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PROFESSOR: Welcome
to lecture number 12.

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I'm very sorry that
this has to be remote.

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I hope all of you are doing OK.

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I know this is lots
of trouble and stress

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for many of you, having to
move, not knowing necessarily

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where to move to, financial
issues and so on and so forth,

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lots of worries about health,
of your own health and others.

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I hope you're doing OK.

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Try to take good care
of yourselves and others

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try to look out for others,
be there for each other.

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Try also to make use of mental
health resources as you can.

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I'll send an email
about that as well.

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This is lecture number 12.

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We talk about
social preferences.

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So we talked about
sort of broadly

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given introduction about
social preferences.

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Let me just move towards
where we were towards the end.

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I showed you, essentially,
different ways

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in which you can
experimentally elicit

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people's social preferences
using dictator games, ultimatum

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games, trust games.

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We looked at how
generous do people

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behave in those kinds of games?

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Does it look like people
care about others,

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they're nice towards others?

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We then, to some degree, sort of
found quite a bit of generosity

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in dictator games
and other games.

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People seemed quite nice.

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In some pieces of evidence,
it wasn't quite clear

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whether it was is it
that people are generally

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nice to each other, or is
it like they don't want

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to look like a mean person,
either towards others

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or perhaps towards themselves.

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They want to think of themselves
as being a nice person,

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and they don't want to be mean.

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And that might be a motivation
of giving towards others.

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In the games that
have shown you so far,

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it wasn't quite clear
how to distinguish that.

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So what we're going
to do in this lecture,

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we're going to look at
some pieces of evidence

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where there's versions of
dictator and other games

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that lets us look at more the
underlying motivation of why

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people give, and perhaps
detect, in some cases,

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that when people are giving
in some situations which

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look like people are
quite nice, in fact,

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that might not be
because they generally

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care about the other person.

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It might be rather either
because of social image

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concerns-- is this about what
other people think about them

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if they give versus not--

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or because of
self-image concerns,

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these are, like, what do they
think of themselves, as in you

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give to somebody else not
necessarily because you care

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about the other person,
or it might not even

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be that you care about what
the other person thinks of you.

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It's just about
you yourself want

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to feel good about
yourself, and therefore you

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might be generous because
you want to sort of keep

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or maintain the image of being
a nice person to yourself

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as well.

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Some of the evidence that I'm
going to show you is-- you

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wouldn't say
depressing, but it's

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a little bit sort of negative in
the sense that essentially what

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I'm going to show you is that
people appear, or in fact are,

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if you believe that evidence,
less nice than it might appear.

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So it says that last
time, at first sight,

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it looks like that's a little
depressing or little negative

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in the sense of we might be
disappointed that we thought

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everybody was really
nice and friendly

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and cared so much about others.

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Maybe that's not quite true.

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On the other hand, however,
if we sort of understand

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the conditions under which
people are nice and friendly

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to each other--

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and in some ways, you
might sort of say,

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well, it's not
obvious that we really

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care that much about whether
people are generally nice

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versus not.

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What we really care
about, perhaps,

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is how people, in fact, behave.

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Are they friendly and prosocial
and support each other?

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And perhaps if we understand the
conditions under which people

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are nice and friendly
to each other,

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perhaps that allows us, then,
to think about policies,

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how do we set up--

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in firms or in organizations
or in society as a whole--

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how do we set up
policies that might make

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people more prosocial overall.

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So this lecture, we're going
to talk about more trying

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to detect different motivations
for people's prosociality.

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And then the next
lecture, we're going

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to talk about now what are
some field evidence So all I'm

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going to show you for now
is essentially mostly lab

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evidence, but we're
going to show some field

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evidence in real
world situations

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in companies and so on,
or in field experiments,

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how people are behaving.

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And in particular,
we're going to think

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about some policies that
might get people to be

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more prosocial versus not.

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So we already talked
about this as a whole.

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So the first thing we
want to think about

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is essentially
social recognition.

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This is essentially
social image.

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How do others think about
you when you give versus not?

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So then I'm going to show
you now several papers,

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or evidence from several
papers, that essentially does

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different modifications, mostly
of the Dictator Game, that

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allows us to disentangle
these different motivations.

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So the first one is
the very nice paper

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by Lazear et al that conduct
an experiment to study motives

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for giving, as of many
dictator games do.

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And they have essentially a very
simple design, two treatments.

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One of them is the
standard dictator game.

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This is what you
have seen before.

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The only difference is
this one is in euros.

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It's sort of, I
think, done in Europe.

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Think of euros as just
being the same as dollars.

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So people can decide to split
10 euros between themselves

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and another subject.

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In another treatment,
subjects decide

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whether to even participate
in the Dictator Game.

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So essentially, what's being
allowed here is an exit option.

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You could essentially
say either you're

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going to participate
in the dictator game

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with another person, or
you could just decide

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you don't even play this game.

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And you get just get
some fixed payout.

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Now then, if the dictator
chooses to participate,

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the recipient is
informed of the game

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and the choice of the dictator.

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So the recipient
will be informed

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and know about there was a
dictator game that was played.

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Here's the amount that
the dictator chose.

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Here's the amount that you got.

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And then the standard dictator
game commences, and then

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the recipient just
gets the money,

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and the recipient is essentially
informed of the action.

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So if you choose, for example,
9 euros for yourself and one

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euros for the other person,
the other person will know that

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the one euro that they got
came from a dictator game,

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and there was somebody who chose
$9.00 for themselves and gave

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$1.00 for them.

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So then one option of this,
or one version of this game,

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was essentially just like
a costless exit option.

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That is essentially
the option where

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you say you receive 10
euros without the option

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of distributing the money.

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Notice that that's
exactly the same

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as choosing to opt into
the game and choosing 10-0

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in terms of payouts.

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If I just say I want
10 euros for myself,

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I give nothing to
the other person,

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that's exactly the same
as saying you opt out

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of the dictator game.

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The difference, of course,
is that if you opt out,

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the participant will never
know that you opted out.

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So the other person
will never find out

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that somebody was
kind of mean to them.

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And so you might sort of choose
the opt out option, perhaps

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because you think the
other person will feel bad.

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And if the other person feels
bad, you try and avoid that

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and you might opt out.

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This is kind of the exit option.

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So the first option here, the
subject line of the slides,

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is costly exit.

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In this version of the game,
the exit is actually not costly.

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It's costless to do so.

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You can just essentially
take the $1.00 and run,

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and you don't have to actually
play the dictator game.

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Now when you think about
distributional preferences,

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what do distributional
preferences predict?

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Well, dictators who want
to give some money strictly

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prefer to play
the dictator game.

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If you think you prefer
9-1 over 10-0 well,

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then you're going
to play the game

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and say I'm going to choose
9-1 because otherwise, there's

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no way to actually
give this person money.

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Notice distributional
preferences,

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just to remind you,
are preferences

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were only the outcomes matter.

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It doesn't matter how
the outcomes come about.

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Only the actual outcome matters.

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Now there are some people who
want to just keep everything

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to themselves.

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Well, those people
who should just

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be indifferent--
they will just be

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like, it doesn't really
matter whether I just opt out.

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Maybe that's easier to opt out.

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It doesn't really matter.

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I would give 10-0 anyway,
either opt out or just

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stay in the game and
choose 10-0 anyway.

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But in either case, the
option to exit the game

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should have no effect on how
much the dictators share.

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It shouldn't matter.

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If you want to give
some positive amount,

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if you opt that option,
it doesn't really

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matter because you're
not going to opt out.

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You're going to just opt in.

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You stay in the game and just
give the money to that person.

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And if you want
to give 0 anyway,

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it doesn't matter whether
you opt out or not.

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You just give 0 anyway,
and if you opt out,

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it's essentially effectively
giving 0 to the other person.

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So either way,
the option to exit

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should have no effect on
how much dictators share.

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In particular, it
should not reduce

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how much dictators share.

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Does that make sense?

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OK.

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The limited audience
seems to understand.

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Hope this is clear to
everybody else as well.

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By the way, I should have
said the lectures now

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will be recorded currently
with a very limited audience,

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but in general,
with no audience.

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What I'm going to
do is try to keep

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sort of what I very much
miss in this format is

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sort of the interactive
form of the lectures.

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So what are we're going to
do is trying to figure out,

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in particular,
after spring break,

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trying to record the
lectures and then finding

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some other ways of allowing
students to interact, perhaps

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by having a version
of, well, you

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can watch the lectures
online, and then we

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have essentially either online
office hours or discussions

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of the slides.

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Or if there are particular
issues that you may,

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may answer some
questions over Zoom

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or other formats we can then
discuss some issues that

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perhaps aren't clear.

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Or you can ask these
questions, and then I

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try to respond to that.

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Anyway, getting
back to this game,

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essentially we have
now the comparison

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between standard dictator
games and the option

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of, in this case, a free exit.

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So in this case, the exit
option lowers giving,

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and the standard dictator game,
dictators shared about one euro

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$0.87 on average.

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That's, again, sort of
in line with the 20%, 25%

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that people tend to give in
dictator games in the very

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simplest form.

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But when you allow people
to exit, the share given

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goes down to $0.58.

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OK?

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And so that's essentially to
say there are many people who,

249
00:11:15,390 --> 00:11:18,750
when they're getting
into the dictator game,

250
00:11:18,750 --> 00:11:23,280
they feel compelled to give at
least some money because either

251
00:11:23,280 --> 00:11:24,870
they feel bad
themselves somehow,

252
00:11:24,870 --> 00:11:27,510
or they feel that the
other person will feel bad.

253
00:11:27,510 --> 00:11:29,520
So you kind of want
to choose 10-0.

254
00:11:29,520 --> 00:11:32,760
But you feel bad about the
other person feeling bad

255
00:11:32,760 --> 00:11:36,600
if you choose 10-0, so you might
be inclined to choose 8-2, 7-3,

256
00:11:36,600 --> 00:11:38,400
or the like.

