will really what the computer does. 00:22:13.270 --> 00:22:14.860 And essentially that will exactly 00:22:14.860 --> 00:22:17.710 reveal people hiding behind the computer 00:22:17.710 --> 00:22:20.740 because then some variation will be the computer does 19-1, 00:22:20.740 --> 00:22:23.530 and suddenly people choose a lot of 19-1. 00:22:23.530 --> 00:22:25.390 And the only reason why you might do that 00:22:25.390 --> 00:22:26.770 is exactly because you might want 00:22:26.770 --> 00:22:28.960 to hide behind the computer. 00:22:28.960 --> 00:22:31.180 So let me show you that, exactly that, in fact. 00:22:31.180 --> 00:22:35.680 So here's now what we find. 00:22:35.680 --> 00:22:37.310 This is a bit of a complicated graph 00:22:37.310 --> 00:22:40.550 so let me try to walk you through that in detail. 00:22:40.550 --> 00:22:42.910 So the graph shows you the following. 00:22:42.910 --> 00:22:46.720 It shows you on the y-axis the fraction that people gave, 00:22:46.720 --> 00:22:49.070 on, average for, the different scenarios. 00:22:49.070 --> 00:22:52.373 So how much, what percentage of the $20 00:22:52.373 --> 00:22:54.040 did the person give to the other person, 00:22:54.040 --> 00:22:55.768 decide the dictator to do? 00:22:55.768 --> 00:22:56.810 This is not the computer. 00:22:56.810 --> 00:22:59.470 So this is only the dictator's choices. 00:22:59.470 --> 00:23:01.660 On the x-axis, we see the probability 00:23:01.660 --> 00:23:07.250 of the forced choice, of x 0 being 0. 00:23:10.140 --> 00:23:12.970 This is essentially to say what is the forced choice? 00:23:12.970 --> 00:23:17.270 What is the chance that the other person gets 0? 00:23:17.270 --> 00:23:20.970 The computer chooses with some probability 20-0, 00:23:20.970 --> 00:23:23.730 so 20 for the dictator and 0 for the other person, 00:23:23.730 --> 00:23:26.220 and that's happening for different probability. 00:23:26.220 --> 00:23:31.590 So the probability is either 0, 25%, 50%, or 75%. 00:23:31.590 --> 00:23:33.880 That's the p that I mentioned earlier. 00:23:33.880 --> 00:23:37.770 Let's look at p equals 0% to start with. 00:23:37.770 --> 00:23:40.125 That's essentially the scenario in which 00:23:40.125 --> 00:23:41.250 the computer is irrelevant. 00:23:41.250 --> 00:23:43.500 The computer never makes any choices. 00:23:43.500 --> 00:23:47.040 What you see, essentially, is the typical behavior 00:23:47.040 --> 00:23:48.450 in dictator games. 00:23:48.450 --> 00:23:50.780 Sorry, I should have also mentioned that here's much, 00:23:50.780 --> 00:23:53.190 then the different lines are, like how much 00:23:53.190 --> 00:23:55.570 is given to the other person. 00:23:55.570 --> 00:23:58.170 So the blue line that you see there is like 10. 00:23:58.170 --> 00:23:59.640 That's the 10-10 allocation. 00:23:59.640 --> 00:24:02.610 How much is the dictator giving to the other person? 00:24:02.610 --> 00:24:04.530 The red line is a 0. 00:24:04.530 --> 00:24:06.870 This is essentially the 20-0 allocation. 00:24:06.870 --> 00:24:11.430 And the other two lines down there are 1, 2 to 9, 00:24:11.430 --> 00:24:14.618 and there's also larger than 10. 00:24:14.618 --> 00:24:16.410 What we're going to focus on is essentially 00:24:16.410 --> 00:24:18.420 how often does the person give 0, 00:24:18.420 --> 00:24:21.940 and how often does the person give, like, 50%? 00:24:21.940 --> 00:24:24.400 So when you look at the 0% line, essentially, that's 00:24:24.400 --> 00:24:25.650 the typical dictator choice. 00:24:25.650 --> 00:24:26.610 Again, p is 0. 00:24:26.610 --> 00:24:28.110 The computer is entirely irrelevant. 00:24:28.110 --> 00:24:30.000 The computer can't do anything. 00:24:30.000 --> 00:24:32.090 Now I cannot hide behind the computer. 00:24:32.090 --> 00:24:34.680 You get sort of the typical dictator game outcomes. 00:24:34.680 --> 00:24:38.340 But just, like, 55% of people, actually, more than usual, 00:24:38.340 --> 00:24:39.810 give half. 00:24:39.810 --> 00:24:42.660 They choose the 10-10 allocation. 00:24:42.660 --> 00:24:44.400 About 30% of people choose 0. 00:24:44.400 --> 00:24:45.540 That's very common. 00:24:45.540 --> 00:24:49.170 And then there are some people below that give either 2 to 9, 00:24:49.170 --> 00:24:52.380 or 1 or even larger than 10. 00:24:52.380 --> 00:24:56.250 So that's typically what we see in a dictator game. 00:24:56.250 --> 00:24:59.640 Now moving to the right is now positive p's. 00:24:59.640 --> 00:25:06.060 This is p equals 0.25%, 50%, 75%. 00:25:06.060 --> 00:25:08.525 And now what we're seeing, essentially, 00:25:08.525 --> 00:25:09.900 is that as you move to the right, 00:25:09.900 --> 00:25:14.700 in particular going from 0 to 25 and from 25 to 50, 00:25:14.700 --> 00:25:18.060 the probability of, or the fraction of people 00:25:18.060 --> 00:25:23.040 who choose 0 for the other person goes up quite a bit. 00:25:23.040 --> 00:25:26.980 So now, for example, look at the 50% chance equals 50%. 00:25:26.980 --> 00:25:30.810 Now there's a 50% chance that the other person gets 0 anyway 00:25:30.810 --> 00:25:33.030 because the computer chose so. 00:25:33.030 --> 00:25:36.900 And now, if I'm the dictator, essentially I 00:25:36.900 --> 00:25:39.420 can also choose 20-0. 00:25:39.420 --> 00:25:42.360 And we know once you, as a recipient, see the outcome, 00:25:42.360 --> 00:25:45.720 you cannot tell if it was a 50% chance that it was me, 00:25:45.720 --> 00:25:50.580 it was a 50% chance it was the computer choosing that. 00:25:50.580 --> 00:25:55.230 And so in that case, you see now that 70% of people 00:25:55.230 --> 00:25:57.180 actually choose 20-0. 00:25:57.180 --> 00:26:02.400 So that fraction goes up from 30% for p equals 0 to about 50% 00:26:02.400 --> 00:26:07.680 for p equals 25%, and to 70% for p equals 50%. 00:26:07.680 --> 00:26:11.190 So essentially, the larger p is, at least for the range of 0 00:26:11.190 --> 00:26:13.710 to 50%, the larger is the fraction 00:26:13.710 --> 00:26:16.740 of people who actually choose the 20-0 allocation, 00:26:16.740 --> 00:26:19.230 presumably because it's now more plausible if I'm 00:26:19.230 --> 00:26:20.550 hiding behind the computer. 00:26:23.220 --> 00:26:26.080 Now you see for people, 75%, now there 00:26:26.080 --> 00:26:29.820 seems to be sort of no increase anymore. 00:26:29.820 --> 00:26:32.550 It's a little unclear how to interpret that. 00:26:32.550 --> 00:26:36.388 To some degree, this could be because now, 50% is already 00:26:36.388 --> 00:26:36.930 large enough. 00:26:36.930 --> 00:26:39.840 That's already very plausible that the computer chose anyway, 00:26:39.840 --> 00:26:42.480 so going from 50 to 75, there's no additional benefits 00:26:42.480 --> 00:26:44.190 of hiding behind the computer. 00:26:44.190 --> 00:26:46.245 It could also be that people in some way sort 00:26:46.245 --> 00:26:48.120 feel bad for the other person because there's 00:26:48.120 --> 00:26:51.140 a high chance that they get 0 anyway from the computer. 00:26:51.140 --> 00:26:54.330 So you might as well give something to that other person, 00:26:54.330 --> 00:26:54.960 perhaps. 00:26:54.960 --> 00:26:57.120 I'm not quite sure, but that's, in some sense, not the point 00:26:57.120 --> 00:26:57.640 here. 00:26:57.640 --> 00:27:00.060 The point here is that the fraction who are mean 00:27:00.060 --> 00:27:02.800 goes up by a lot when you can hide behind the computer. 00:27:02.800 --> 00:27:04.680 The fraction who looks or is quite 00:27:04.680 --> 00:27:07.080 nice who chooses the 10-10 allocation 00:27:07.080 --> 00:27:09.325 goes down by quite a bit. 00:27:09.325 --> 00:27:10.200 Does that make sense? 00:27:10.200 --> 00:27:13.500 And the following slides have added a fairly detailed 00:27:13.500 --> 00:27:14.340 description of this. 00:27:14.340 --> 00:27:17.820 But let's pause for a second to see whether that makes sense. 00:27:22.060 --> 00:27:24.370 So I think I have already said all of this. 00:27:24.370 --> 00:27:27.375 This is to say, the higher p star or p is, 00:27:27.375 --> 00:27:28.750 the easier it is for the dictator 00:27:28.750 --> 00:27:30.700 to hide behind the computer. 00:27:30.700 --> 00:27:33.010 I said all of that already. 00:27:33.010 --> 00:27:36.700 So when you sort of take together this evidence, 00:27:36.700 --> 00:27:38.890 it seems to be evidence that people are not 00:27:38.890 --> 00:27:44.500 as nice as results from simple dictator games 00:27:44.500 --> 00:27:46.870 might suggest because, in some sense, 00:27:46.870 --> 00:27:48.610 in the simple dictator games, they 00:27:48.610 --> 00:27:52.090 would like to do something else, but they just can't really 00:27:52.090 --> 00:27:54.460 do so. 00:27:54.460 --> 00:27:56.380 And this is kind of like your question here. 00:27:56.380 --> 00:27:59.620 This is a very nice variation that they have. 00:27:59.620 --> 00:28:02.500 This is a different variation where the computer now chooses 00:28:02.500 --> 00:28:05.200 19-1 with probability p. 00:28:05.200 --> 00:28:07.660 So the computer essentially chooses 19 for the dictator 00:28:07.660 --> 00:28:10.510 and 1 for the other person with probability, again, 00:28:10.510 --> 00:28:15.010 p equals 0, 25%, 50%, 75%. 00:28:15.010 --> 00:28:17.620 And exactly as you sort of predicted and thought about, 00:28:17.620 --> 00:28:20.260 is you see the same thing happening for the people 00:28:20.260 --> 00:28:20.860 choosing 10. 00:28:20.860 --> 00:28:22.570 That fraction goes down. 00:28:22.570 --> 00:28:25.792 But instead, people are not now choosing more of 20-0. 00:28:25.792 --> 00:28:27.500 Instead, what they're choosing-- in fact, 00:28:27.500 --> 00:28:29.417 there's a fraction of people that choose 20-0. 00:28:29.417 --> 00:28:31.180 The red line goes down a bit. 00:28:31.180 --> 00:28:34.870 Instead, what goes up is the 19-1 allocation. 00:28:34.870 --> 00:28:37.630 So lots of people now choose 19 for themselves 00:28:37.630 --> 00:28:39.290 and 1 for the other person. 00:28:39.290 --> 00:28:40.370 Why is that? 00:28:40.370 --> 00:28:42.910 It's because now you can hide between the 19-1 choice 00:28:42.910 --> 00:28:44.290 of the computer. 00:28:44.290 --> 00:28:46.750 And that's the selfish choice. 00:28:46.750 --> 00:28:51.790 The 20-0 choice, in fact, goes down a little bit, 00:28:51.790 --> 00:28:55.420 perhaps because it becomes quite obvious that these are people 00:28:55.420 --> 00:28:58.120 who are quite selfish anyway. 00:28:58.120 --> 00:28:59.950 But now they choose the 19-1 option. 00:28:59.950 --> 00:29:03.940 They switch to 19-1 because now, you're kind of mean anyway, 00:29:03.940 --> 00:29:06.490 but now you can essentially hide behind the computer. 00:29:06.490 --> 00:29:08.600 OK? 00:29:08.600 --> 00:29:09.670 Any questions on this? 00:29:15.160 --> 00:29:16.790 So now what's going on here? 00:29:16.790 --> 00:29:22.930 So one potential explanation is face-saving concerns, 00:29:22.930 --> 00:29:24.770 essentially social image. 00:29:24.770 --> 00:29:27.550 So these are the motivation to avoid unfavorable judgment 00:29:27.550 --> 00:29:28.060 by others. 00:29:28.060 --> 00:29:29.710 It's essentially if you care about what 00:29:29.710 --> 00:29:31.720 others think about you, you might 00:29:31.720 --> 00:29:33.950 engage in certain behaviors. 00:29:33.950 --> 00:29:38.260 So the experiment provides a way to provide 00:29:38.260 --> 00:29:40.040 people to avoid such judgments. 00:29:40.040 --> 00:29:42.400 So remember, this is not an anonymous game. 00:29:42.400 --> 00:29:44.020 You have to face this other person 00:29:44.020 --> 00:29:46.880 and deal with them afterwards, at least in some way. 00:29:46.880 --> 00:29:49.330 So now, essentially, the experiment, the computer 00:29:49.330 --> 00:29:53.050 provides, essentially, people an opportunity to save face, 00:29:53.050 --> 00:29:56.902 and essentially to keep up their social image 00:29:56.902 --> 00:29:59.110 because essentially, what you're trying to avoid here 00:29:59.110 --> 00:30:02.560 is if you choose the 20-0 option the other person will 00:30:02.560 --> 00:30:03.820 think you're not very nice. 00:30:03.820 --> 00:30:07.150 And either you're trying to avoid to have 00:30:07.150 --> 00:30:08.770 to see that they're unhappy. 00:30:08.770 --> 00:30:11.350 You might just feel bad about them if they're unhappy. 00:30:11.350 --> 00:30:15.270 Or perhaps more plausible, it just feels bad for you 00:30:15.270 --> 00:30:17.020 if other people think you're kind of mean. 00:30:17.020 --> 00:30:18.825 So you want to be mean, but you don't 00:30:18.825 --> 00:30:20.200 want others to think you're mean, 00:30:20.200 --> 00:30:23.932 and therefore you hide behind the computer. 00:30:23.932 --> 00:30:25.390 I think I said all of this already. 00:30:25.390 --> 00:30:28.420 So both of these types of evidence, 00:30:28.420 --> 00:30:31.660 I think, the exit in the dictator game, 00:30:31.660 --> 00:30:35.138 but also the evidence that I showed you 00:30:35.138 --> 00:30:36.680 just now, hiding behind the computer, 00:30:36.680 --> 00:30:44.260 seems to say when there's an option to avoid people feeling 00:30:44.260 --> 00:30:47.440 bad or people feeling that you're mean to them, 00:30:47.440 --> 00:30:50.710 people tend to take that option, and then essentially, that 00:30:50.710 --> 00:30:53.440 reduces their giving behavior. 00:30:53.440 --> 00:30:56.650 Now in some sense, when you think about many other-- 00:30:56.650 --> 00:30:59.320 and there's some empirical evidence on this by Gautam Rao 00:30:59.320 --> 00:31:05.200 and Stefano DellaVigna and others, 00:31:05.200 --> 00:31:10.780 in a situation when it comes to voting or other gift-giving 00:31:10.780 --> 00:31:17.920 choices overall, people are willing to pay, essentially, 00:31:17.920 --> 00:31:21.127 to avoid situations where they're asked to give. 00:31:21.127 --> 00:31:23.210 This is like somebody comes to your door and says, 00:31:23.210 --> 00:31:25.030 would you like to donate for this cause, 00:31:25.030 --> 00:31:28.240 or would you like to vote for this candidate, 00:31:28.240 --> 00:31:30.020 and so on and so forth. 00:31:30.020 --> 00:31:33.790 People might, once they ask them, I'd say, yeah, sure, 00:31:33.790 --> 00:31:36.610 I'll do it because they feel bad, 00:31:36.610 --> 00:31:38.740 or it feels like it's not a very-- so [INAUDIBLE] 00:31:38.740 --> 00:31:42.250 shows you pictures of poor children 00:31:42.250 --> 00:31:46.420 and some terrible situations. 00:31:46.420 --> 00:31:49.450 If you are now saying, no, I don't want to give any money, 00:31:49.450 --> 00:31:51.670 you look like a really mean person. 00:31:51.670 --> 00:31:53.470 So what people then tend to do is 00:31:53.470 --> 00:31:56.290 they tend to essentially just avoid the situation altogether 00:31:56.290 --> 00:31:58.390 by either pretending that they're not home 00:31:58.390 --> 00:32:00.520 or indicating never opening the door. 00:32:00.520 --> 00:32:02.710 Or if you see somebody on the street who 00:32:02.710 --> 00:32:06.880 wants to collect donations, you might just 00:32:06.880 --> 00:32:09.730 essentially avoid that person altogether, go out of your way. 00:32:09.730 --> 00:32:11.800 If you see a beggar on the street, 00:32:11.800 --> 00:32:15.040 you essentially might go around that person 00:32:15.040 --> 00:32:18.520 because you try to avoid, essentially, judgment, 00:32:18.520 --> 00:32:21.220 either feeling bad for them about you being mean to them, 00:32:21.220 --> 00:32:25.033 or feeling bad about them just judging you in certain ways 00:32:25.033 --> 00:32:26.200 for not being a nice person. 00:32:28.820 --> 00:32:31.490 How do we think about this in terms of utility function? 00:32:31.490 --> 00:32:33.580 We're not going to talk about this very much. 00:32:33.580 --> 00:32:35.470 We're going to get into this a little bit 00:32:35.470 --> 00:32:38.500 back about this when you talk about beliefs 00:32:38.500 --> 00:32:40.552 and belief-based utility. 00:32:40.552 --> 00:32:42.010 But just to give you a sense of how 00:32:42.010 --> 00:32:45.190 to think about this in terms of modeling it, so what you need, 00:32:45.190 --> 00:32:46.810 essentially, is like another term. 00:32:46.810 --> 00:32:49.930 And utility function-- in addition to your distributional 00:32:49.930 --> 00:32:52.480 preferences about you put some weight on how much you get 00:32:52.480 --> 00:32:54.097 and how much the other person gets-- 00:32:54.097 --> 00:32:55.180 you need some other term-- 00:32:55.180 --> 00:32:56.350 I call it v-- 00:32:56.350 --> 00:32:58.810 which is player 1's beliefs about rho. 00:32:58.810 --> 00:33:02.257 Like what does the other person think that your rho is? 00:33:02.257 --> 00:33:04.090 So if you really don't want to give anything 00:33:04.090 --> 00:33:06.730 to that other person, you want to avoid 00:33:06.730 --> 00:33:10.240 that the other person thinks that you put very little weight 00:33:10.240 --> 00:33:11.140 on the other person. 00:33:11.140 --> 00:33:12.932 So rho, again, to remind you, is the weight 00:33:12.932 --> 00:33:14.380 that's put on the other person. 00:33:14.380 --> 00:33:16.420 This is the perspective of player 2. 00:33:16.420 --> 00:33:19.180 So rho is the weight that you put on the other person. 00:33:19.180 --> 00:33:22.750 And now essentially, player 2 might 00:33:22.750 --> 00:33:25.317 put some weight on player 1 in terms of the output 00:33:25.317 --> 00:33:25.900 that they get. 00:33:25.900 --> 00:33:27.317 They want to give them some money, 00:33:27.317 --> 00:33:30.820 and if they have more money, they feel happier. 00:33:30.820 --> 00:33:32.590 But they also put some weight on what 00:33:32.590 --> 00:33:34.930 player 1 thinks that my rho is. 00:33:34.930 --> 00:33:39.040 So if I have the choice, do I want to give 10? 00:33:39.040 --> 00:33:41.530 If I have $10, and I can choose that in a dictator game 00:33:41.530 --> 00:33:47.800 to give it to the other person, I might want to do 10-0, 00:33:47.800 --> 00:33:50.110 and that's essentially just coming from my rho. 00:33:50.110 --> 00:33:52.240 But I also don't want the other person 00:33:52.240 --> 00:33:54.160 to think that my rho is 0. 00:33:54.160 --> 00:33:56.380 So I might derive positive utility 00:33:56.380 --> 00:34:00.700 from the other player thinking that my rho is whatever, 0.3, 00:34:00.700 --> 00:34:02.560 0.5, or whatever. 00:34:02.560 --> 00:34:04.680 I like that the other person thinks that I'm 00:34:04.680 --> 00:34:06.790 of a positive weight on them. 00:34:06.790 --> 00:34:08.657 And therefore, I might give them more. 00:34:08.657 --> 00:34:11.199 More generally, I guess you can just sort of have the utility 00:34:11.199 --> 00:34:14.080 function that depends on the other person's outputs 00:34:14.080 --> 00:34:19.860 or on each person's outcome, how much they get, 00:34:19.860 --> 00:34:24.530 and on the other's beliefs about what my utility function looks 00:34:24.530 --> 00:34:25.030 like. 00:34:25.030 --> 00:34:26.820 So essentially, people care about 00:34:26.820 --> 00:34:29.250 whether others think that they are nice 00:34:29.250 --> 00:34:34.310 or have concerns for others in the utility function. 00:34:34.310 --> 00:34:36.719 Again, we're not going to talk about this in more 00:34:36.719 --> 00:34:38.100 detail, at least for now. 00:34:38.100 --> 00:34:40.590 We're going to get back to this when we think about beliefs 00:34:40.590 --> 00:34:42.780 and belief-based utility, which essentially 00:34:42.780 --> 00:34:46.949 is the idea that beliefs are potentially not 00:34:46.949 --> 00:34:50.790 just instrumental, but about like others usually 00:34:50.790 --> 00:34:52.260 help you make good decisions. 00:34:52.260 --> 00:34:54.659 But it might be that you also just derive utility 00:34:54.659 --> 00:34:55.469 from beliefs. 00:34:55.469 --> 00:34:57.930 You might drive utility from thinking that you're 00:34:57.930 --> 00:35:02.460 smart, good-looking, and so on. 00:35:02.460 --> 00:35:04.260 Any questions on this? 00:35:06.910 --> 00:35:07.680 OK. 00:35:07.680 --> 00:35:11.870 So now one question you might have, 00:35:11.870 --> 00:35:14.035 and I already alluded to that, is 00:35:14.035 --> 00:35:16.300 are people giving because they enjoy giving, 00:35:16.300 --> 00:35:18.620 or because it's uncomfortable refusing to give? 00:35:18.620 --> 00:35:19.120 is? 00:35:19.120 --> 00:35:21.510 It like, I really want to give and I feel really good 00:35:21.510 --> 00:35:22.010 about it. 00:35:22.010 --> 00:35:24.190 I get some warm glow in some ways. 00:35:24.190 --> 00:35:27.640 Or is it in some ways, I'm giving not because I actually 00:35:27.640 --> 00:35:32.290 enjoy it and I'm happy about it, but rather, because otherwise 00:35:32.290 --> 00:35:38.750 I just feel bad and uncomfortable. 00:35:38.750 --> 00:35:40.510 So the evidence we talked about suggests 00:35:40.510 --> 00:35:43.420 that the latter motivation is more important for many. 00:35:43.420 --> 00:35:46.870 So many people kind of just feel bad by not giving. 