257
00:11:38,400 --> 00:11:41,760
Now if you allow the
costless exit option,

258
00:11:41,760 --> 00:11:43,800
the person who in the
standard dictator game

259
00:11:43,800 --> 00:11:48,060
would choose like 7-3,
6-4, or 8-2 or the like,

260
00:11:48,060 --> 00:11:52,170
that person, in fact,
wants to choose the 10-0

261
00:11:52,170 --> 00:11:57,780
but feels bad in the standard
dictator game, so chooses 7-3.

262
00:11:57,780 --> 00:12:00,390
Once you allow
the costless exit,

263
00:12:00,390 --> 00:12:04,780
the person just chooses the
10-0 and essentially, then,

264
00:12:04,780 --> 00:12:09,690
by opting out, effectively
is choosing 10-0.

265
00:12:09,690 --> 00:12:12,600
Now a different version of
this-- so what I showed you

266
00:12:12,600 --> 00:12:14,370
so far was costless exit.

267
00:12:14,370 --> 00:12:16,110
It essentially was free to exit.

268
00:12:16,110 --> 00:12:19,380
You could just choose
the 10-0 and just run.

269
00:12:19,380 --> 00:12:22,500
There was no cost of doing so.

270
00:12:22,500 --> 00:12:23,880
The pie stayed the same.

271
00:12:23,880 --> 00:12:25,740
There was no
subtraction of that.

272
00:12:25,740 --> 00:12:28,500
Now different
versions of that games

273
00:12:28,500 --> 00:12:31,290
were the exit is
actually costly.

274
00:12:31,290 --> 00:12:34,080
That is to say, instead of
choosing a dictator game where

275
00:12:34,080 --> 00:12:38,500
you can share 10 euros between
the dictator and the recipient,

276
00:12:38,500 --> 00:12:40,140
now you can choose
the exit option.

277
00:12:40,140 --> 00:12:42,750
You have to pay, essentially,
one euro for the exit option

278
00:12:42,750 --> 00:12:46,290
so you get 9 euros if you exit,
and the other person still

279
00:12:46,290 --> 00:12:48,150
gets 0.

280
00:12:48,150 --> 00:12:54,370
So that's now to say people then
choose the costly exit, which

281
00:12:54,370 --> 00:12:57,400
is to say they say, I'd
rather do the 9 euros

282
00:12:57,400 --> 00:13:00,010
and not play the dictator
game with this other person.

283
00:13:00,010 --> 00:13:02,560
Rather than playing
the dictator game

284
00:13:02,560 --> 00:13:04,990
where you get 10
euros potentially,

285
00:13:04,990 --> 00:13:08,740
you could choose 10 euros
and 0 for the other person.

286
00:13:08,740 --> 00:13:14,140
But there seem to be quite a few
people who choose, essentially,

287
00:13:14,140 --> 00:13:17,950
the costly exit, the 9 euros,
without playing the game.

288
00:13:17,950 --> 00:13:20,030
And so they're here.

289
00:13:20,030 --> 00:13:23,290
Say average subjects are
willing to take 82% of the pie

290
00:13:23,290 --> 00:13:26,230
rather than split the full
pie in the dictator game.

291
00:13:26,230 --> 00:13:27,640
That is to say
people essentially

292
00:13:27,640 --> 00:13:29,890
are willing to forgo
quite a bit of money

293
00:13:29,890 --> 00:13:31,480
to face the situation
where you have

294
00:13:31,480 --> 00:13:33,103
to deal with this other person.

295
00:13:33,103 --> 00:13:35,020
Notice that you could
choose exactly the same.

296
00:13:35,020 --> 00:13:37,840
You could choose 10-0
or 9-0 or the like.

297
00:13:37,840 --> 00:13:39,480
People don't want to do that.

298
00:13:39,480 --> 00:13:43,600
Instead, they choose
the costly exit option

299
00:13:43,600 --> 00:13:45,280
so the other person
never finds out.

300
00:13:45,280 --> 00:13:46,660
So in some ways, you
don't have to deal

301
00:13:46,660 --> 00:13:48,368
with yourself or the
other person feeling

302
00:13:48,368 --> 00:13:51,430
bad about your not being nice.

303
00:13:51,430 --> 00:13:52,900
And so that reveals,
in some sense,

304
00:13:52,900 --> 00:13:56,140
saying if you see people
being nice in dictator games,

305
00:13:56,140 --> 00:13:58,300
it seems to be, at
least to some degree,

306
00:13:58,300 --> 00:14:00,400
that's not coming
from people generally

307
00:14:00,400 --> 00:14:02,290
wanting to be nice
to the other person

308
00:14:02,290 --> 00:14:05,860
and generally wanting to improve
people's payout for the sake

309
00:14:05,860 --> 00:14:07,390
of making them richer.

310
00:14:07,390 --> 00:14:08,890
But it's rather
they want to avoid

311
00:14:08,890 --> 00:14:10,810
the other person
feels bad about them,

312
00:14:10,810 --> 00:14:13,120
or getting mad or the like.

313
00:14:13,120 --> 00:14:14,830
Now do let me just repeat that.

314
00:14:14,830 --> 00:14:17,590
Why do people
subject want to exit?

315
00:14:17,590 --> 00:14:21,023
Well, simply put, they want to
take the money for themselves,

316
00:14:21,023 --> 00:14:23,440
but they don't want to indicate
to the potential recipient

317
00:14:23,440 --> 00:14:25,270
that she's been
treated unfairly.

318
00:14:25,270 --> 00:14:28,030
So exiting allows them
to satisfy their greed

319
00:14:28,030 --> 00:14:31,225
and not to worry about the
participant's reaction.

320
00:14:34,210 --> 00:14:35,589
Do you have any questions?

321
00:14:42,300 --> 00:14:43,010
OK.

322
00:14:43,010 --> 00:14:45,440
So that's the first
piece of evidence.

323
00:14:45,440 --> 00:14:51,170
That's Lazear et al on costly
exit in a dictator game.

324
00:14:51,170 --> 00:14:53,600
Now we discussed
already very last time

325
00:14:53,600 --> 00:14:55,820
another version of
that, which essentially

326
00:14:55,820 --> 00:15:00,380
is a different version,
which is providing excuses

327
00:15:00,380 --> 00:15:03,080
or covers to be selfish.

328
00:15:03,080 --> 00:15:05,210
This is a very nice paper
by Andreoni and Bernheim,

329
00:15:05,210 --> 00:15:07,130
where essentially the
short summary of this

330
00:15:07,130 --> 00:15:10,400
is what they do is they
allow for a computer option.

331
00:15:10,400 --> 00:15:12,980
They allow for an option where
essentially, the computer

332
00:15:12,980 --> 00:15:17,660
decides in some
cases, which gives

333
00:15:17,660 --> 00:15:20,470
people cover to be not nice.

334
00:15:20,470 --> 00:15:22,850
So if there's a chance that
you will decide yourself

335
00:15:22,850 --> 00:15:25,640
and a chance that the computer
decides, and the recipient

336
00:15:25,640 --> 00:15:29,150
doesn't know whether I chose
or the computer decided--

337
00:15:29,150 --> 00:15:31,160
say it's 50% or the like--

338
00:15:31,160 --> 00:15:35,660
I might choose a
very mean choice

339
00:15:35,660 --> 00:15:39,327
because I can always say, well,
you know, I didn't do this.

340
00:15:39,327 --> 00:15:40,160
It was the computer.

341
00:15:40,160 --> 00:15:41,850
I wanted to be
really nice to you.

342
00:15:41,850 --> 00:15:43,970
The computer happened
to be just mean.

343
00:15:43,970 --> 00:15:45,850
Sorry about that.

344
00:15:45,850 --> 00:15:47,790
I really tried to
be nice to you.

345
00:15:47,790 --> 00:15:50,480
And so people essentially
use the computer as cover.

346
00:15:50,480 --> 00:15:53,010
Let me show you what this
exact evidence looks like.

347
00:15:53,010 --> 00:15:56,160
So this is a different version
of a non-anonymous dictator

348
00:15:56,160 --> 00:15:56,660
game.

349
00:15:56,660 --> 00:15:59,103
So this game is sort
of set up in a way

350
00:15:59,103 --> 00:16:00,770
that you actually
know the other person,

351
00:16:00,770 --> 00:16:03,500
so you have to sort of face
the other person, at least

352
00:16:03,500 --> 00:16:04,590
in some way.

353
00:16:04,590 --> 00:16:09,080
And so the way this is set up is
that the dictator's choice was

354
00:16:09,080 --> 00:16:11,390
forced with some probability.

355
00:16:11,390 --> 00:16:17,360
So this is a dictator
game with $20.

356
00:16:17,360 --> 00:16:23,000
Now in the simplest version, the
computer chooses 20-0 or 0-20

357
00:16:23,000 --> 00:16:25,100
with equal probability.

358
00:16:25,100 --> 00:16:26,870
So if the computer
chooses, the computer

359
00:16:26,870 --> 00:16:30,470
chooses either 20-0 or
0-20 with 50% chance each

360
00:16:30,470 --> 00:16:32,810
if it's the computer's turn.

361
00:16:32,810 --> 00:16:34,850
The dictator observes
the allocation

362
00:16:34,850 --> 00:16:36,080
chosen by the computer.

363
00:16:36,080 --> 00:16:38,450
The recipient does not.

364
00:16:38,450 --> 00:16:42,575
If I'm the dictator, I can
see what the computer does,

365
00:16:42,575 --> 00:16:44,450
and then I'm sort of
asked to make my choice.

366
00:16:44,450 --> 00:16:49,580
The recipient does not know what
the computer actually chose.

367
00:16:49,580 --> 00:16:52,160
The dictator then makes a
dictator game allocation

368
00:16:52,160 --> 00:16:54,380
with a pie of $20
such as before.

369
00:16:54,380 --> 00:16:57,050
Just happens to be
$20 rather than $10.

370
00:16:57,050 --> 00:17:00,470
And the computer's
forced allocation

371
00:17:00,470 --> 00:17:04,369
implemented with probability p
is known both to the dictator

372
00:17:04,369 --> 00:17:05,569
and to recipient.

373
00:17:05,569 --> 00:17:09,230
So the recipient knows
what the chance of p

374
00:17:09,230 --> 00:17:12,920
is that I'm choosing versus
the computer choosing.

375
00:17:12,920 --> 00:17:17,420
So the computer chooses
with probability p.

376
00:17:17,420 --> 00:17:21,230
The dictator chooses with
probability 1 minus p.

377
00:17:21,230 --> 00:17:28,030
That is known to both the
recipient and to the dictator.

378
00:17:28,030 --> 00:17:35,980
And now the game will
vary the probability p.

379
00:17:35,980 --> 00:17:38,800
So if the probability
p is like a 0,

380
00:17:38,800 --> 00:17:41,380
if the computer never chooses,
and only the dictator chooses,

381
00:17:41,380 --> 00:17:43,990
then we're back to the
typical dictator game.

382
00:17:43,990 --> 00:17:46,270
Then I cannot hide
behind the computer.

383
00:17:46,270 --> 00:17:48,280
It's obvious that I'm choosing.

384
00:17:48,280 --> 00:17:52,000
If I'm choosing
20-0, you know that,

385
00:17:52,000 --> 00:17:55,840
so I have no way of
blaming the computer.

386
00:17:55,840 --> 00:18:01,300
If, in contrast, the
probability is larger than 0--

387
00:18:01,300 --> 00:18:04,220
suppose the probability
is 50%, 60%, 70%--

388
00:18:04,220 --> 00:18:06,790
it's very likely that
the computer chose.

389
00:18:06,790 --> 00:18:10,990
So now I can also choose 20-0
and just say, well, sorry,

390
00:18:10,990 --> 00:18:13,210
it happens to be that
the computer implemented

391
00:18:13,210 --> 00:18:14,440
this choice.

392
00:18:14,440 --> 00:18:15,880
Sorry that you got 0.

393
00:18:15,880 --> 00:18:18,430
So I can essentially
hide behind the computer.

394
00:18:18,430 --> 00:18:20,230
And the larger the
probability p is,

395
00:18:20,230 --> 00:18:23,350
the more credible is this
hiding behind the computer

396
00:18:23,350 --> 00:18:26,740
because you know if the
chance is only 5% or 10%,

397
00:18:26,740 --> 00:18:29,440
you might not believe me that
the computer actually chose.

398
00:18:29,440 --> 00:18:31,270
You're like, yeah,
yeah, Frank, you're

399
00:18:31,270 --> 00:18:32,110
telling me it was the computer.

400
00:18:32,110 --> 00:18:32,860
Really it was you.

401
00:18:32,860 --> 00:18:35,500
But if the chance
is 90% or the like,

402
00:18:35,500 --> 00:18:38,290
then it's actually very
likely, very plausible

403
00:18:38,290 --> 00:18:41,170
that the computer
chose the main outcome.

404
00:18:41,170 --> 00:18:43,325
And then I might also just
choose the mean outcome

405
00:18:43,325 --> 00:18:44,950
because you're never
going to find out.

406
00:18:44,950 --> 00:18:47,350
You're not going to suspect
that this was me as opposed

407
00:18:47,350 --> 00:18:49,640
to the computer.

408
00:18:49,640 --> 00:18:53,050
And then at the
end, the recipient

409
00:18:53,050 --> 00:18:57,120
only learns the allocation,
not the dictator's choice.

410
00:18:57,120 --> 00:18:59,590
The recipient only
learns what they get.

411
00:18:59,590 --> 00:19:02,680
They do not learn what I
chose or whether it was

412
00:19:02,680 --> 00:19:05,050
the computer or me who chose.

413
00:19:05,050 --> 00:19:09,490
They only know the probability
p with which the computer or I

414
00:19:09,490 --> 00:19:10,690
made that choice.

415
00:19:10,690 --> 00:19:12,390
Yeah.

416
00:19:12,390 --> 00:19:13,904
AUDIENCE: Does the
dictator know p

417
00:19:13,904 --> 00:19:15,800
before he makes his allocation?

418
00:19:19,120 --> 00:19:19,820
PROFESSOR: Yes.

419
00:19:19,820 --> 00:19:20,320
Yes.

420
00:19:20,320 --> 00:19:22,270
So exactly.

421
00:19:22,270 --> 00:19:23,740
The dictator knows p.

422
00:19:23,740 --> 00:19:26,890
The dictator even knows,
I think, the actual choice

423
00:19:26,890 --> 00:19:29,590
that the computer made, yeah.

424
00:19:29,590 --> 00:19:31,160
But that's key here.

425
00:19:31,160 --> 00:19:34,840
So both the dictator and
the recipient know p.

426
00:19:34,840 --> 00:19:38,590
That's really important because
only if I know what p is,

427
00:19:38,590 --> 00:19:40,720
I can actually react
to it and hide.

428
00:19:40,720 --> 00:19:43,165
So the prediction
here will be that if p

429
00:19:43,165 --> 00:19:46,210
is very high, if the computer
chooses with high probability,

430
00:19:46,210 --> 00:19:51,280
people will be more likely
to be mean in the 10-0 case

431
00:19:51,280 --> 00:19:53,530
because I could just
essentially emulate the computer

432
00:19:53,530 --> 00:19:54,490
and hide behind it.

433
00:19:54,490 --> 00:19:58,030
But for that I need to
know exactly what p is.

434
00:19:58,030 --> 00:20:00,520
So now what do distributional
preferences here predict?

435
00:20:00,520 --> 00:20:02,050
Again, distributional
preferences

436
00:20:02,050 --> 00:20:05,150
are preferences such that you
only care about the outcome.

437
00:20:05,150 --> 00:20:08,570
You don't care about
how this came about.

438
00:20:08,570 --> 00:20:11,110
So the dictator here should
only think about the case

439
00:20:11,110 --> 00:20:13,060
in which her choice counts.

440
00:20:13,060 --> 00:20:15,185
That is to say, the computer
is entirely irrelevant

441
00:20:15,185 --> 00:20:17,810
because again, I can't influence
what the computer does anyway.

442
00:20:17,810 --> 00:20:20,530
It doesn't matter whether the
computer chooses with 5% or 10%

443
00:20:20,530 --> 00:20:24,160
or a 20% chance, or
50%, even 70% chance.

444
00:20:24,160 --> 00:20:25,960
The only thing I
should care about

445
00:20:25,960 --> 00:20:30,040
is well, for the chance of 1
minus p when I choose myself,

446
00:20:30,040 --> 00:20:31,030
what am I going to do?

447
00:20:31,030 --> 00:20:32,822
And what are my
distributional preferences?

448
00:20:32,822 --> 00:20:36,160
How much do I want to give
you versus the other person?

449
00:20:36,160 --> 00:20:37,930
And that's essentially
the only case

450
00:20:37,930 --> 00:20:41,380
in which she can, in fact,
affect the distribution.

451
00:20:41,380 --> 00:20:47,437
And so p should have essentially
no effect in people's choices.

452
00:20:47,437 --> 00:20:49,270
So that's a very
straightforward prediction.

453
00:20:49,270 --> 00:20:51,310
Essentially, you only
care about the case

454
00:20:51,310 --> 00:20:52,870
when you can make a difference.

455
00:20:52,870 --> 00:20:54,790
And in that case,
you just choose

456
00:20:54,790 --> 00:20:58,600
whatever you want to choose
between 20-0 and 0-20,

457
00:20:58,600 --> 00:21:01,367
whatever you want to
give the other person.

458
00:21:01,367 --> 00:21:03,700
The other cases are just
irrelevant because they are out

459
00:21:03,700 --> 00:21:05,440
of the person's control.

460
00:21:05,440 --> 00:21:07,390
Now why might p matter anyway?

461
00:21:07,390 --> 00:21:08,380
I already said that.

462
00:21:08,380 --> 00:21:10,690
Essentially p might
matter because you

463
00:21:10,690 --> 00:21:14,940
can hide behind the computer
if p is particularly high.

464
00:21:14,940 --> 00:21:15,720
Yes.

465
00:21:15,720 --> 00:21:18,510
AUDIENCE: So the recipient
knows that the computer can only

466
00:21:18,510 --> 00:21:21,353
choose 20 or 0?

467
00:21:21,353 --> 00:21:22,020
PROFESSOR: Yeah.

468
00:21:22,020 --> 00:21:24,780
There's different
versions of that, exactly.

469
00:21:24,780 --> 00:21:25,380
Exactly.

470
00:21:25,380 --> 00:21:29,550
In some case, the computer
could choose 20-0,

471
00:21:29,550 --> 00:21:31,750
0-20 with equal probability.

472
00:21:31,750 --> 00:21:33,360
So the recipient knows that.

473
00:21:33,360 --> 00:21:35,160
That's known.

474
00:21:35,160 --> 00:21:37,612
AUDIENCE: If it's like a
80-20 and the recipient

475
00:21:37,612 --> 00:21:39,388
knows automatically.

476
00:21:39,388 --> 00:21:40,180
PROFESSOR: Exactly.

477
00:21:40,180 --> 00:21:41,055
That's exactly right.

478
00:21:41,055 --> 00:21:43,330
I'm going to show you
exactly that evidence.

479
00:21:43,330 --> 00:21:45,890
In fact, what the
game will do is--

480
00:21:45,890 --> 00:21:46,390
sorry.

481
00:21:46,390 --> 00:21:47,860
The question was
does the recipient

482
00:21:47,860 --> 00:21:52,440
know whether it's 20-0 versus
18-two or something else?