00:35:49.390 --> 00:35:51.700 This is essentially in particular, the evidence 00:35:51.700 --> 00:35:56.050 that people are willing to pay to avoid dictator games that I 00:35:56.050 --> 00:35:57.100 showed you. 00:35:57.100 --> 00:36:02.470 There's a very nice paper about what's 00:36:02.470 --> 00:36:07.840 called moral wiggle room, which gets at the idea 00:36:07.840 --> 00:36:13.030 that in a way, if people opt out of the dictator game, 00:36:13.030 --> 00:36:16.400 they have to justify to themselves that they're mean. 00:36:16.400 --> 00:36:18.460 So if you have self-image, if you also 00:36:18.460 --> 00:36:21.310 care about how do you think about yourself, 00:36:21.310 --> 00:36:24.460 are you a good person or not, how 00:36:24.460 --> 00:36:26.320 do you justify to yourself, essentially, 00:36:26.320 --> 00:36:28.090 that you chose a 20-0 option. 00:36:28.090 --> 00:36:30.580 And the Dana et al paper is a very nice paper 00:36:30.580 --> 00:36:33.200 that sort of illustrates that very nicely. 00:36:33.200 --> 00:36:38.380 So this is, again, a very simple game. 00:36:38.380 --> 00:36:40.907 Subjects are asked to choose between self, other. 00:36:40.907 --> 00:36:42.740 So how much do you get yourself and how much 00:36:42.740 --> 00:36:44.770 does the other person get? 00:36:44.770 --> 00:36:46.180 There's two options here. 00:36:46.180 --> 00:36:49.090 Option A is you get $6.00 for yourself and x dollars 00:36:49.090 --> 00:36:50.590 for the other person. 00:36:50.590 --> 00:36:53.800 Option B is you get $5.00 for yourself and y dollars 00:36:53.800 --> 00:36:55.570 for the other person. 00:36:55.570 --> 00:36:58.490 And x and y is varied across subjects 00:36:58.490 --> 00:37:00.220 subject and randomized. 00:37:00.220 --> 00:37:06.220 So one option here is x equals 1 and y equals 5. 00:37:06.220 --> 00:37:08.110 Now what does that mean for Options A and B? 00:37:08.110 --> 00:37:10.780 That means option A is, if you had to choose, 00:37:10.780 --> 00:37:13.750 would be 6 for yourself and 1 for the other person. 00:37:13.750 --> 00:37:18.850 Option B is like 5 for each player. 00:37:18.850 --> 00:37:21.970 So now choosing between Option B and Option A. 00:37:21.970 --> 00:37:23.950 If you choose Option A, essentially, 00:37:23.950 --> 00:37:27.580 you get $1.00 more than you would get if you chose Option B 00:37:27.580 --> 00:37:31.600 But the other person gets $4.00 less than they would get if you 00:37:31.600 --> 00:37:35.110 chose Option B. So choosing Option A is not a particularly 00:37:35.110 --> 00:37:36.010 nice option. 00:37:36.010 --> 00:37:40.300 Essentially you decide that one additional dollar for you is 00:37:40.300 --> 00:37:46.960 worth more than $4.00 that the other person gets less. 00:37:46.960 --> 00:37:50.200 And so again, that's not a very nice move. 00:37:50.200 --> 00:37:55.210 So most people, in fact, tend to choose Option B when 00:37:55.210 --> 00:37:57.190 faced with that direct choice. 00:37:57.190 --> 00:37:59.800 That is to say, 26% of people choose 00:37:59.800 --> 00:38:02.890 Option A. They choose the selfish option, if you want. 00:38:02.890 --> 00:38:07.160 And 74% choose Option B, which is, in some ways, 00:38:07.160 --> 00:38:09.293 the nice thing to do. 00:38:09.293 --> 00:38:10.960 This is the very standard version of it. 00:38:10.960 --> 00:38:13.520 There's no other things going on. 00:38:13.520 --> 00:38:15.520 There's no exit option and so on. 00:38:15.520 --> 00:38:22.890 And so again, I said all this. 00:38:22.890 --> 00:38:25.590 So now when people choose Option B, 00:38:25.590 --> 00:38:27.670 there's essentially two explanations here. 00:38:27.670 --> 00:38:30.840 One is the person is quite nice. 00:38:30.840 --> 00:38:34.890 The other explanation is in some ways, they're not that nice, 00:38:34.890 --> 00:38:37.690 but they're just trying to avoid feeling bad. 00:38:37.690 --> 00:38:39.570 They kind of want to choose Option A, 00:38:39.570 --> 00:38:42.360 but if you choose Option A, you feel really bad about it, 00:38:42.360 --> 00:38:44.550 and that's why you don't do it. 00:38:44.550 --> 00:38:47.790 Now the game also has a twist here, which 00:38:47.790 --> 00:38:49.770 is for some other subjects-- 00:38:49.770 --> 00:38:53.580 these are some subjects just had this choice only. 00:38:53.580 --> 00:38:55.920 They choose, as I said, 74% chose 00:38:55.920 --> 00:39:00.120 Option B. Some other subjects, x and y 00:39:00.120 --> 00:39:03.000 were initially unknown with either x 00:39:03.000 --> 00:39:08.070 equals 1 and y equals 5, or x equals 5 and y equals 1. 00:39:08.070 --> 00:39:11.520 And those are implemented with 50% chance. 00:39:11.520 --> 00:39:12.790 So initially you don't know. 00:39:12.790 --> 00:39:14.310 It could be either-- 00:39:14.310 --> 00:39:15.490 let me just write this down. 00:39:15.490 --> 00:39:17.130 Could be one of two scenarios. 00:39:17.130 --> 00:39:19.800 Both the chance 50%. 00:39:19.800 --> 00:39:22.980 So one of them is if you choose Option A, that's the choice 00:39:22.980 --> 00:39:24.300 that we just had before. 00:39:24.300 --> 00:39:26.940 The first one is Option A versus B. That's what we just had, 00:39:26.940 --> 00:39:29.460 which essentially is 6-1 versus 5-5. 00:39:29.460 --> 00:39:32.820 So their choosing A is a pretty selfish move. 00:39:32.820 --> 00:39:35.190 That's the option I just showed you. 00:39:35.190 --> 00:39:40.680 The second scenario is it's 6-5 versus 5-1. 00:39:40.680 --> 00:39:43.680 Now it's unambiguously clear that you should choose Option 00:39:43.680 --> 00:39:47.280 A because you're better off, the other person is better off, 00:39:47.280 --> 00:39:48.510 everybody is happy. 00:39:48.510 --> 00:39:50.910 So surely you should choose Option A. Essentially 00:39:50.910 --> 00:39:55.110 Option A dominates Option B in the second scenario. 00:39:55.110 --> 00:39:57.360 OK? 00:39:57.360 --> 00:39:59.760 Now here's the twist. 00:39:59.760 --> 00:40:05.010 Subjects could costlessly find out which one is the case. 00:40:05.010 --> 00:40:07.740 And the recipient, in this case, will not 00:40:07.740 --> 00:40:09.150 learn what the other person did. 00:40:09.150 --> 00:40:12.180 The recipient just essentially receives the money. 00:40:12.180 --> 00:40:14.790 The recipient does not know what the person does. 00:40:14.790 --> 00:40:17.940 So now, essentially, I will tell you there's 00:40:17.940 --> 00:40:20.970 two scenarios going on, either one or two. 00:40:20.970 --> 00:40:24.300 I'm going to ask you to choose A versus B. 00:40:24.300 --> 00:40:26.760 And you have two options before that choice. 00:40:26.760 --> 00:40:30.090 The option is either you can just choose without not knowing 00:40:30.090 --> 00:40:34.020 which scenario you're in, or you can choose costlessly 00:40:34.020 --> 00:40:40.890 to find out whether you're in Choice 1 versus Choice 2. 00:40:40.890 --> 00:40:42.660 OK. 00:40:42.660 --> 00:40:47.410 So is that easy to set up, clear? 00:40:47.410 --> 00:40:49.850 Happy to repeat. 00:40:49.850 --> 00:40:50.640 Yeah. 00:40:50.640 --> 00:40:51.140 Yeah. 00:40:55.070 --> 00:40:58.440 AUDIENCE: Who is choosing between 1 and 2? 00:40:58.440 --> 00:41:00.110 PROFESSOR: So if you're in the game, 00:41:00.110 --> 00:41:03.860 there's a 50% chance that you're in scenario 1 and a 50% chance 00:41:03.860 --> 00:41:05.390 in scenario 2. 00:41:05.390 --> 00:41:07.790 That is fixed. 00:41:07.790 --> 00:41:12.110 You have two choices to make in your whole decision. 00:41:12.110 --> 00:41:14.960 The first one is, do you want to find out whether you're 00:41:14.960 --> 00:41:17.510 in scenario 1 or in scenario 2? 00:41:17.510 --> 00:41:20.120 So either you don't find out-- it's just a 50% chance 00:41:20.120 --> 00:41:23.690 of scenario 1 and 50% chance of scenario 2-- 00:41:23.690 --> 00:41:26.390 or you find out costlessly I'm going to tell you 00:41:26.390 --> 00:41:28.760 you're in scenario 1 or scenario 2. 00:41:28.760 --> 00:41:30.680 It's already decided which scenario you're in. 00:41:30.680 --> 00:41:32.462 You just don't know it. 00:41:32.462 --> 00:41:33.920 So your first choice is do you want 00:41:33.920 --> 00:41:36.620 to know which scenario you're in? 00:41:36.620 --> 00:41:40.740 The second choice, then, is between A and B. 00:41:40.740 --> 00:41:42.300 And you either choose without knowing 00:41:42.300 --> 00:41:43.300 what scenario you're in. 00:41:43.300 --> 00:41:44.375 You're either in 1 or 2. 00:41:44.375 --> 00:41:45.750 You choose A and B, and then it's 00:41:45.750 --> 00:41:48.930 just going to be implemented afterwards, 00:41:48.930 --> 00:41:50.760 the A or B for each of the scenarios, 00:41:50.760 --> 00:41:54.060 or the one that's actually implemented. 00:41:54.060 --> 00:41:57.300 Or you know already you're in scenario 1 or scenario 2 00:41:57.300 --> 00:41:59.070 because you costlessly found out, 00:41:59.070 --> 00:42:02.340 and then you make that choice about A and B. 00:42:02.340 --> 00:42:03.340 Does it make sense? 00:42:03.340 --> 00:42:03.840 OK. 00:42:03.840 --> 00:42:04.980 Perfect. 00:42:04.980 --> 00:42:08.250 So now first, we can think about distributional preferences. 00:42:08.250 --> 00:42:10.770 What happens if you just have purely distributional 00:42:10.770 --> 00:42:11.670 preferences? 00:42:11.670 --> 00:42:13.680 Could this additional twist in any way 00:42:13.680 --> 00:42:16.150 lower people's giving behavior? 00:42:16.150 --> 00:42:20.860 And so when you are distributional preferences, 00:42:20.860 --> 00:42:23.180 notice that what I added-- 00:42:23.180 --> 00:42:26.890 so what we're comparing here is only having the first scenario 00:42:26.890 --> 00:42:27.470 to choose. 00:42:27.470 --> 00:42:29.240 We're comparing that to the twist. 00:42:29.240 --> 00:42:31.240 So we're comparing, essentially, this scenario-- 00:42:34.870 --> 00:42:37.180 this is the people who chose without having 00:42:37.180 --> 00:42:38.950 this additional twist going on. 00:42:38.950 --> 00:42:41.020 We're going to compare those kinds of people 00:42:41.020 --> 00:42:44.080 to people who are randomized to have this additional twist, 00:42:44.080 --> 00:42:47.020 where they first have the choice or the option 00:42:47.020 --> 00:42:49.095 to costlessly find out where they are. 00:42:49.095 --> 00:42:50.470 And the question I'm going to ask 00:42:50.470 --> 00:42:54.490 is, now, how does adding this additional option affect 00:42:54.490 --> 00:42:55.870 people's giving behavior? 00:42:55.870 --> 00:42:57.310 And in particular, is it possible 00:42:57.310 --> 00:43:02.390 that people give less because of adding this additional choice? 00:43:02.390 --> 00:43:05.260 So now there's two options overall. 