483
00:21:52,440 --> 00:21:54,130
And that's exactly right.

484
00:21:54,130 --> 00:21:57,280
The only plausible way in which
I can hide behind the computer,

485
00:21:57,280 --> 00:22:00,550
in this case, is if I want
to be selfish, is 20-0.

486
00:22:00,550 --> 00:22:03,048
If I choose 19-one,
you know it was me.

487
00:22:03,048 --> 00:22:05,590
It can't end up in the computer
because the computer can only

488
00:22:05,590 --> 00:22:07,750
do 20-0-0-20.

489
00:22:07,750 --> 00:22:08,825
And that's key here.

490
00:22:08,825 --> 00:22:10,450
And there's going to
be some variation.

491
00:22:10,450 --> 00:22:13,270
And that variation will
really what the computer does.

492
00:22:13,270 --> 00:22:14,860
And essentially
that will exactly

493
00:22:14,860 --> 00:22:17,710
reveal people hiding
behind the computer

494
00:22:17,710 --> 00:22:20,740
because then some variation
will be the computer does 19-1,

495
00:22:20,740 --> 00:22:23,530
and suddenly people
choose a lot of 19-1.

496
00:22:23,530 --> 00:22:25,390
And the only reason
why you might do that

497
00:22:25,390 --> 00:22:26,770
is exactly because
you might want

498
00:22:26,770 --> 00:22:28,960
to hide behind the computer.

499
00:22:28,960 --> 00:22:31,180
So let me show you that,
exactly that, in fact.

500
00:22:31,180 --> 00:22:35,680
So here's now what we find.

501
00:22:35,680 --> 00:22:37,310
This is a bit of a
complicated graph

502
00:22:37,310 --> 00:22:40,550
so let me try to walk you
through that in detail.

503
00:22:40,550 --> 00:22:42,910
So the graph shows
you the following.

504
00:22:42,910 --> 00:22:46,720
It shows you on the y-axis
the fraction that people gave,

505
00:22:46,720 --> 00:22:49,070
on, average for, the
different scenarios.

506
00:22:49,070 --> 00:22:52,373
So how much, what
percentage of the $20

507
00:22:52,373 --> 00:22:54,040
did the person give
to the other person,

508
00:22:54,040 --> 00:22:55,768
decide the dictator to do?

509
00:22:55,768 --> 00:22:56,810
This is not the computer.

510
00:22:56,810 --> 00:22:59,470
So this is only the
dictator's choices.

511
00:22:59,470 --> 00:23:01,660
On the x-axis, we
see the probability

512
00:23:01,660 --> 00:23:07,250
of the forced choice,
of x 0 being 0.

513
00:23:10,140 --> 00:23:12,970
This is essentially to say
what is the forced choice?

514
00:23:12,970 --> 00:23:17,270
What is the chance that
the other person gets 0?

515
00:23:17,270 --> 00:23:20,970
The computer chooses with
some probability 20-0,

516
00:23:20,970 --> 00:23:23,730
so 20 for the dictator and
0 for the other person,

517
00:23:23,730 --> 00:23:26,220
and that's happening for
different probability.

518
00:23:26,220 --> 00:23:31,590
So the probability is
either 0, 25%, 50%, or 75%.

519
00:23:31,590 --> 00:23:33,880
That's the p that I
mentioned earlier.

520
00:23:33,880 --> 00:23:37,770
Let's look at p equals
0% to start with.

521
00:23:37,770 --> 00:23:40,125
That's essentially
the scenario in which

522
00:23:40,125 --> 00:23:41,250
the computer is irrelevant.

523
00:23:41,250 --> 00:23:43,500
The computer never
makes any choices.

524
00:23:43,500 --> 00:23:47,040
What you see, essentially,
is the typical behavior

525
00:23:47,040 --> 00:23:48,450
in dictator games.

526
00:23:48,450 --> 00:23:50,780
Sorry, I should have also
mentioned that here's much,

527
00:23:50,780 --> 00:23:53,190
then the different
lines are, like how much

528
00:23:53,190 --> 00:23:55,570
is given to the other person.

529
00:23:55,570 --> 00:23:58,170
So the blue line that
you see there is like 10.

530
00:23:58,170 --> 00:23:59,640
That's the 10-10 allocation.

531
00:23:59,640 --> 00:24:02,610
How much is the dictator
giving to the other person?

532
00:24:02,610 --> 00:24:04,530
The red line is a 0.

533
00:24:04,530 --> 00:24:06,870
This is essentially
the 20-0 allocation.

534
00:24:06,870 --> 00:24:11,430
And the other two lines
down there are 1, 2 to 9,

535
00:24:11,430 --> 00:24:14,618
and there's also larger than 10.

536
00:24:14,618 --> 00:24:16,410
What we're going to
focus on is essentially

537
00:24:16,410 --> 00:24:18,420
how often does
the person give 0,

538
00:24:18,420 --> 00:24:21,940
and how often does the
person give, like, 50%?

539
00:24:21,940 --> 00:24:24,400
So when you look at the 0%
line, essentially, that's

540
00:24:24,400 --> 00:24:25,650
the typical dictator choice.

541
00:24:25,650 --> 00:24:26,610
Again, p is 0.

542
00:24:26,610 --> 00:24:28,110
The computer is
entirely irrelevant.

543
00:24:28,110 --> 00:24:30,000
The computer can't do anything.

544
00:24:30,000 --> 00:24:32,090
Now I cannot hide
behind the computer.

545
00:24:32,090 --> 00:24:34,680
You get sort of the typical
dictator game outcomes.

546
00:24:34,680 --> 00:24:38,340
But just, like, 55% of people,
actually, more than usual,

547
00:24:38,340 --> 00:24:39,810
give half.

548
00:24:39,810 --> 00:24:42,660
They choose the
10-10 allocation.

549
00:24:42,660 --> 00:24:44,400
About 30% of people choose 0.

550
00:24:44,400 --> 00:24:45,540
That's very common.

551
00:24:45,540 --> 00:24:49,170
And then there are some people
below that give either 2 to 9,

552
00:24:49,170 --> 00:24:52,380
or 1 or even larger than 10.

553
00:24:52,380 --> 00:24:56,250
So that's typically what
we see in a dictator game.

554
00:24:56,250 --> 00:24:59,640
Now moving to the right
is now positive p's.

555
00:24:59,640 --> 00:25:06,060
This is p equals
0.25%, 50%, 75%.

556
00:25:06,060 --> 00:25:08,525
And now what we're
seeing, essentially,

557
00:25:08,525 --> 00:25:09,900
is that as you
move to the right,

558
00:25:09,900 --> 00:25:14,700
in particular going from
0 to 25 and from 25 to 50,

559
00:25:14,700 --> 00:25:18,060
the probability of, or
the fraction of people

560
00:25:18,060 --> 00:25:23,040
who choose 0 for the other
person goes up quite a bit.

561
00:25:23,040 --> 00:25:26,980
So now, for example, look at
the 50% chance equals 50%.

562
00:25:26,980 --> 00:25:30,810
Now there's a 50% chance that
the other person gets 0 anyway

563
00:25:30,810 --> 00:25:33,030
because the computer chose so.

564
00:25:33,030 --> 00:25:36,900
And now, if I'm the
dictator, essentially I

565
00:25:36,900 --> 00:25:39,420
can also choose 20-0.

566
00:25:39,420 --> 00:25:42,360
And we know once you, as a
recipient, see the outcome,

567
00:25:42,360 --> 00:25:45,720
you cannot tell if it was a
50% chance that it was me,

568
00:25:45,720 --> 00:25:50,580
it was a 50% chance it was
the computer choosing that.

569
00:25:50,580 --> 00:25:55,230
And so in that case, you
see now that 70% of people

570
00:25:55,230 --> 00:25:57,180
actually choose 20-0.

571
00:25:57,180 --> 00:26:02,400
So that fraction goes up from
30% for p equals 0 to about 50%

572
00:26:02,400 --> 00:26:07,680
for p equals 25%, and
to 70% for p equals 50%.

573
00:26:07,680 --> 00:26:11,190
So essentially, the larger p
is, at least for the range of 0

574
00:26:11,190 --> 00:26:13,710
to 50%, the larger
is the fraction

575
00:26:13,710 --> 00:26:16,740
of people who actually
choose the 20-0 allocation,

576
00:26:16,740 --> 00:26:19,230
presumably because it's
now more plausible if I'm

577
00:26:19,230 --> 00:26:20,550
hiding behind the computer.

578
00:26:23,220 --> 00:26:26,080
Now you see for
people, 75%, now there

579
00:26:26,080 --> 00:26:29,820
seems to be sort of
no increase anymore.

580
00:26:29,820 --> 00:26:32,550
It's a little unclear
how to interpret that.

581
00:26:32,550 --> 00:26:36,388
To some degree, this could be
because now, 50% is already

582
00:26:36,388 --> 00:26:36,930
large enough.

583
00:26:36,930 --> 00:26:39,840
That's already very plausible
that the computer chose anyway,

584
00:26:39,840 --> 00:26:42,480
so going from 50 to 75,
there's no additional benefits

585
00:26:42,480 --> 00:26:44,190
of hiding behind the computer.

586
00:26:44,190 --> 00:26:46,245
It could also be that
people in some way sort

587
00:26:46,245 --> 00:26:48,120
feel bad for the other
person because there's

588
00:26:48,120 --> 00:26:51,140
a high chance that they get
0 anyway from the computer.

589
00:26:51,140 --> 00:26:54,330
So you might as well give
something to that other person,

590
00:26:54,330 --> 00:26:54,960
perhaps.

591
00:26:54,960 --> 00:26:57,120
I'm not quite sure, but that's,
in some sense, not the point

592
00:26:57,120 --> 00:26:57,640
here.

593
00:26:57,640 --> 00:27:00,060
The point here is that
the fraction who are mean

594
00:27:00,060 --> 00:27:02,800
goes up by a lot when you
can hide behind the computer.