00:43:05.260 --> 00:43:07.630 Either it's the case that your optimal choice 00:43:07.630 --> 00:43:09.070 depends on x and y-- 00:43:09.070 --> 00:43:12.430 so either you're going to tell me, well, 00:43:12.430 --> 00:43:16.180 whether I choose A or B depends on x and y. 00:43:16.180 --> 00:43:17.980 And if that's the case, well, of course 00:43:17.980 --> 00:43:20.740 then you want to find out what x and y is. 00:43:20.740 --> 00:43:21.880 Remember, what is x and y? 00:43:21.880 --> 00:43:23.950 X and y is the thing that I have at the top. 00:43:23.950 --> 00:43:27.250 X and y is either x equals 1 and y equals 5, 00:43:27.250 --> 00:43:30.370 or it is x equals 5 and y equals 1. 00:43:30.370 --> 00:43:32.772 So it either is the case that it matters to you 00:43:32.772 --> 00:43:34.480 what x and y are-- either you really want 00:43:34.480 --> 00:43:36.670 to find out what x and y is. 00:43:36.670 --> 00:43:38.680 Well, in that case, surely if I ask you, 00:43:38.680 --> 00:43:40.157 do you want to costlessly find out, 00:43:40.157 --> 00:43:41.740 you don't want to find out because you 00:43:41.740 --> 00:43:43.120 want to make the right choice. 00:43:43.120 --> 00:43:44.710 You want to know, am I in scenario 1 00:43:44.710 --> 00:43:47.320 or am I in scenario 2? 00:43:47.320 --> 00:43:50.410 So then if I offer you the costless option 00:43:50.410 --> 00:43:53.500 to find out which scenario you're in, 00:43:53.500 --> 00:43:55.690 but you want to find out. 00:43:55.690 --> 00:43:58.510 And then if you find out that you're in the x equals 1 00:43:58.510 --> 00:44:01.720 and y equals 5 situation, you should make the same choice 00:44:01.720 --> 00:44:04.180 that you chose previously. 00:44:04.180 --> 00:44:07.930 If you chose previously Option A or Option 00:44:07.930 --> 00:44:10.188 B, once you find out what scenario you're in, 00:44:10.188 --> 00:44:12.730 surely you're going to choose the same thing because you only 00:44:12.730 --> 00:44:15.160 care about distributiona; preferences. 00:44:15.160 --> 00:44:18.670 You're going to just choose the same thing. 00:44:18.670 --> 00:44:21.170 Now if your choice, on the other hand, 00:44:21.170 --> 00:44:23.560 does not depend on x and y, you should 00:44:23.560 --> 00:44:25.930 be indifferent between finding out or not. 00:44:25.930 --> 00:44:29.875 And it shouldn't really matter whether they give you 00:44:29.875 --> 00:44:31.000 that option, in some sense. 00:44:31.000 --> 00:44:33.580 You should choose the same thing as you chose before. 00:44:33.580 --> 00:44:36.850 In either case, when x equals 1 and y equals 5, 00:44:36.850 --> 00:44:39.370 leaving x and y initially unknown, 00:44:39.370 --> 00:44:41.020 so adding this additional option, 00:44:41.020 --> 00:44:43.870 should not decrease the amount of giving. 00:44:43.870 --> 00:44:50.560 If anything, it should not be affected in any case. 00:44:50.560 --> 00:44:54.770 But in particular, it should not decrease it. 00:44:54.770 --> 00:44:58.360 So let me have you look at this for a second 00:44:58.360 --> 00:44:59.900 just to be clear on that. 00:44:59.900 --> 00:45:01.390 So essentially what I'm saying is 00:45:01.390 --> 00:45:05.440 adding this additional thing, the scenario 2, 00:45:05.440 --> 00:45:08.800 either the scenarios matter, and if the scenarios 00:45:08.800 --> 00:45:10.957 matter whether you're in scenario 1 versus scenario 00:45:10.957 --> 00:45:12.790 2, if you make different choices, well, then 00:45:12.790 --> 00:45:15.640 surely you should find out which scenario you're in. 00:45:15.640 --> 00:45:18.010 And you're going to say, OK, I really want to know. 00:45:18.010 --> 00:45:20.260 Once you know whether you're in scenario 1-- 00:45:20.260 --> 00:45:22.300 suppose you're actually in scenario 1-- 00:45:22.300 --> 00:45:26.540 you should make the same choice as you did before. 00:45:26.540 --> 00:45:31.100 And if you say, well, I actually don't 00:45:31.100 --> 00:45:32.392 care which scenario I'm in. 00:45:32.392 --> 00:45:34.100 I'm going to make the same choice anyway, 00:45:34.100 --> 00:45:35.800 then adding this additional scenario 00:45:35.800 --> 00:45:37.550 shouldn't really matter anyway because you 00:45:37.550 --> 00:45:39.350 choose the same thing anyway. 00:45:39.350 --> 00:45:41.900 But regardless, adding essentially the scenario 2 00:45:41.900 --> 00:45:45.050 should not decrease how much you give. 00:45:45.050 --> 00:45:49.400 Now what they find instead is 44% 00:45:49.400 --> 00:45:51.980 chose not to find out x and y. 00:45:51.980 --> 00:45:57.110 And of these subjects, 95% chose Option A. 00:45:57.110 --> 00:45:59.330 So these are people who essentially they 00:45:59.330 --> 00:46:04.110 say, I'd rather not know what's going on here, 00:46:04.110 --> 00:46:07.380 then they chose Option A, which is either the fairly 00:46:07.380 --> 00:46:09.480 selfish option, or it's the option that's 00:46:09.480 --> 00:46:10.560 better for both people. 00:46:10.560 --> 00:46:13.050 Let me go back to this so you see this. 00:46:13.050 --> 00:46:16.180 So when given these two choices, they essentially say, 00:46:16.180 --> 00:46:18.780 I'd rather not know, even if it's costless to do. 00:46:18.780 --> 00:46:21.450 I don't want to know whether I'm in scenario 1 or 2. 00:46:21.450 --> 00:46:24.510 I'm going to choose Option A. Why do they do that, 00:46:24.510 --> 00:46:26.370 or what's going on in their minds? 00:46:30.610 --> 00:46:31.906 Yes. 00:46:31.906 --> 00:46:33.739 AUDIENCE: They don't want to know if they're 00:46:33.739 --> 00:46:35.530 being mean to the other person. 00:46:35.530 --> 00:46:36.490 PROFESSOR: Exactly. 00:46:36.490 --> 00:46:43.390 So if you find out whether it's scenario 1 or scenario 2, 00:46:43.390 --> 00:46:44.810 things can happen. 00:46:44.810 --> 00:46:47.300 One will be you'll be in scenario number 2. 00:46:47.300 --> 00:46:49.300 You're going to choose Option A because you know 00:46:49.300 --> 00:46:51.190 that's better for everybody. 00:46:51.190 --> 00:46:53.350 Or you're going to be in scenario 1, 00:46:53.350 --> 00:46:57.610 well, then, choosing A is kind of a selfish and mean move. 00:46:57.610 --> 00:47:00.550 And then, once you do that, then you have to sort of deal with, 00:47:00.550 --> 00:47:03.100 well, am I a mean person or not? 00:47:03.100 --> 00:47:05.980 Instead, what people do or seem to do, is they just say, 00:47:05.980 --> 00:47:07.510 I actually don't want to find out. 00:47:07.510 --> 00:47:10.030 It could be either way. 00:47:10.030 --> 00:47:11.170 Who knows what's going on? 00:47:11.170 --> 00:47:13.720 Could be scenario 1, could be scenario 2. 00:47:13.720 --> 00:47:15.620 Who knows? 00:47:15.620 --> 00:47:17.120 But you know, there's a good chance, 00:47:17.120 --> 00:47:21.595 50% chance that it's scenario 2, in which case choosing Option A 00:47:21.595 --> 00:47:23.240 is actually good for everybody. 00:47:23.240 --> 00:47:26.590 So let me just not find out and then choose Option A, 00:47:26.590 --> 00:47:29.050 and I'm going to essentially make myself think that, 00:47:29.050 --> 00:47:33.160 oh, probably it was scenario number 2. 00:47:33.160 --> 00:47:35.110 So essentially what people are doing here 00:47:35.110 --> 00:47:37.450 is they sort of delude themselves in some way 00:47:37.450 --> 00:47:40.660 into thinking that they're doing the right thing, 00:47:40.660 --> 00:47:44.620 or they're doing not a mean thing by avoiding information 00:47:44.620 --> 00:47:47.950 that would essentially be free. 00:47:47.950 --> 00:47:51.040 So if you really wanted to find out whether you're mean or not, 00:47:51.040 --> 00:47:52.850 you could just get the information. 00:47:52.850 --> 00:47:55.302 And since it's like free there and entirely available. 00:47:55.302 --> 00:47:57.010 Instead, what people do is they just say, 00:47:57.010 --> 00:47:58.810 oh, I'd rather not know, and then they 00:47:58.810 --> 00:48:02.620 choose the thing that's at least potentially mean. 00:48:02.620 --> 00:48:07.510 And so then not only is it the case that 44% of people 00:48:07.510 --> 00:48:11.920 choose not to find out, but also the fraction of selfish people 00:48:11.920 --> 00:48:13.330 goes up by a lot. 00:48:15.890 --> 00:48:17.400 So I showed you-- 00:48:17.400 --> 00:48:19.930 this is a little bit tricky-- but essentially 00:48:19.930 --> 00:48:23.630 what I showed you here is that there's a 50% chance 00:48:23.630 --> 00:48:27.920 to be in scenario 1 versus in scenario 2. 00:48:27.920 --> 00:48:32.090 And the 63% that I'm going to show you here, 00:48:32.090 --> 00:48:33.590 this is the fraction who essentially 00:48:33.590 --> 00:48:35.120 chose the selfish choice. 00:48:35.120 --> 00:48:40.070 This is only looking at the 50% chance for which x 00:48:40.070 --> 00:48:42.080 equals 1 and y equals 5. 00:48:42.080 --> 00:48:44.180 So essentially this is taking the half 00:48:44.180 --> 00:48:51.410 of the cases in which, actually, x 00:48:51.410 --> 00:48:53.900 equals 1 and y equals 5 was implemented. 00:48:53.900 --> 00:48:57.422 These are cases where either the person found out or not. 00:48:57.422 --> 00:48:59.130 But when you take those things together-- 00:48:59.130 --> 00:49:02.900 so these are like essentially two scenarios or the sum of two 00:49:02.900 --> 00:49:04.430 things that happened-- 00:49:04.430 --> 00:49:08.120 one is the person didn't find out and chose Option A or B, 00:49:08.120 --> 00:49:10.040 or the person actually found out. 00:49:10.040 --> 00:49:15.380 But taken together, essentially 63% of people in those cases 00:49:15.380 --> 00:49:17.600 chose the selfish option, Option A, 00:49:17.600 --> 00:49:20.150 compared to the 26% in the baseline case 00:49:20.150 --> 00:49:21.510 that I showed you earlier. 00:49:21.510 --> 00:49:23.420 So putting these things together essentially 00:49:23.420 --> 00:49:26.390 means that there's quite a few people who 00:49:26.390 --> 00:49:28.790 conveniently don't want to find out whether they're mean 00:49:28.790 --> 00:49:29.480 or not. 00:49:29.480 --> 00:49:32.000 They choose, then, the mean option, 00:49:32.000 --> 00:49:35.690 and much more so than when they don't have this whole-- 00:49:35.690 --> 00:49:39.920 what's called moral wiggle room, which essentially is the option 00:49:39.920 --> 00:49:42.410 to delude themselves, and they're actually not 00:49:42.410 --> 00:49:45.650 that mean because probably, it was better 00:49:45.650 --> 00:49:48.800 for everybody to choose Option A. Does that make sense? 00:49:55.780 --> 00:49:58.300 So now you might ask two things. 00:49:58.300 --> 00:50:00.540 Well, it could be that there's this concern 00:50:00.540 --> 00:50:01.535 about others' beliefs. 00:50:01.535 --> 00:50:02.910 This could be about social image, 00:50:02.910 --> 00:50:04.830 or could be about self-image. 00:50:04.830 --> 00:50:08.190 Now the experiment is precisely set up in a way 00:50:08.190 --> 00:50:10.260 that, in fact, it's not about social image. 00:50:10.260 --> 00:50:14.190 The other person, in fact, doesn't find out 00:50:14.190 --> 00:50:16.470 whether you learned her payoff. 00:50:16.470 --> 00:50:21.180 And so not learning doesn't really help improve her. 00:50:21.180 --> 00:50:23.140 The other person only sees the result. 00:50:23.140 --> 00:50:29.010 So whether I actually learn about which scenario we're in 00:50:29.010 --> 00:50:32.670 doesn't really actually help improving the other person's 00:50:32.670 --> 00:50:33.330 opinion. 00:50:33.330 --> 00:50:35.910 The only person who actually knows whether you found out 00:50:35.910 --> 00:50:37.980 what scenario you're in is actually you 00:50:37.980 --> 00:50:40.020 yourself when you make that choice, which 00:50:40.020 --> 00:50:43.020 really suggests that this is about saving face, about 00:50:43.020 --> 00:50:44.340 self-image. 00:50:44.340 --> 00:50:47.370 People essentially want to delude themselves or make 00:50:47.370 --> 00:50:49.710 themselves think that they're nicer than they actually 00:50:49.710 --> 00:50:54.090 are by avoiding information that could actually help them 00:50:54.090 --> 00:50:56.220 make the right choice or be nicer if they really 00:50:56.220 --> 00:50:57.900 wanted to be. 00:50:57.900 --> 00:51:00.750 So if you really wanted to be nice, what you would do 00:51:00.750 --> 00:51:03.480 is you would really find out which scenario you're in. 00:51:03.480 --> 00:51:05.370 You would choose Option A and Scenario 2 00:51:05.370 --> 00:51:07.950 when it's better for everybody, and you choose option B 00:51:07.950 --> 00:51:10.410 if it's better for the other person 00:51:10.410 --> 00:51:14.350 or really costly for the other person to choose Option A. 00:51:14.350 --> 00:51:16.390 So let me sort of summarize here. 00:51:16.390 --> 00:51:18.810 So the most likely explanation is 00:51:18.810 --> 00:51:22.200 that it's really based on how dictators 00:51:22.200 --> 00:51:23.740 feel about themselves. 00:51:23.740 --> 00:51:25.830 So the uncertainty in whether the selfish action 00:51:25.830 --> 00:51:29.580 helps or hurts the other person gives an excuse to be selfish. 00:51:29.580 --> 00:51:32.430 So now I can say, oh, 50% chance that this is 00:51:32.430 --> 00:51:34.330 the right choice for everybody. 00:51:34.330 --> 00:51:35.580 So that's an excuse. 00:51:35.580 --> 00:51:39.227 So you can keep telling yourself that you didn't mean any harm. 00:51:39.227 --> 00:51:40.560 I really didn't want to be mean. 00:51:40.560 --> 00:51:42.750 I thought with a good chance the other person will 00:51:42.750 --> 00:51:43.820 be better off as well. 00:51:49.000 --> 00:51:52.090 And this term is sort of called moral wiggle room, which 00:51:52.090 --> 00:51:54.520 essentially is sort of helping you 00:51:54.520 --> 00:51:58.090 be in an ambiguous situation because once you haven't found 00:51:58.090 --> 00:52:01.300 out, it's actually unclear whether the other person is 00:52:01.300 --> 00:52:03.430 better off or worse off by choosing Option A and B. 00:52:03.430 --> 00:52:05.050 The experiment is set up in a way 00:52:05.050 --> 00:52:08.440 that if you do not find out which scenario you're in, 00:52:08.440 --> 00:52:10.690 it's not clear what's better for the other person what 00:52:10.690 --> 00:52:12.430 to choose. 00:52:12.430 --> 00:52:15.070 But of course, that's amazing in some sense 00:52:15.070 --> 00:52:17.787 because you could always find out costlessly. 00:52:17.787 --> 00:52:19.870 And sometimes you can delude yourself and say, ah, 00:52:19.870 --> 00:52:20.710 it's not clear. 00:52:20.710 --> 00:52:21.730 What should we do? 00:52:21.730 --> 00:52:23.018 I don't know. 00:52:23.018 --> 00:52:25.060 Could be good for the person, bad for the person, 00:52:25.060 --> 00:52:27.010 whatever, but I'm choosing A. 00:52:27.010 --> 00:52:29.780 But of course that's silly because in some sense 00:52:29.780 --> 00:52:32.290 that's not an explanation that holds water because you could 00:52:32.290 --> 00:52:34.207 always find out, if you really wanted to know, 00:52:34.207 --> 00:52:36.820 whether you wanted to be nice to the other person. 00:52:36.820 --> 00:52:39.530 It's very easy to find out what's going on. 00:52:39.530 --> 00:52:41.080 So that's essentially to say people 00:52:41.080 --> 00:52:43.420 want to save face in front of themselves 00:52:43.420 --> 00:52:46.990 as opposed to in front of others. 00:52:46.990 --> 00:52:48.100 Any questions on this? 00:52:52.710 --> 00:52:53.510 OK. 00:52:53.510 --> 00:52:56.360 So now a different version of that is giving 00:52:56.360 --> 00:52:59.360 and communication, which, is, again in some ways, 00:52:59.360 --> 00:53:02.720 about social image concerns, about having 00:53:02.720 --> 00:53:04.880 to deal with others' reactions to you. 00:53:04.880 --> 00:53:07.160 This could be about self-image or social image. 00:53:07.160 --> 00:53:09.890 But either way, it's about some form of communication, 00:53:09.890 --> 00:53:12.170 how others or you yourself feel. 00:53:12.170 --> 00:53:16.430 So Ellingsen and Johannesson modified the dictator game 00:53:16.430 --> 00:53:20.660 by allowing for a very limited form of communication. 00:53:20.660 --> 00:53:23.030 One group of subjects played the usual dictator game, 00:53:23.030 --> 00:53:24.950 which is just as usual. 00:53:24.950 --> 00:53:26.600 And the other group, the recipients 00:53:26.600 --> 00:53:28.910 only were allowed to send anonymous messages 00:53:28.910 --> 00:53:30.790 to the dictator after receiving their share. 00:53:30.790 --> 00:53:33.290 Is that the version you played, or was it different for you? 00:53:33.290 --> 00:53:36.220 Could you already talk to them earlier, 00:53:36.220 --> 00:53:37.791 when there was communication? 00:53:42.392 --> 00:53:44.600 It might have been the exact version that you played, 00:53:44.600 --> 00:53:46.183 or it might have been in your version, 00:53:46.183 --> 00:53:48.800 you could actually talk to the other person earlier. 00:53:48.800 --> 00:53:52.972 AUDIENCE: You could only message before you decided. 00:53:52.972 --> 00:53:53.680 PROFESSOR: I see. 00:53:53.680 --> 00:53:56.830 So that's a slightly different version from what you played. 00:53:56.830 --> 00:54:00.700 This one is a version where the recipient could only respond. 00:54:00.700 --> 00:54:04.750 So the dictator gets the $10 or whatever is played. 00:54:04.750 --> 00:54:07.480 The dictator makes a choice, and then the recipient 00:54:07.480 --> 00:54:09.790 can essentially send a message back, 00:54:09.790 --> 00:54:13.080 can in some way reciprocate if you want. 00:54:13.080 --> 00:54:17.110 Could be a nice message if you give quite a bit of money, 00:54:17.110 --> 00:54:20.920 or it could be a mean message if you didn't give a lot of money. 00:54:20.920 --> 00:54:25.030 And anticipating that might affect the dictator's choices. 00:54:25.030 --> 00:54:29.930 And so this is kind of what they found in the paper. 00:54:29.930 --> 00:54:33.520 So essentially, the anticipation of a feedback 00:54:33.520 --> 00:54:38.260 increased sharing from 25% to 34% in this specific game. 00:54:38.260 --> 00:54:39.770 That's quite a bit. 00:54:39.770 --> 00:54:45.610 So most recipients, in fact, do choose to send a message. 00:54:45.610 --> 00:54:47.360 The messages vary quite a bit. 00:54:47.360 --> 00:54:50.080 So it's about very mean messages saying, 00:54:50.080 --> 00:54:53.200 so you chose to take all the money yourself, 00:54:53.200 --> 00:54:54.520 you greedy bastard. 00:54:54.520 --> 00:54:57.165 I was just wondering if there was anyone who would do that. 00:54:57.165 --> 00:54:58.540 And the answer is apparently yes. 00:54:58.540 --> 00:55:00.190 Apparently people like you exist. 00:55:00.190 --> 00:55:01.270 Have a nice evening. 00:55:01.270 --> 00:55:02.990 So that's not a very nice message. 00:55:02.990 --> 00:55:06.530 I also censored a few messages that were in there earlier. 00:55:06.530 --> 00:55:08.470 Another one is, thank you, greedy bastard. 00:55:08.470 --> 00:55:11.080 You will like it as investment banker. 00:55:11.080 --> 00:55:13.728 I hope you will buy something nice. 00:55:13.728 --> 00:55:15.520 And then there's sort of positive messages, 00:55:15.520 --> 00:55:17.770 presumably, when people are actually given quite a bit 00:55:17.770 --> 00:55:20.373 of money, which is like, there's hope for a better world. 00:55:20.373 --> 00:55:22.540 With the help of your generosity and your big heart, 00:55:22.540 --> 00:55:26.530 I can tonight break the black pudding curse. 00:55:26.530 --> 00:55:28.000 No more pea soup. 00:55:28.000 --> 00:55:30.460 You have a standing invitation to dinner at my place. 00:55:30.460 --> 00:55:32.435 The door is always open with love. 00:55:32.435 --> 00:55:34.060 So you know that varies by quite a bit. 00:55:34.060 --> 00:55:36.370 And anticipating those kinds of messages, 00:55:36.370 --> 00:55:38.547 you can see how dictators then might, 00:55:38.547 --> 00:55:40.630 particularly if they play this repeatedly and have 00:55:40.630 --> 00:55:47.210 some experience with it, might opt into giving more. 00:55:47.210 --> 00:55:49.330 So this indicates that sort of beyond caring 00:55:49.330 --> 00:55:53.620 about the recipient's reaction, dictators 00:55:53.620 --> 00:55:55.760 care how shielded they are from it. 00:55:55.760 --> 00:55:57.865 So it's not just about, you might 00:55:57.865 --> 00:56:00.490 feel bad-- so what I showed you previously in the costless exit 00:56:00.490 --> 00:56:03.952 thing, it was more about I'm worried about you feeling bad, 00:56:03.952 --> 00:56:06.160 and I don't want you to feel bad even if I don't have 00:56:06.160 --> 00:56:08.410 to face you in any situations. 00:56:08.410 --> 00:56:11.350 This one is about, I might worry about you feeling bad, 00:56:11.350 --> 00:56:17.590 but I also might worry about receiving 00:56:17.590 --> 00:56:18.507 that message from you. 00:56:18.507 --> 00:56:20.298 So there are some people who might actually 00:56:20.298 --> 00:56:22.630 be fine about the other person feeling bad as long as I 00:56:22.630 --> 00:56:24.490 don't have to face it. 00:56:24.490 --> 00:56:26.740 But now, if I actually have to face the message 00:56:26.740 --> 00:56:31.713 from the other person, I might behave nicer in some ways 00:56:31.713 --> 00:56:33.880 because I didn't have to actually deal with the fact 00:56:33.880 --> 00:56:38.260 or face the fact that perhaps I'm not a nice person. 00:56:38.260 --> 00:56:40.960 In our version-- I looked this up-- 00:56:40.960 --> 00:56:44.650 it seems like there's not much evidence of communication 00:56:44.650 --> 00:56:46.267 affecting behavior. 