595
00:27:02,800 --> 00:27:04,680
The fraction who
looks or is quite

596
00:27:04,680 --> 00:27:07,080
nice who chooses
the 10-10 allocation

597
00:27:07,080 --> 00:27:09,325
goes down by quite a bit.

598
00:27:09,325 --> 00:27:10,200
Does that make sense?

599
00:27:10,200 --> 00:27:13,500
And the following slides
have added a fairly detailed

600
00:27:13,500 --> 00:27:14,340
description of this.

601
00:27:14,340 --> 00:27:17,820
But let's pause for a second to
see whether that makes sense.

602
00:27:22,060 --> 00:27:24,370
So I think I have
already said all of this.

603
00:27:24,370 --> 00:27:27,375
This is to say, the
higher p star or p is,

604
00:27:27,375 --> 00:27:28,750
the easier it is
for the dictator

605
00:27:28,750 --> 00:27:30,700
to hide behind the computer.

606
00:27:30,700 --> 00:27:33,010
I said all of that already.

607
00:27:33,010 --> 00:27:36,700
So when you sort of take
together this evidence,

608
00:27:36,700 --> 00:27:38,890
it seems to be evidence
that people are not

609
00:27:38,890 --> 00:27:44,500
as nice as results from
simple dictator games

610
00:27:44,500 --> 00:27:46,870
might suggest because,
in some sense,

611
00:27:46,870 --> 00:27:48,610
in the simple
dictator games, they

612
00:27:48,610 --> 00:27:52,090
would like to do something
else, but they just can't really

613
00:27:52,090 --> 00:27:54,460
do so.

614
00:27:54,460 --> 00:27:56,380
And this is kind of
like your question here.

615
00:27:56,380 --> 00:27:59,620
This is a very nice
variation that they have.

616
00:27:59,620 --> 00:28:02,500
This is a different variation
where the computer now chooses

617
00:28:02,500 --> 00:28:05,200
19-1 with probability p.

618
00:28:05,200 --> 00:28:07,660
So the computer essentially
chooses 19 for the dictator

619
00:28:07,660 --> 00:28:10,510
and 1 for the other person
with probability, again,

620
00:28:10,510 --> 00:28:15,010
p equals 0, 25%, 50%, 75%.

621
00:28:15,010 --> 00:28:17,620
And exactly as you sort of
predicted and thought about,

622
00:28:17,620 --> 00:28:20,260
is you see the same thing
happening for the people

623
00:28:20,260 --> 00:28:20,860
choosing 10.

624
00:28:20,860 --> 00:28:22,570
That fraction goes down.

625
00:28:22,570 --> 00:28:25,792
But instead, people are not
now choosing more of 20-0.

626
00:28:25,792 --> 00:28:27,500
Instead, what they're
choosing-- in fact,

627
00:28:27,500 --> 00:28:29,417
there's a fraction of
people that choose 20-0.

628
00:28:29,417 --> 00:28:31,180
The red line goes down a bit.

629
00:28:31,180 --> 00:28:34,870
Instead, what goes up
is the 19-1 allocation.

630
00:28:34,870 --> 00:28:37,630
So lots of people now
choose 19 for themselves

631
00:28:37,630 --> 00:28:39,290
and 1 for the other person.

632
00:28:39,290 --> 00:28:40,370
Why is that?

633
00:28:40,370 --> 00:28:42,910
It's because now you can
hide between the 19-1 choice

634
00:28:42,910 --> 00:28:44,290
of the computer.

635
00:28:44,290 --> 00:28:46,750
And that's the selfish choice.

636
00:28:46,750 --> 00:28:51,790
The 20-0 choice, in fact,
goes down a little bit,

637
00:28:51,790 --> 00:28:55,420
perhaps because it becomes quite
obvious that these are people

638
00:28:55,420 --> 00:28:58,120
who are quite selfish anyway.

639
00:28:58,120 --> 00:28:59,950
But now they choose
the 19-1 option.

640
00:28:59,950 --> 00:29:03,940
They switch to 19-1 because
now, you're kind of mean anyway,

641
00:29:03,940 --> 00:29:06,490
but now you can essentially
hide behind the computer.

642
00:29:06,490 --> 00:29:08,600
OK?

643
00:29:08,600 --> 00:29:09,670
Any questions on this?

644
00:29:15,160 --> 00:29:16,790
So now what's going on here?

645
00:29:16,790 --> 00:29:22,930
So one potential explanation
is face-saving concerns,

646
00:29:22,930 --> 00:29:24,770
essentially social image.

647
00:29:24,770 --> 00:29:27,550
So these are the motivation
to avoid unfavorable judgment

648
00:29:27,550 --> 00:29:28,060
by others.

649
00:29:28,060 --> 00:29:29,710
It's essentially if
you care about what

650
00:29:29,710 --> 00:29:31,720
others think about
you, you might

651
00:29:31,720 --> 00:29:33,950
engage in certain behaviors.

652
00:29:33,950 --> 00:29:38,260
So the experiment
provides a way to provide

653
00:29:38,260 --> 00:29:40,040
people to avoid such judgments.

654
00:29:40,040 --> 00:29:42,400
So remember, this is
not an anonymous game.

655
00:29:42,400 --> 00:29:44,020
You have to face
this other person

656
00:29:44,020 --> 00:29:46,880
and deal with them afterwards,
at least in some way.

657
00:29:46,880 --> 00:29:49,330
So now, essentially, the
experiment, the computer

658
00:29:49,330 --> 00:29:53,050
provides, essentially, people
an opportunity to save face,

659
00:29:53,050 --> 00:29:56,902
and essentially to keep
up their social image

660
00:29:56,902 --> 00:29:59,110
because essentially, what
you're trying to avoid here

661
00:29:59,110 --> 00:30:02,560
is if you choose the 20-0
option the other person will

662
00:30:02,560 --> 00:30:03,820
think you're not very nice.

663
00:30:03,820 --> 00:30:07,150
And either you're
trying to avoid to have

664
00:30:07,150 --> 00:30:08,770
to see that they're unhappy.

665
00:30:08,770 --> 00:30:11,350
You might just feel bad about
them if they're unhappy.

666
00:30:11,350 --> 00:30:15,270
Or perhaps more plausible,
it just feels bad for you

667
00:30:15,270 --> 00:30:17,020
if other people think
you're kind of mean.

668
00:30:17,020 --> 00:30:18,825
So you want to be
mean, but you don't

669
00:30:18,825 --> 00:30:20,200
want others to
think you're mean,

670
00:30:20,200 --> 00:30:23,932
and therefore you hide
behind the computer.

671
00:30:23,932 --> 00:30:25,390
I think I said all
of this already.

672
00:30:25,390 --> 00:30:28,420
So both of these
types of evidence,

673
00:30:28,420 --> 00:30:31,660
I think, the exit in
the dictator game,

674
00:30:31,660 --> 00:30:35,138
but also the evidence
that I showed you

675
00:30:35,138 --> 00:30:36,680
just now, hiding
behind the computer,

676
00:30:36,680 --> 00:30:44,260
seems to say when there's an
option to avoid people feeling

677
00:30:44,260 --> 00:30:47,440
bad or people feeling
that you're mean to them,

678
00:30:47,440 --> 00:30:50,710
people tend to take that option,
and then essentially, that

679
00:30:50,710 --> 00:30:53,440
reduces their giving behavior.

680
00:30:53,440 --> 00:30:56,650
Now in some sense, when you
think about many other--

681
00:30:56,650 --> 00:30:59,320
and there's some empirical
evidence on this by Gautam Rao

682
00:30:59,320 --> 00:31:05,200
and Stefano
DellaVigna and others,

683
00:31:05,200 --> 00:31:10,780
in a situation when it comes
to voting or other gift-giving

684
00:31:10,780 --> 00:31:17,920
choices overall, people are
willing to pay, essentially,

685
00:31:17,920 --> 00:31:21,127
to avoid situations where
they're asked to give.

686
00:31:21,127 --> 00:31:23,210
This is like somebody comes
to your door and says,

687
00:31:23,210 --> 00:31:25,030
would you like to
donate for this cause,

688
00:31:25,030 --> 00:31:28,240
or would you like to
vote for this candidate,

689
00:31:28,240 --> 00:31:30,020
and so on and so forth.

690
00:31:30,020 --> 00:31:33,790
People might, once they ask
them, I'd say, yeah, sure,

691
00:31:33,790 --> 00:31:36,610
I'll do it because
they feel bad,

692
00:31:36,610 --> 00:31:38,740
or it feels like it's not
a very-- so [INAUDIBLE]

693
00:31:38,740 --> 00:31:42,250
shows you pictures
of poor children

694
00:31:42,250 --> 00:31:46,420
and some terrible situations.

695
00:31:46,420 --> 00:31:49,450
If you are now saying, no, I
don't want to give any money,

696
00:31:49,450 --> 00:31:51,670
you look like a
really mean person.

697
00:31:51,670 --> 00:31:53,470
So what people
then tend to do is

698
00:31:53,470 --> 00:31:56,290
they tend to essentially just
avoid the situation altogether

699
00:31:56,290 --> 00:31:58,390
by either pretending
that they're not home

700
00:31:58,390 --> 00:32:00,520
or indicating never
opening the door.

701
00:32:00,520 --> 00:32:02,710
Or if you see somebody
on the street who

702
00:32:02,710 --> 00:32:06,880
wants to collect
donations, you might just

703
00:32:06,880 --> 00:32:09,730
essentially avoid that person
altogether, go out of your way.

704
00:32:09,730 --> 00:32:11,800
If you see a beggar
on the street,

705
00:32:11,800 --> 00:32:15,040
you essentially might
go around that person

706
00:32:15,040 --> 00:32:18,520
because you try to avoid,
essentially, judgment,

707
00:32:18,520 --> 00:32:21,220
either feeling bad for them
about you being mean to them,

708
00:32:21,220 --> 00:32:25,033
or feeling bad about them just
judging you in certain ways

709
00:32:25,033 --> 00:32:26,200
for not being a nice person.