00:56:46.267 --> 00:56:48.850 This could be, perhaps, because the version with communication 00:56:48.850 --> 00:56:52.270 was different from what was played here. 00:56:52.270 --> 00:56:54.730 So it doesn't seem like once the person gave, 00:56:54.730 --> 00:56:57.310 I think the game was just over, as opposed 00:56:57.310 --> 00:57:01.390 to once the person gave, you could send a message back 00:57:01.390 --> 00:57:04.430 and reciprocate in some way. 00:57:04.430 --> 00:57:05.890 So here you can see that. 00:57:05.890 --> 00:57:08.582 In a dictator game without communication, 00:57:08.582 --> 00:57:10.540 notice that the axes are changing a little bit. 00:57:10.540 --> 00:57:13.360 This is like the monetary stakes, no communication. 00:57:13.360 --> 00:57:14.600 This is with communication. 00:57:14.600 --> 00:57:15.960 Notice that the axis changes. 00:57:15.960 --> 00:57:17.710 I can't really fix this from the software, 00:57:17.710 --> 00:57:21.460 but if you look at the average offer, with no communication, 00:57:21.460 --> 00:57:23.800 it's 38%. 00:57:23.800 --> 00:57:26.200 With communication, it's 37%, so if anything, 00:57:26.200 --> 00:57:27.880 it's a little bit lower. 00:57:27.880 --> 00:57:30.910 The comparison is a little bit unclean because over time, 00:57:30.910 --> 00:57:32.740 maybe later in the game, you play different 00:57:32.740 --> 00:57:34.573 than earlier in the game, and it's not quite 00:57:34.573 --> 00:57:35.740 cleanly randomized. 00:57:35.740 --> 00:57:37.420 But it doesn't seem, in your case, 00:57:37.420 --> 00:57:39.520 like the communication mattered very much. 00:57:39.520 --> 00:57:41.920 Again, perhaps that's because the nature of the game 00:57:41.920 --> 00:57:43.045 is somewhat different. 00:57:46.630 --> 00:57:47.130 Sorry. 00:57:47.130 --> 00:57:48.672 This is actually not a dictator game. 00:57:48.672 --> 00:57:51.410 This is the ultimatum game. 00:57:51.410 --> 00:57:52.710 This is a typo at the top. 00:57:52.710 --> 00:57:57.222 For the ultimatum game, it seems like communication matters 00:57:57.222 --> 00:57:58.680 a little bit when you look at this. 00:57:58.680 --> 00:58:01.800 When you look at the very left, people giving 0, 00:58:01.800 --> 00:58:04.050 for whatever reason, I don't know how you communicated 00:58:04.050 --> 00:58:06.600 and what you said, but it seems like your communication made 00:58:06.600 --> 00:58:08.670 people more likely to give 0, and then 00:58:08.670 --> 00:58:11.930 these 0 options being rejected. 00:58:11.930 --> 00:58:14.430 So this is what you see on the very left is in the ultimatum 00:58:14.430 --> 00:58:17.100 game, the red is essentially, these 00:58:17.100 --> 00:58:19.200 are offers that are rejected. 00:58:19.200 --> 00:58:22.290 Without communication, nobody was giving 0. 00:58:22.290 --> 00:58:25.080 With communication, somehow people are giving 0, 00:58:25.080 --> 00:58:27.280 and then these offers were rejected. 00:58:27.280 --> 00:58:30.900 So perhaps some of you gave very negative messages or threats 00:58:30.900 --> 00:58:32.820 or whatever, and that really pissed off 00:58:32.820 --> 00:58:35.910 the dictator, the other person, and then essentially 00:58:35.910 --> 00:58:37.470 that really backfired. 00:58:37.470 --> 00:58:40.260 So I don't know who is teaching you how to communicate, 00:58:40.260 --> 00:58:43.170 but maybe you want to think about this in future games. 00:58:43.170 --> 00:58:45.720 Somehow communication, if anything, 00:58:45.720 --> 00:58:51.270 made things worse compared to the no communication case. 00:58:51.270 --> 00:58:55.860 But even there, if you look at the average offer 00:58:55.860 --> 00:58:59.380 is 47% here on the top. 00:58:59.380 --> 00:59:03.940 And again, 46% with communication. 00:59:03.940 --> 00:59:07.020 So it doesn't make a huge difference either way. 00:59:07.020 --> 00:59:08.550 OK? 00:59:08.550 --> 00:59:09.680 Any questions on that? 00:59:16.310 --> 00:59:17.990 So then we're going to talk a little bit 00:59:17.990 --> 00:59:21.710 about intentions-based social preferences. 00:59:21.710 --> 00:59:26.660 Let me tell you a brief tale about this 00:59:26.660 --> 00:59:28.910 that sort of illustrates this point quite nicely. 00:59:28.910 --> 00:59:32.930 So a boy finds two ripe apples as he walks home from school. 00:59:32.930 --> 00:59:37.760 He keeps the larger one, gives a smaller one to his friend. 00:59:37.760 --> 00:59:43.230 The friend says, it wasn't nice to keep the larger one. 00:59:43.230 --> 00:59:45.900 The boy says, well, what would you have done? 00:59:45.900 --> 00:59:49.350 And the friend says, I'd have given you the larger one 00:59:49.350 --> 00:59:51.300 and kept the smaller one. 00:59:51.300 --> 00:59:54.400 And the boy says, well, we each got what you wanted. 00:59:54.400 --> 00:59:56.680 So what are you complaining about? 00:59:56.680 --> 00:59:58.230 And so what does that illustrate? 00:59:58.230 --> 01:00:01.890 It illustrates that it's not always 01:00:01.890 --> 01:00:04.710 about outcomes or the distribution, even, 01:00:04.710 --> 01:00:06.210 of outcomes or the like. 01:00:06.210 --> 01:00:10.290 What seems to matter is some form 01:00:10.290 --> 01:00:15.210 of like justice or fairness in how the allocation came about. 01:00:15.210 --> 01:00:17.910 In most of the economics, essentially, we 01:00:17.910 --> 01:00:19.920 assume that our satisfaction of outcomes, 01:00:19.920 --> 01:00:22.590 like how much we like certain outcomes and so on, when 01:00:22.590 --> 01:00:25.710 you look at people's utility function, often, essentially, 01:00:25.710 --> 01:00:26.790 it's outcome-based. 01:00:26.790 --> 01:00:29.680 What matters is essentially how much you consume, and so on. 01:00:29.680 --> 01:00:31.590 So the satisfaction with outcomes 01:00:31.590 --> 01:00:34.440 doesn't depend on how the outcome came about. 01:00:34.440 --> 01:00:37.410 And here, when you look at these apples, 01:00:37.410 --> 01:00:41.092 how the apples are distributed, the friend actually 01:00:41.092 --> 01:00:43.050 doesn't seem to care that much about whether he 01:00:43.050 --> 01:00:44.910 gets the larger or the smaller apple. 01:00:44.910 --> 01:00:47.280 What the friend cares about is, is your other friend 01:00:47.280 --> 01:00:50.160 a nice person, or is the allocation of the outcome fair, 01:00:50.160 --> 01:00:52.860 and a sense of didn't he just keep the larger 01:00:52.860 --> 01:00:57.070 apple because he could, and then was mean to his friend. 01:00:57.070 --> 01:01:00.583 So really what seems to matter quite a bit is-- 01:01:00.583 --> 01:01:03.000 and there's quite a bit of work in organizational behavior 01:01:03.000 --> 01:01:04.650 and economics and social psychology-- 01:01:04.650 --> 01:01:07.170 is the idea of procedural justice. 01:01:07.170 --> 01:01:09.990 Fairness in the process used to allocate resources 01:01:09.990 --> 01:01:12.340 seems to matter quite a bit. 01:01:12.340 --> 01:01:14.790 So maybe another way to put this, 01:01:14.790 --> 01:01:17.160 it's kind of OK, actually, for most people. 01:01:17.160 --> 01:01:20.430 If some people are richer than others that's fine, 01:01:20.430 --> 01:01:25.020 but it's much less if they obtained money 01:01:25.020 --> 01:01:27.990 as coming in some corrupt process, 01:01:27.990 --> 01:01:32.130 or if it's just kind of unfair because some person was born 01:01:32.130 --> 01:01:35.670 really rich, and the other person was born really poor, 01:01:35.670 --> 01:01:40.650 and there's no mobility or opportunity in society. 01:01:40.650 --> 01:01:43.560 That's sort of relating to the idea that in a way, 01:01:43.560 --> 01:01:45.960 the American dream is everybody can become rich, 01:01:45.960 --> 01:01:47.460 and that's essentially the key here. 01:01:47.460 --> 01:01:49.660 And then if some people are richer than others, 01:01:49.660 --> 01:01:51.810 people often think that's OK. 01:01:51.810 --> 01:01:54.180 What's not OK, however, is if some people 01:01:54.180 --> 01:01:56.280 have vastly different opportunities or chances 01:01:56.280 --> 01:01:57.090 than others. 01:01:57.090 --> 01:01:59.580 Or if there's lots of corruption, where essentially 01:01:59.580 --> 01:02:04.860 some people get certain jobs not because they're qualified, 01:02:04.860 --> 01:02:07.470 but rather because their parents or their family 01:02:07.470 --> 01:02:10.050 or their friends or whatever are very powerful 01:02:10.050 --> 01:02:12.150 or they have corrupted others in other ways. 01:02:17.370 --> 01:02:20.100 Now there's a question of fairness, 01:02:20.100 --> 01:02:23.350 and then there's a question of reciprocity, 01:02:23.350 --> 01:02:26.880 which is essentially the idea that so fairness, people have 01:02:26.880 --> 01:02:27.960 preferences for fairness. 01:02:27.960 --> 01:02:31.690 They like fair outcomes more than others, unfair outcomes. 01:02:31.690 --> 01:02:33.750 Another form of that is reciprocity, 01:02:33.750 --> 01:02:38.160 is people like to treat others as others have treated 01:02:38.160 --> 01:02:39.240 or treating them. 01:02:42.330 --> 01:02:45.060 More generally, the way we treat others, essentially, depends 01:02:45.060 --> 01:02:46.478 on the way they treat us. 01:02:46.478 --> 01:02:48.020 So if somebody is mean to you, you're 01:02:48.020 --> 01:02:48.990 going to be mean to them. 01:02:48.990 --> 01:02:50.407 If somebody is nice to you, you're 01:02:50.407 --> 01:02:51.550 going to be nice to them. 01:02:51.550 --> 01:02:53.390 And that's really important motivation 01:02:53.390 --> 01:02:55.500 in a lot of behavior. 01:02:55.500 --> 01:02:59.430 Now this gets us back to the ultimatum game-- 01:02:59.430 --> 01:03:01.810 I'm going to talk about this only very briefly-- 01:03:01.810 --> 01:03:06.433 which is the question of why do responders reject low offers 01:03:06.433 --> 01:03:07.350 in the ultimatum game? 01:03:07.350 --> 01:03:08.370 We talked about this a little bit. 01:03:08.370 --> 01:03:10.530 You can think about distributional preferences. 01:03:10.530 --> 01:03:14.520 We talked about [INAUDIBLE] and Rabin and about the preferences 01:03:14.520 --> 01:03:16.182 about being behind versus not. 01:03:16.182 --> 01:03:17.640 There's an explanation that's based 01:03:17.640 --> 01:03:19.170 on distributional preference where you just 01:03:19.170 --> 01:03:21.240 don't want to be really behind, and therefore you 01:03:21.240 --> 01:03:23.580 reject the unfair offers. 01:03:23.580 --> 01:03:26.100 But another one is you think you've really treated unfairly, 01:03:26.100 --> 01:03:29.730 and you're willing to punish the proposer for such unfairness. 01:03:29.730 --> 01:03:33.360 And in a simple ultimatum game, you 01:03:33.360 --> 01:03:36.630 can't really tell whether it's hypothesis one or two. 01:03:36.630 --> 01:03:40.200 But-- and we talked about this already-- 01:03:40.200 --> 01:03:43.290 you can compare responders' choices in the ultimatum game 01:03:43.290 --> 01:03:45.210 to choices when the offer isn't generated 01:03:45.210 --> 01:03:51.000 by the other person, the recipient or the other person. 01:03:51.000 --> 01:03:54.060 For example, you can look at choices 01:03:54.060 --> 01:03:58.110 that were generated by the computer, by a third person 01:03:58.110 --> 01:03:59.000 and so on. 01:03:59.000 --> 01:04:02.670 So if it's generated by the third person, you might say, 01:04:02.670 --> 01:04:05.790 I shouldn't punish the other person in the game 01:04:05.790 --> 01:04:08.240 because it's not that person who chose it. 01:04:08.240 --> 01:04:10.240 It's some other person, so it's not their fault. 01:04:10.240 --> 01:04:11.640 So why should I punish them? 01:04:11.640 --> 01:04:14.250 Similarly, if the computer chose, again, 01:04:14.250 --> 01:04:16.748 if I have less than the other person, that might be OK. 01:04:16.748 --> 01:04:18.540 I might not be happy about it, but it's not 01:04:18.540 --> 01:04:21.930 the other person's fault. It's the computer who chose. 01:04:21.930 --> 01:04:24.180 In the next lecture, we're going to talk about a field 01:04:24.180 --> 01:04:25.080 application of that. 01:04:25.080 --> 01:04:28.730 It's a very nice paper by Emily Breza and co-authors, 01:04:28.730 --> 01:04:32.430 which is about the morale effects of pay inequality. 01:04:32.430 --> 01:04:36.690 This is about how workers behave in a work environment 01:04:36.690 --> 01:04:39.180 when people are paid unequally. 01:04:39.180 --> 01:04:43.728 And the short summary of this paper is that when workers-- 01:04:43.728 --> 01:04:45.270 this is a field experiment in India-- 01:04:45.270 --> 01:04:52.680 when workers are paid unequally, they might be really unhappy 01:04:52.680 --> 01:04:56.937 and be less productive at their work because essentially, 01:04:56.937 --> 01:04:58.770 and particularly if they have to collaborate 01:04:58.770 --> 01:05:01.110 with other workers who are paid more than them. 01:05:01.110 --> 01:05:03.120 But in particular, what they seem to care about 01:05:03.120 --> 01:05:06.850 is, is it fair that the other person earns more? 01:05:06.850 --> 01:05:09.000 So if you earn more than I do, it 01:05:09.000 --> 01:05:11.010 might actually be OK if I can understand 01:05:11.010 --> 01:05:12.560 that you are much smarter, faster, 01:05:12.560 --> 01:05:13.840 or better at what you do. 01:05:13.840 --> 01:05:15.690 So if in some observable ways, I can 01:05:15.690 --> 01:05:18.720 tell that you're better than I am, then, in some sense, 01:05:18.720 --> 01:05:20.700 I might be perfectly fine with you 01:05:20.700 --> 01:05:22.830 earning like 10%, 20%, 50% or whatever percent 01:05:22.830 --> 01:05:25.710 more money because I know you're a better worker. 01:05:25.710 --> 01:05:27.600 So OK, fine, you're paid more. 01:05:27.600 --> 01:05:30.600 That seems fine and OK. 01:05:30.600 --> 01:05:32.935 However, in some other situation where 01:05:32.935 --> 01:05:35.310 it's kind of not that obvious, where it looks like you're 01:05:35.310 --> 01:05:36.768 doing the same thing that I'm doing 01:05:36.768 --> 01:05:38.790 and not really faster or better and so on, 01:05:38.790 --> 01:05:42.060 yet you're paid more, I might be really annoyed and unhappy 01:05:42.060 --> 01:05:43.092 about it. 01:05:43.092 --> 01:05:44.550 And you might also be uncomfortable 01:05:44.550 --> 01:05:48.000 because you feel bad about being paid more than I do for doing 01:05:48.000 --> 01:05:49.540 exactly the same thing. 01:05:49.540 --> 01:05:52.190 So the experiment by Emily Breza and coauthors 01:05:52.190 --> 01:05:55.410 is doing exactly that, looking at situations where workers are 01:05:55.410 --> 01:06:00.060 paid unequally versus the same, and situations where this 01:06:00.060 --> 01:06:02.400 is justified versus not, and really 01:06:02.400 --> 01:06:05.130 seems to be that fairness matters, or perceived fairness 01:06:05.130 --> 01:06:06.930 matters quite a bit for these workers. 01:06:06.930 --> 01:06:11.550 When workers can justify being paid less in some way, or more 01:06:11.550 --> 01:06:13.470 than others, that's OK. 01:06:13.470 --> 01:06:15.030 When it's unjustified, they really 01:06:15.030 --> 01:06:17.400 get annoyed and produce a lot less 01:06:17.400 --> 01:06:18.570 in that particular setting. 01:06:21.740 --> 01:06:23.060 OK. 01:06:23.060 --> 01:06:25.557 So let me now start with some field evidence. 01:06:25.557 --> 01:06:28.140 We're going to talk a lot more about field evidence next time. 01:06:28.140 --> 01:06:31.020 Let me briefly talk about this paper here, and the next time, 01:06:31.020 --> 01:06:33.540 I'm going to tell you a lot more about that. 01:06:33.540 --> 01:06:36.080 So this is a very nice paper by Bandiera et al which 01:06:36.080 --> 01:06:40.370 looks at the impact of relative pay versus piece rates 01:06:40.370 --> 01:06:41.600 on productivity. 01:06:41.600 --> 01:06:43.640 Piece rates is just like whatever you produce, 01:06:43.640 --> 01:06:46.490 you're going to be paid by unit of your output. 01:06:46.490 --> 01:06:50.630 You just get some fixed payment per each unit of output 01:06:50.630 --> 01:06:52.220 that you produce. 01:06:52.220 --> 01:06:55.580 Relative pay is essentially your workers 01:06:55.580 --> 01:06:57.630 are paid relative to others. 01:06:57.630 --> 01:07:01.370 So if I'm working 50% more than you do, 01:07:01.370 --> 01:07:05.720 I get paid a lot more than you do. 01:07:05.720 --> 01:07:09.830 Now why does this matter for people, worker behavior? 01:07:09.830 --> 01:07:12.350 Well, there's a negative externality now 01:07:12.350 --> 01:07:13.623 on me working really hard. 01:07:13.623 --> 01:07:14.540 What's an externality? 01:07:14.540 --> 01:07:21.110 Essentially an effect on you that you're not 01:07:21.110 --> 01:07:22.580 really compensated for. 01:07:22.580 --> 01:07:24.320 That is to say, if I worked really hard 01:07:24.320 --> 01:07:26.690 and I'm really good at my work, not only am 01:07:26.690 --> 01:07:29.180 I getting paid more, but also you're 01:07:29.180 --> 01:07:33.980 going to be paid less because essentially relatively, 01:07:33.980 --> 01:07:35.630 you're going to look worse than me 01:07:35.630 --> 01:07:37.170 if you work in the same team. 01:07:37.170 --> 01:07:39.110 So relative pay essentially has this issue 01:07:39.110 --> 01:07:41.750 about where it matters for social preferences 01:07:41.750 --> 01:07:44.720 because essentially, any increase in my pay 01:07:44.720 --> 01:07:47.078 comes at a reduction of your pay. 01:07:47.078 --> 01:07:48.620 To be clear, the relative pay is such 01:07:48.620 --> 01:07:49.995 that there's an average pay which 01:07:49.995 --> 01:07:52.430 depends on the average productivity of everybody. 01:07:52.430 --> 01:07:54.380 And then the relative pay is on top of that, 01:07:54.380 --> 01:07:56.960 is like the workers who work more, 01:07:56.960 --> 01:07:58.610 are more productive relative to others, 01:07:58.610 --> 01:08:00.305 are paid more than others. 01:08:03.380 --> 01:08:05.280 And so how do you think about this? 01:08:05.280 --> 01:08:07.520 You can think about a model of pure altruism. 01:08:07.520 --> 01:08:09.260 We talked about this already before. 01:08:09.260 --> 01:08:12.740 There's self has a payoff of x. 01:08:12.740 --> 01:08:16.640 The other person has a payoff of x0 for other. 01:08:16.640 --> 01:08:19.939 The self assigns weight alpha to the other person's utility. 01:08:19.939 --> 01:08:21.979 This is sort of the typical model that's 01:08:21.979 --> 01:08:23.432 been used by Becker and others. 01:08:23.432 --> 01:08:24.890 We don't really think that's really 01:08:24.890 --> 01:08:26.569 the right model for many situations, 01:08:26.569 --> 01:08:29.100 but it's a really useful benchmark model. 01:08:29.100 --> 01:08:33.979 And so now, if I have positive weight on this other person, 01:08:33.979 --> 01:08:37.319 what I'm going to do is I'm going to, 01:08:37.319 --> 01:08:40.189 in the relative pay scheme, I might not 01:08:40.189 --> 01:08:42.350 work particularly hard because I know 01:08:42.350 --> 01:08:47.810 if I'm working really hard, I'm going to make you worse off. 01:08:47.810 --> 01:08:49.410 Does this make sense? 01:08:49.410 --> 01:08:49.910 OK. 01:08:49.910 --> 01:08:54.420 So I'm going to show you, essentially, 01:08:54.420 --> 01:08:56.348 briefly the experiment, the impact, 01:08:56.348 --> 01:08:58.390 the impact of social preference in the workplace. 01:08:58.390 --> 01:09:03.750 So what they do is they have really nice data from the UK-- 01:09:03.750 --> 01:09:07.620 sorry, the microphone doesn't really work-- 01:09:07.620 --> 01:09:14.100 from the UK on fruit pickers under different compensation 01:09:14.100 --> 01:09:15.810 schemes. 01:09:15.810 --> 01:09:17.500 They have a quasi-field experiment. 01:09:17.500 --> 01:09:20.760 They have eight weeks in a 2002 picking season 01:09:20.760 --> 01:09:22.979 where fruit pickers are compensated 01:09:22.979 --> 01:09:24.660 on a relative performance scheme. 01:09:24.660 --> 01:09:29.910 That is to say, the per fruit piece rate 01:09:29.910 --> 01:09:32.430 is decreasing in the average productivity. 01:09:32.430 --> 01:09:34.439 So the incentive is to keep the productivity low 01:09:34.439 --> 01:09:35.500 if you care about others. 01:09:35.500 --> 01:09:38.250 Essentially, the more you produce, 01:09:38.250 --> 01:09:40.950 the more you get yourself, but the other person, 01:09:40.950 --> 01:09:42.210 everybody else, gets less. 01:09:42.210 --> 01:09:44.069 So essentially, now you have an incentive 01:09:44.069 --> 01:09:46.410 to not work too hard because if you work too hard, 01:09:46.410 --> 01:09:49.170 other people around you are going to be paid less. 01:09:49.170 --> 01:09:52.109 In the next eight weeks, however, the compensation 01:09:52.109 --> 01:09:55.080 switched to a flat piece rate per fruit. 01:09:55.080 --> 01:09:56.900 And so now the externality is shut down. 01:09:56.900 --> 01:09:58.650 However, it doesn't really matter for you. 01:09:58.650 --> 01:10:00.450 It doesn't matter how much I produce. 01:10:00.450 --> 01:10:06.340 You essentially get however much you produce, 01:10:06.340 --> 01:10:09.240 or the payment for that. 01:10:09.240 --> 01:10:13.360 The switch was announced on the day when the change took place. 