710
00:32:28,820 --> 00:32:31,490
How do we think about this
in terms of utility function?

711
00:32:31,490 --> 00:32:33,580
We're not going to talk
about this very much.

712
00:32:33,580 --> 00:32:35,470
We're going to get
into this a little bit

713
00:32:35,470 --> 00:32:38,500
back about this when
you talk about beliefs

714
00:32:38,500 --> 00:32:40,552
and belief-based utility.

715
00:32:40,552 --> 00:32:42,010
But just to give
you a sense of how

716
00:32:42,010 --> 00:32:45,190
to think about this in terms of
modeling it, so what you need,

717
00:32:45,190 --> 00:32:46,810
essentially, is
like another term.

718
00:32:46,810 --> 00:32:49,930
And utility function-- in
addition to your distributional

719
00:32:49,930 --> 00:32:52,480
preferences about you put some
weight on how much you get

720
00:32:52,480 --> 00:32:54,097
and how much the
other person gets--

721
00:32:54,097 --> 00:32:55,180
you need some other term--

722
00:32:55,180 --> 00:32:56,350
I call it v--

723
00:32:56,350 --> 00:32:58,810
which is player 1's
beliefs about rho.

724
00:32:58,810 --> 00:33:02,257
Like what does the other
person think that your rho is?

725
00:33:02,257 --> 00:33:04,090
So if you really don't
want to give anything

726
00:33:04,090 --> 00:33:06,730
to that other person,
you want to avoid

727
00:33:06,730 --> 00:33:10,240
that the other person thinks
that you put very little weight

728
00:33:10,240 --> 00:33:11,140
on the other person.

729
00:33:11,140 --> 00:33:12,932
So rho, again, to remind
you, is the weight

730
00:33:12,932 --> 00:33:14,380
that's put on the other person.

731
00:33:14,380 --> 00:33:16,420
This is the perspective
of player 2.

732
00:33:16,420 --> 00:33:19,180
So rho is the weight that
you put on the other person.

733
00:33:19,180 --> 00:33:22,750
And now essentially,
player 2 might

734
00:33:22,750 --> 00:33:25,317
put some weight on player
1 in terms of the output

735
00:33:25,317 --> 00:33:25,900
that they get.

736
00:33:25,900 --> 00:33:27,317
They want to give
them some money,

737
00:33:27,317 --> 00:33:30,820
and if they have more
money, they feel happier.

738
00:33:30,820 --> 00:33:32,590
But they also put
some weight on what

739
00:33:32,590 --> 00:33:34,930
player 1 thinks that my rho is.

740
00:33:34,930 --> 00:33:39,040
So if I have the choice,
do I want to give 10?

741
00:33:39,040 --> 00:33:41,530
If I have $10, and I can
choose that in a dictator game

742
00:33:41,530 --> 00:33:47,800
to give it to the other person,
I might want to do 10-0,

743
00:33:47,800 --> 00:33:50,110
and that's essentially
just coming from my rho.

744
00:33:50,110 --> 00:33:52,240
But I also don't
want the other person

745
00:33:52,240 --> 00:33:54,160
to think that my rho is 0.

746
00:33:54,160 --> 00:33:56,380
So I might derive
positive utility

747
00:33:56,380 --> 00:34:00,700
from the other player thinking
that my rho is whatever, 0.3,

748
00:34:00,700 --> 00:34:02,560
0.5, or whatever.

749
00:34:02,560 --> 00:34:04,680
I like that the other
person thinks that I'm

750
00:34:04,680 --> 00:34:06,790
of a positive weight on them.

751
00:34:06,790 --> 00:34:08,657
And therefore, I
might give them more.

752
00:34:08,657 --> 00:34:11,199
More generally, I guess you can
just sort of have the utility

753
00:34:11,199 --> 00:34:14,080
function that depends on
the other person's outputs

754
00:34:14,080 --> 00:34:19,860
or on each person's
outcome, how much they get,

755
00:34:19,860 --> 00:34:24,530
and on the other's beliefs about
what my utility function looks

756
00:34:24,530 --> 00:34:25,030
like.

757
00:34:25,030 --> 00:34:26,820
So essentially,
people care about

758
00:34:26,820 --> 00:34:29,250
whether others think
that they are nice

759
00:34:29,250 --> 00:34:34,310
or have concerns for others
in the utility function.

760
00:34:34,310 --> 00:34:36,719
Again, we're not going to
talk about this in more

761
00:34:36,719 --> 00:34:38,100
detail, at least for now.

762
00:34:38,100 --> 00:34:40,590
We're going to get back to this
when we think about beliefs

763
00:34:40,590 --> 00:34:42,780
and belief-based utility,
which essentially

764
00:34:42,780 --> 00:34:46,949
is the idea that beliefs
are potentially not

765
00:34:46,949 --> 00:34:50,790
just instrumental, but
about like others usually

766
00:34:50,790 --> 00:34:52,260
help you make good decisions.

767
00:34:52,260 --> 00:34:54,659
But it might be that you
also just derive utility

768
00:34:54,659 --> 00:34:55,469
from beliefs.

769
00:34:55,469 --> 00:34:57,930
You might drive utility
from thinking that you're

770
00:34:57,930 --> 00:35:02,460
smart, good-looking, and so on.

771
00:35:02,460 --> 00:35:04,260
Any questions on this?

772
00:35:06,910 --> 00:35:07,680
OK.

773
00:35:07,680 --> 00:35:11,870
So now one question
you might have,

774
00:35:11,870 --> 00:35:14,035
and I already
alluded to that, is

775
00:35:14,035 --> 00:35:16,300
are people giving because
they enjoy giving,

776
00:35:16,300 --> 00:35:18,620
or because it's uncomfortable
refusing to give?

777
00:35:18,620 --> 00:35:19,120
is?

778
00:35:19,120 --> 00:35:21,510
It like, I really want to
give and I feel really good

779
00:35:21,510 --> 00:35:22,010
about it.

780
00:35:22,010 --> 00:35:24,190
I get some warm
glow in some ways.

781
00:35:24,190 --> 00:35:27,640
Or is it in some ways, I'm
giving not because I actually

782
00:35:27,640 --> 00:35:32,290
enjoy it and I'm happy about it,
but rather, because otherwise

783
00:35:32,290 --> 00:35:38,750
I just feel bad
and uncomfortable.

784
00:35:38,750 --> 00:35:40,510
So the evidence we
talked about suggests

785
00:35:40,510 --> 00:35:43,420
that the latter motivation
is more important for many.

786
00:35:43,420 --> 00:35:46,870
So many people kind of just
feel bad by not giving.

787
00:35:49,390 --> 00:35:51,700
This is essentially in
particular, the evidence

788
00:35:51,700 --> 00:35:56,050
that people are willing to pay
to avoid dictator games that I

789
00:35:56,050 --> 00:35:57,100
showed you.

790
00:35:57,100 --> 00:36:02,470
There's a very nice
paper about what's

791
00:36:02,470 --> 00:36:07,840
called moral wiggle room,
which gets at the idea

792
00:36:07,840 --> 00:36:13,030
that in a way, if people opt
out of the dictator game,

793
00:36:13,030 --> 00:36:16,400
they have to justify to
themselves that they're mean.

794
00:36:16,400 --> 00:36:18,460
So if you have
self-image, if you also

795
00:36:18,460 --> 00:36:21,310
care about how do you
think about yourself,

796
00:36:21,310 --> 00:36:24,460
are you a good
person or not, how

797
00:36:24,460 --> 00:36:26,320
do you justify to
yourself, essentially,

798
00:36:26,320 --> 00:36:28,090
that you chose a 20-0 option.

799
00:36:28,090 --> 00:36:30,580
And the Dana et al paper
is a very nice paper

800
00:36:30,580 --> 00:36:33,200
that sort of illustrates
that very nicely.

801
00:36:33,200 --> 00:36:38,380
So this is, again,
a very simple game.

802
00:36:38,380 --> 00:36:40,907
Subjects are asked to
choose between self, other.

803
00:36:40,907 --> 00:36:42,740
So how much do you get
yourself and how much

804
00:36:42,740 --> 00:36:44,770
does the other person get?

805
00:36:44,770 --> 00:36:46,180
There's two options here.

806
00:36:46,180 --> 00:36:49,090
Option A is you get $6.00
for yourself and x dollars

807
00:36:49,090 --> 00:36:50,590
for the other person.

808
00:36:50,590 --> 00:36:53,800
Option B is you get $5.00
for yourself and y dollars

809
00:36:53,800 --> 00:36:55,570
for the other person.

810
00:36:55,570 --> 00:36:58,490
And x and y is varied
across subjects

811
00:36:58,490 --> 00:37:00,220
subject and randomized.

812
00:37:00,220 --> 00:37:06,220
So one option here is x
equals 1 and y equals 5.

813
00:37:06,220 --> 00:37:08,110
Now what does that mean
for Options A and B?

814
00:37:08,110 --> 00:37:10,780
That means option A is,
if you had to choose,

815
00:37:10,780 --> 00:37:13,750
would be 6 for yourself
and 1 for the other person.

816
00:37:13,750 --> 00:37:18,850
Option B is like
5 for each player.

817
00:37:18,850 --> 00:37:21,970
So now choosing between
Option B and Option A.

818
00:37:21,970 --> 00:37:23,950
If you choose Option
A, essentially,

819
00:37:23,950 --> 00:37:27,580
you get $1.00 more than you
would get if you chose Option B

820
00:37:27,580 --> 00:37:31,600
But the other person gets $4.00
less than they would get if you

821
00:37:31,600 --> 00:37:35,110
chose Option B. So choosing
Option A is not a particularly

822
00:37:35,110 --> 00:37:36,010
nice option.