01:10:13.360 --> 01:10:15.340 So it's kind of a surprise to workers. 01:10:15.340 --> 01:10:17.580 So workers were working for eight weeks, 01:10:17.580 --> 01:10:19.788 and then for another eight weeks, there was a switch, 01:10:19.788 --> 01:10:22.205 and they didn't know that this change was going to happen. 01:10:22.205 --> 01:10:24.120 This was a surprise change so we shouldn't 01:10:24.120 --> 01:10:26.760 see any anticipatory effects of that. 01:10:26.760 --> 01:10:29.520 Now the relative effects, now, of this policy 01:10:29.520 --> 01:10:32.040 depends now on this alpha term. 01:10:32.040 --> 01:10:34.500 If I don't care about others at all, it shouldn't matter. 01:10:34.500 --> 01:10:36.750 I should just work really hard, as hard as I can, 01:10:36.750 --> 01:10:39.150 because I want to increase my relative pay. 01:10:39.150 --> 01:10:42.270 However, if my alpha is high, I might 01:10:42.270 --> 01:10:44.820 work not so hard because I'm worried about, essentially, 01:10:44.820 --> 01:10:49.047 my friends or co-workers being paid less. 01:10:49.047 --> 01:10:50.130 And here's what they find. 01:10:50.130 --> 01:10:53.258 Essentially find a dramatic increase in productivity. 01:10:53.258 --> 01:10:55.800 So on the left-hand side, you see essentially the first eight 01:10:55.800 --> 01:10:58.750 weeks, which essentially is their productivity. 01:10:58.750 --> 01:11:03.690 This is kilograms per hour of fruit that are being collected. 01:11:03.690 --> 01:11:06.510 That goes up dramatically in the second half. 01:11:06.510 --> 01:11:09.410 You see on the left side, you essentially see no pre-trend. 01:11:09.410 --> 01:11:11.910 It doesn't look like people are getting just more productive 01:11:11.910 --> 01:11:14.280 over time, maybe because they become more experienced 01:11:14.280 --> 01:11:17.790 or they understand better how to work fast. 01:11:17.790 --> 01:11:20.010 It seems really flat on the left-hand side. 01:11:20.010 --> 01:11:22.770 On the right-hand side it goes up by quite a bit 01:11:22.770 --> 01:11:27.420 pretty much very quickly after this policy is announced. 01:11:27.420 --> 01:11:29.640 It doesn't seem there's any other significant change. 01:11:29.640 --> 01:11:33.120 It really seems like worker productivity per hour goes up. 01:11:33.120 --> 01:11:35.940 For example, the number of workers in the same field 01:11:35.940 --> 01:11:37.050 stays the same and so on. 01:11:37.050 --> 01:11:39.248 It doesn't seem to be lots of other effects. 01:11:39.248 --> 01:11:41.040 Really, the main thing that seems to happen 01:11:41.040 --> 01:11:43.620 is that workers' productivity goes up. 01:11:43.620 --> 01:11:47.280 Is this a response to changes in the piece rate? 01:11:47.280 --> 01:11:49.590 No, in fact, the piece rate went down. 01:11:49.590 --> 01:11:53.730 How much you were rewarded for the marginal kilogram 01:11:53.730 --> 01:11:56.930 that you collected actually went down. 01:11:56.930 --> 01:11:59.460 In fact, there were incentives to work less if you only 01:11:59.460 --> 01:12:01.410 cared about your own output. 01:12:01.410 --> 01:12:03.510 Also this is robust to controlling. 01:12:03.510 --> 01:12:10.380 So now what's going on here, it seems to me 01:12:10.380 --> 01:12:12.930 that workers care about others. 01:12:12.930 --> 01:12:15.540 But not only do they care about others, 01:12:15.540 --> 01:12:18.000 it also seems to be that the effects are 01:12:18.000 --> 01:12:22.060 larger the more friends somebody had on the field. 01:12:22.060 --> 01:12:23.730 So some workers have lots of friends 01:12:23.730 --> 01:12:25.230 on the field in the same field that 01:12:25.230 --> 01:12:27.897 are sort of their comparison group, and others did not. 01:12:27.897 --> 01:12:30.480 Now why does it matter how many friends you have in your field 01:12:30.480 --> 01:12:33.040 if care presumably you care more about your friends 01:12:33.040 --> 01:12:34.300 than other people? 01:12:34.300 --> 01:12:38.280 So now, you might have social preferences. 01:12:38.280 --> 01:12:40.727 You work less to help others because if you work not very 01:12:40.727 --> 01:12:42.185 much, they're going to be paid more 01:12:42.185 --> 01:12:44.260 and you might care about them. 01:12:44.260 --> 01:12:46.710 So you work even less when the friends 01:12:46.710 --> 01:12:50.530 benefit because you care more about your friends than others. 01:12:50.530 --> 01:12:52.350 So then you should see stronger effects 01:12:52.350 --> 01:12:55.920 if you have more friends on the field of the piece 01:12:55.920 --> 01:12:58.210 rates versus the other effects. 01:12:58.210 --> 01:13:00.390 The second part is it's also like a repeated game, 01:13:00.390 --> 01:13:02.920 and that's kind of a trickier to deal with, 01:13:02.920 --> 01:13:05.880 which is your friends might sort of punish you in various ways. 01:13:05.880 --> 01:13:09.420 If I work really hard, they can see, I'm working really hard. 01:13:09.420 --> 01:13:12.510 They might sort of punish you socially at night, 01:13:12.510 --> 01:13:13.867 or they might sort of be mean. 01:13:13.867 --> 01:13:16.450 They might just not want to be your friends anymore and so on. 01:13:16.450 --> 01:13:18.630 It's really a mean thing to do to your friends. 01:13:18.630 --> 01:13:23.700 So if you do that, you might actually not 01:13:23.700 --> 01:13:25.568 want to work hard, not because you 01:13:25.568 --> 01:13:27.360 care that much about the others, but you're 01:13:27.360 --> 01:13:29.027 worried about, essentially, retribution. 01:13:29.027 --> 01:13:31.050 You're worried about them punishing you 01:13:31.050 --> 01:13:34.482 if you are working too fast. 01:13:34.482 --> 01:13:35.940 Now what kind of variation could we 01:13:35.940 --> 01:13:39.237 look at to disentangle those two types of effects? 01:13:39.237 --> 01:13:41.820 So they have different types of fruit, I can tell you already. 01:13:41.820 --> 01:13:43.380 But what kind of variation would we 01:13:43.380 --> 01:13:45.664 need to disentangle those two explanations? 01:13:57.300 --> 01:13:58.450 Or let me ask differently. 01:13:58.450 --> 01:14:03.060 What's crucial in part number two for that explanation? 01:14:03.060 --> 01:14:04.310 So I'll give you another hint. 01:14:04.310 --> 01:14:06.800 There's raspberries and strawberries. 01:14:06.800 --> 01:14:08.840 For strawberries, you can see very well 01:14:08.840 --> 01:14:09.980 what the other person does. 01:14:09.980 --> 01:14:12.088 For raspberries, you cannot. 01:14:12.088 --> 01:14:13.130 And why does that matter? 01:14:18.152 --> 01:14:20.110 AUDIENCE: Because then your friends won't know. 01:14:20.110 --> 01:14:22.830 [INAUDIBLE] 01:14:22.830 --> 01:14:23.790 PROFESSOR: Exactly. 01:14:23.790 --> 01:14:27.900 If your friends don't know-- 01:14:27.900 --> 01:14:29.700 well, if it's explanation number one, 01:14:29.700 --> 01:14:31.180 you really care about your friends, 01:14:31.180 --> 01:14:32.972 it doesn't matter whether your friends know 01:14:32.972 --> 01:14:35.490 or not how much you produce. 01:14:35.490 --> 01:14:36.990 If you care about them a lot, you're 01:14:36.990 --> 01:14:39.780 not going to work particularly hard because working really 01:14:39.780 --> 01:14:42.330 hard is bad for your friends. 01:14:42.330 --> 01:14:44.902 If instead, you're worried about retribution, 01:14:44.902 --> 01:14:46.860 well, then it matters a lot whether your friend 01:14:46.860 --> 01:14:48.090 can see what you do. 01:14:48.090 --> 01:14:50.670 If you do the strawberries, which [INAUDIBLE] on the field, 01:14:50.670 --> 01:14:54.120 you can see really easily what you do. 01:14:54.120 --> 01:14:57.210 If that's the case, you're going to depress your effort 01:14:57.210 --> 01:14:58.440 in the relative pay scheme. 01:15:02.460 --> 01:15:05.760 And then there's going to be large effects once you 01:15:05.760 --> 01:15:08.040 have your individual pay. 01:15:08.040 --> 01:15:12.930 However, if you can hide what you're doing, then 01:15:12.930 --> 01:15:15.330 in some sense you might work secretly really hard 01:15:15.330 --> 01:15:16.805 in some of the bushes. 01:15:16.805 --> 01:15:18.930 Your friends will never be able to tell whether you 01:15:18.930 --> 01:15:20.402 will be working hard. 01:15:20.402 --> 01:15:22.110 And then you should see less of an effect 01:15:22.110 --> 01:15:24.480 when the switch happens. 01:15:24.480 --> 01:15:25.920 And this is exactly that. 01:15:25.920 --> 01:15:28.140 Productivity is observed for the strawberries. 01:15:28.140 --> 01:15:29.910 It's unobserved for raspberries. 01:15:29.910 --> 01:15:32.310 And so what we see, essentially, is no impact 01:15:32.310 --> 01:15:35.850 of the piece rate for food type number two, which essentially 01:15:35.850 --> 01:15:39.030 is to say if you can hide from your friends, 01:15:39.030 --> 01:15:42.580 you will, in fact, work really hard, 01:15:42.580 --> 01:15:45.420 which is essentially suggestive that you don't care 01:15:45.420 --> 01:15:46.800 that much about your friends. 01:15:46.800 --> 01:15:49.050 Instead, what you care about is social sanctions 01:15:49.050 --> 01:15:51.840 or some form of punishment, which only happens 01:15:51.840 --> 01:15:55.080 for the strawberries because that's when people can actually 01:15:55.080 --> 01:15:58.410 see what you produce. 01:15:58.410 --> 01:16:01.620 I can maybe briefly recap this next time. 01:16:01.620 --> 01:16:04.620 Let me just stop here. 01:16:04.620 --> 01:16:09.900 Next lecture, I'm going to show you a lot more field 01:16:09.900 --> 01:16:12.640 evidence from various settings. 01:16:12.640 --> 01:16:15.480 Essentially, the paper by Breza et al 01:16:15.480 --> 01:16:18.150 that have morale effects and so on, essentially looking at 01:16:18.150 --> 01:16:21.180 in field situations, I'm going to show you 01:16:21.180 --> 01:16:23.742 that social preferences seem to matter quite a bit. 01:16:23.742 --> 01:16:25.200 And then in particular, we're going 01:16:25.200 --> 01:16:28.470 to look at the malleability of prosociality, which 01:16:28.470 --> 01:16:31.900 is the question of, well, should we take social preferences 01:16:31.900 --> 01:16:32.670 as given? 01:16:32.670 --> 01:16:37.770 Or are there some interventions or some policies that perhaps 01:16:37.770 --> 01:16:42.750 could make people become nicer or more prosocial 01:16:42.750 --> 01:16:43.710 in some situations? 01:16:43.710 --> 01:16:46.770 Is it something that the government or companies 01:16:46.770 --> 01:16:52.888 could do to get workers or people to be more prosocial? 01:16:52.888 --> 01:16:53.680 That's all for now. 01:16:53.680 --> 01:16:55.400 Thanks so much.