823
00:37:36,010 --> 00:37:40,300
Essentially you decide that one
additional dollar for you is

824
00:37:40,300 --> 00:37:46,960
worth more than $4.00 that
the other person gets less.

825
00:37:46,960 --> 00:37:50,200
And so again, that's
not a very nice move.

826
00:37:50,200 --> 00:37:55,210
So most people, in fact,
tend to choose Option B when

827
00:37:55,210 --> 00:37:57,190
faced with that direct choice.

828
00:37:57,190 --> 00:37:59,800
That is to say, 26%
of people choose

829
00:37:59,800 --> 00:38:02,890
Option A. They choose the
selfish option, if you want.

830
00:38:02,890 --> 00:38:07,160
And 74% choose Option B,
which is, in some ways,

831
00:38:07,160 --> 00:38:09,293
the nice thing to do.

832
00:38:09,293 --> 00:38:10,960
This is the very
standard version of it.

833
00:38:10,960 --> 00:38:13,520
There's no other
things going on.

834
00:38:13,520 --> 00:38:15,520
There's no exit
option and so on.

835
00:38:15,520 --> 00:38:22,890
And so again, I said all this.

836
00:38:22,890 --> 00:38:25,590
So now when people
choose Option B,

837
00:38:25,590 --> 00:38:27,670
there's essentially
two explanations here.

838
00:38:27,670 --> 00:38:30,840
One is the person is quite nice.

839
00:38:30,840 --> 00:38:34,890
The other explanation is in some
ways, they're not that nice,

840
00:38:34,890 --> 00:38:37,690
but they're just trying
to avoid feeling bad.

841
00:38:37,690 --> 00:38:39,570
They kind of want
to choose Option A,

842
00:38:39,570 --> 00:38:42,360
but if you choose Option A,
you feel really bad about it,

843
00:38:42,360 --> 00:38:44,550
and that's why you don't do it.

844
00:38:44,550 --> 00:38:47,790
Now the game also has
a twist here, which

845
00:38:47,790 --> 00:38:49,770
is for some other subjects--

846
00:38:49,770 --> 00:38:53,580
these are some subjects
just had this choice only.

847
00:38:53,580 --> 00:38:55,920
They choose, as
I said, 74% chose

848
00:38:55,920 --> 00:39:00,120
Option B. Some other
subjects, x and y

849
00:39:00,120 --> 00:39:03,000
were initially
unknown with either x

850
00:39:03,000 --> 00:39:08,070
equals 1 and y equals 5, or
x equals 5 and y equals 1.

851
00:39:08,070 --> 00:39:11,520
And those are implemented
with 50% chance.

852
00:39:11,520 --> 00:39:12,790
So initially you don't know.

853
00:39:12,790 --> 00:39:14,310
It could be either--

854
00:39:14,310 --> 00:39:15,490
let me just write this down.

855
00:39:15,490 --> 00:39:17,130
Could be one of two scenarios.

856
00:39:17,130 --> 00:39:19,800
Both the chance 50%.

857
00:39:19,800 --> 00:39:22,980
So one of them is if you choose
Option A, that's the choice

858
00:39:22,980 --> 00:39:24,300
that we just had before.

859
00:39:24,300 --> 00:39:26,940
The first one is Option A versus
B. That's what we just had,

860
00:39:26,940 --> 00:39:29,460
which essentially
is 6-1 versus 5-5.

861
00:39:29,460 --> 00:39:32,820
So their choosing A is
a pretty selfish move.

862
00:39:32,820 --> 00:39:35,190
That's the option
I just showed you.

863
00:39:35,190 --> 00:39:40,680
The second scenario is
it's 6-5 versus 5-1.

864
00:39:40,680 --> 00:39:43,680
Now it's unambiguously clear
that you should choose Option

865
00:39:43,680 --> 00:39:47,280
A because you're better off,
the other person is better off,

866
00:39:47,280 --> 00:39:48,510
everybody is happy.

867
00:39:48,510 --> 00:39:50,910
So surely you should choose
Option A. Essentially

868
00:39:50,910 --> 00:39:55,110
Option A dominates Option
B in the second scenario.

869
00:39:55,110 --> 00:39:57,360
OK?

870
00:39:57,360 --> 00:39:59,760
Now here's the twist.

871
00:39:59,760 --> 00:40:05,010
Subjects could costlessly find
out which one is the case.

872
00:40:05,010 --> 00:40:07,740
And the recipient, in
this case, will not

873
00:40:07,740 --> 00:40:09,150
learn what the other person did.

874
00:40:09,150 --> 00:40:12,180
The recipient just essentially
receives the money.

875
00:40:12,180 --> 00:40:14,790
The recipient does not
know what the person does.

876
00:40:14,790 --> 00:40:17,940
So now, essentially, I
will tell you there's

877
00:40:17,940 --> 00:40:20,970
two scenarios going
on, either one or two.

878
00:40:20,970 --> 00:40:24,300
I'm going to ask you
to choose A versus B.

879
00:40:24,300 --> 00:40:26,760
And you have two options
before that choice.

880
00:40:26,760 --> 00:40:30,090
The option is either you can
just choose without not knowing

881
00:40:30,090 --> 00:40:34,020
which scenario you're in,
or you can choose costlessly

882
00:40:34,020 --> 00:40:40,890
to find out whether you're
in Choice 1 versus Choice 2.

883
00:40:40,890 --> 00:40:42,660
OK.

884
00:40:42,660 --> 00:40:47,410
So is that easy
to set up, clear?

885
00:40:47,410 --> 00:40:49,850
Happy to repeat.

886
00:40:49,850 --> 00:40:50,640
Yeah.

887
00:40:50,640 --> 00:40:51,140
Yeah.

888
00:40:55,070 --> 00:40:58,440
AUDIENCE: Who is
choosing between 1 and 2?

889
00:40:58,440 --> 00:41:00,110
PROFESSOR: So if
you're in the game,

890
00:41:00,110 --> 00:41:03,860
there's a 50% chance that you're
in scenario 1 and a 50% chance

891
00:41:03,860 --> 00:41:05,390
in scenario 2.

892
00:41:05,390 --> 00:41:07,790
That is fixed.

893
00:41:07,790 --> 00:41:12,110
You have two choices to
make in your whole decision.

894
00:41:12,110 --> 00:41:14,960
The first one is, do you want
to find out whether you're

895
00:41:14,960 --> 00:41:17,510
in scenario 1 or in scenario 2?

896
00:41:17,510 --> 00:41:20,120
So either you don't find
out-- it's just a 50% chance

897
00:41:20,120 --> 00:41:23,690
of scenario 1 and 50%
chance of scenario 2--

898
00:41:23,690 --> 00:41:26,390
or you find out costlessly
I'm going to tell you

899
00:41:26,390 --> 00:41:28,760
you're in scenario
1 or scenario 2.

900
00:41:28,760 --> 00:41:30,680
It's already decided
which scenario you're in.

901
00:41:30,680 --> 00:41:32,462
You just don't know it.

902
00:41:32,462 --> 00:41:33,920
So your first choice
is do you want

903
00:41:33,920 --> 00:41:36,620
to know which
scenario you're in?

904
00:41:36,620 --> 00:41:40,740
The second choice, then,
is between A and B.

905
00:41:40,740 --> 00:41:42,300
And you either choose
without knowing

906
00:41:42,300 --> 00:41:43,300
what scenario you're in.

907
00:41:43,300 --> 00:41:44,375
You're either in 1 or 2.

908
00:41:44,375 --> 00:41:45,750
You choose A and
B, and then it's

909
00:41:45,750 --> 00:41:48,930
just going to be
implemented afterwards,

910
00:41:48,930 --> 00:41:50,760
the A or B for each
of the scenarios,

911
00:41:50,760 --> 00:41:54,060
or the one that's
actually implemented.

912
00:41:54,060 --> 00:41:57,300
Or you know already you're
in scenario 1 or scenario 2

913
00:41:57,300 --> 00:41:59,070
because you
costlessly found out,

914
00:41:59,070 --> 00:42:02,340
and then you make that
choice about A and B.

915
00:42:02,340 --> 00:42:03,340
Does it make sense?

916
00:42:03,340 --> 00:42:03,840
OK.

917
00:42:03,840 --> 00:42:04,980
Perfect.

918
00:42:04,980 --> 00:42:08,250
So now first, we can think about
distributional preferences.

919
00:42:08,250 --> 00:42:10,770
What happens if you just
have purely distributional

920
00:42:10,770 --> 00:42:11,670
preferences?

921
00:42:11,670 --> 00:42:13,680
Could this additional
twist in any way

922
00:42:13,680 --> 00:42:16,150
lower people's giving behavior?

923
00:42:16,150 --> 00:42:20,860
And so when you are
distributional preferences,

924
00:42:20,860 --> 00:42:23,180
notice that what I added--

925
00:42:23,180 --> 00:42:26,890
so what we're comparing here is
only having the first scenario

926
00:42:26,890 --> 00:42:27,470
to choose.

927
00:42:27,470 --> 00:42:29,240
We're comparing
that to the twist.

928
00:42:29,240 --> 00:42:31,240
So we're comparing,
essentially, this scenario--

929
00:42:34,870 --> 00:42:37,180
this is the people who
chose without having

930
00:42:37,180 --> 00:42:38,950
this additional twist going on.

931
00:42:38,950 --> 00:42:41,020
We're going to compare
those kinds of people

932
00:42:41,020 --> 00:42:44,080
to people who are randomized
to have this additional twist,

933
00:42:44,080 --> 00:42:47,020
where they first have
the choice or the option

934
00:42:47,020 --> 00:42:49,095
to costlessly find
out where they are.

935
00:42:49,095 --> 00:42:50,470
And the question
I'm going to ask

936
00:42:50,470 --> 00:42:54,490
is, now, how does adding
this additional option affect

937
00:42:54,490 --> 00:42:55,870
people's giving behavior?

938
00:42:55,870 --> 00:42:57,310
And in particular,
is it possible

939
00:42:57,310 --> 00:43:02,390
that people give less because of
adding this additional choice?

940
00:43:02,390 --> 00:43:05,260
So now there's two
options overall.

941
00:43:05,260 --> 00:43:07,630
Either it's the case
that your optimal choice

942
00:43:07,630 --> 00:43:09,070
depends on x and y--

943
00:43:09,070 --> 00:43:12,430
so either you're going
to tell me, well,

944
00:43:12,430 --> 00:43:16,180
whether I choose A or
B depends on x and y.

945
00:43:16,180 --> 00:43:17,980
And if that's the
case, well, of course

946
00:43:17,980 --> 00:43:20,740
then you want to find
out what x and y is.

947
00:43:20,740 --> 00:43:21,880
Remember, what is x and y?

948
00:43:21,880 --> 00:43:23,950
X and y is the thing
that I have at the top.

949
00:43:23,950 --> 00:43:27,250
X and y is either x
equals 1 and y equals 5,

950
00:43:27,250 --> 00:43:30,370
or it is x equals
5 and y equals 1.

951
00:43:30,370 --> 00:43:32,772
So it either is the case
that it matters to you

952
00:43:32,772 --> 00:43:34,480
what x and y are--
either you really want

953
00:43:34,480 --> 00:43:36,670
to find out what x and y is.

954
00:43:36,670 --> 00:43:38,680
Well, in that case,
surely if I ask you,

955
00:43:38,680 --> 00:43:40,157
do you want to
costlessly find out,

956
00:43:40,157 --> 00:43:41,740
you don't want to
find out because you

957
00:43:41,740 --> 00:43:43,120
want to make the right choice.

958
00:43:43,120 --> 00:43:44,710
You want to know,
am I in scenario 1

959
00:43:44,710 --> 00:43:47,320
or am I in scenario 2?

960
00:43:47,320 --> 00:43:50,410
So then if I offer you
the costless option

961
00:43:50,410 --> 00:43:53,500
to find out which
scenario you're in,

962
00:43:53,500 --> 00:43:55,690
but you want to find out.

963
00:43:55,690 --> 00:43:58,510
And then if you find out
that you're in the x equals 1

964
00:43:58,510 --> 00:44:01,720
and y equals 5 situation, you
should make the same choice

965
00:44:01,720 --> 00:44:04,180
that you chose previously.

966
00:44:04,180 --> 00:44:07,930
If you chose previously
Option A or Option

967
00:44:07,930 --> 00:44:10,188
B, once you find out
what scenario you're in,

968
00:44:10,188 --> 00:44:12,730
surely you're going to choose
the same thing because you only

969
00:44:12,730 --> 00:44:15,160
care about distributiona;
preferences.

970
00:44:15,160 --> 00:44:18,670
You're going to just
choose the same thing.

971
00:44:18,670 --> 00:44:21,170
Now if your choice,
on the other hand,

972
00:44:21,170 --> 00:44:23,560
does not depend on
x and y, you should

973
00:44:23,560 --> 00:44:25,930
be indifferent between
finding out or not.

974
00:44:25,930 --> 00:44:29,875
And it shouldn't really
matter whether they give you

975
00:44:29,875 --> 00:44:31,000
that option, in some sense.

976
00:44:31,000 --> 00:44:33,580
You should choose the same
thing as you chose before.

977
00:44:33,580 --> 00:44:36,850
In either case, when x
equals 1 and y equals 5,

978
00:44:36,850 --> 00:44:39,370
leaving x and y
initially unknown,

979
00:44:39,370 --> 00:44:41,020
so adding this
additional option,

980
00:44:41,020 --> 00:44:43,870
should not decrease
the amount of giving.

981
00:44:43,870 --> 00:44:50,560
If anything, it should not
be affected in any case.

982
00:44:50,560 --> 00:44:54,770
But in particular, it
should not decrease it.

983
00:44:54,770 --> 00:44:58,360
So let me have you look
at this for a second

984
00:44:58,360 --> 00:44:59,900
just to be clear on that.

985
00:44:59,900 --> 00:45:01,390
So essentially
what I'm saying is

986
00:45:01,390 --> 00:45:05,440
adding this additional
thing, the scenario 2,

987
00:45:05,440 --> 00:45:08,800
either the scenarios
matter, and if the scenarios

988
00:45:08,800 --> 00:45:10,957
matter whether you're in
scenario 1 versus scenario

989
00:45:10,957 --> 00:45:12,790
2, if you make different
choices, well, then

990
00:45:12,790 --> 00:45:15,640
surely you should find out
which scenario you're in.

991
00:45:15,640 --> 00:45:18,010
And you're going to say,
OK, I really want to know.

992
00:45:18,010 --> 00:45:20,260
Once you know whether
you're in scenario 1--

993
00:45:20,260 --> 00:45:22,300
suppose you're actually
in scenario 1--

994
00:45:22,300 --> 00:45:26,540
you should make the same
choice as you did before.

995
00:45:26,540 --> 00:45:31,100
And if you say, well,
I actually don't

996
00:45:31,100 --> 00:45:32,392
care which scenario I'm in.

997
00:45:32,392 --> 00:45:34,100
I'm going to make the
same choice anyway,

998
00:45:34,100 --> 00:45:35,800
then adding this
additional scenario

999
00:45:35,800 --> 00:45:37,550
shouldn't really matter
anyway because you

1000
00:45:37,550 --> 00:45:39,350
choose the same thing anyway.

1001
00:45:39,350 --> 00:45:41,900
But regardless, adding
essentially the scenario 2

1002
00:45:41,900 --> 00:45:45,050
should not decrease
how much you give.

1003
00:45:45,050 --> 00:45:49,400
Now what they find
instead is 44%

1004
00:45:49,400 --> 00:45:51,980
chose not to find out x and y.

1005
00:45:51,980 --> 00:45:57,110
And of these subjects,
95% chose Option A.

1006
00:45:57,110 --> 00:45:59,330
So these are people
who essentially they

1007
00:45:59,330 --> 00:46:04,110
say, I'd rather not know
what's going on here,

1008
00:46:04,110 --> 00:46:07,380
then they chose Option A,
which is either the fairly

1009
00:46:07,380 --> 00:46:09,480
selfish option, or
it's the option that's

1010
00:46:09,480 --> 00:46:10,560
better for both people.

1011
00:46:10,560 --> 00:46:13,050
Let me go back to
this so you see this.

1012
00:46:13,050 --> 00:46:16,180
So when given these two
choices, they essentially say,

1013
00:46:16,180 --> 00:46:18,780
I'd rather not know, even
if it's costless to do.

1014
00:46:18,780 --> 00:46:21,450
I don't want to know whether
I'm in scenario 1 or 2.

1015
00:46:21,450 --> 00:46:24,510
I'm going to choose Option
A. Why do they do that,

1016
00:46:24,510 --> 00:46:26,370
or what's going
on in their minds?

1017
00:46:30,610 --> 00:46:31,906
Yes.

1018
00:46:31,906 --> 00:46:33,739
AUDIENCE: They don't
want to know if they're

1019
00:46:33,739 --> 00:46:35,530
being mean to the other person.

1020
00:46:35,530 --> 00:46:36,490
PROFESSOR: Exactly.

1021
00:46:36,490 --> 00:46:43,390
So if you find out whether
it's scenario 1 or scenario 2,

1022
00:46:43,390 --> 00:46:44,810
things can happen.

1023
00:46:44,810 --> 00:46:47,300
One will be you'll be
in scenario number 2.

1024
00:46:47,300 --> 00:46:49,300
You're going to choose
Option A because you know

1025
00:46:49,300 --> 00:46:51,190
that's better for everybody.

1026
00:46:51,190 --> 00:46:53,350
Or you're going to
be in scenario 1,

1027
00:46:53,350 --> 00:46:57,610
well, then, choosing A is kind
of a selfish and mean move.

1028
00:46:57,610 --> 00:47:00,550
And then, once you do that, then
you have to sort of deal with,

1029
00:47:00,550 --> 00:47:03,100
well, am I a mean person or not?

1030
00:47:03,100 --> 00:47:05,980
Instead, what people do or
seem to do, is they just say,

1031
00:47:05,980 --> 00:47:07,510
I actually don't
want to find out.

1032
00:47:07,510 --> 00:47:10,030
It could be either way.

1033
00:47:10,030 --> 00:47:11,170
Who knows what's going on?

1034
00:47:11,170 --> 00:47:13,720
Could be scenario 1,
could be scenario 2.

1035
00:47:13,720 --> 00:47:15,620
Who knows?

1036
00:47:15,620 --> 00:47:17,120
But you know, there's
a good chance,

1037
00:47:17,120 --> 00:47:21,595
50% chance that it's scenario 2,
in which case choosing Option A

1038
00:47:21,595 --> 00:47:23,240
is actually good for everybody.

1039
00:47:23,240 --> 00:47:26,590
So let me just not find out
and then choose Option A,

1040
00:47:26,590 --> 00:47:29,050
and I'm going to essentially
make myself think that,

1041
00:47:29,050 --> 00:47:33,160
oh, probably it was
scenario number 2.

1042
00:47:33,160 --> 00:47:35,110
So essentially what
people are doing here

1043
00:47:35,110 --> 00:47:37,450
is they sort of delude
themselves in some way

1044
00:47:37,450 --> 00:47:40,660
into thinking that they're
doing the right thing,

1045
00:47:40,660 --> 00:47:44,620
or they're doing not a mean
thing by avoiding information

1046
00:47:44,620 --> 00:47:47,950
that would essentially be free.

1047
00:47:47,950 --> 00:47:51,040
So if you really wanted to find
out whether you're mean or not,

1048
00:47:51,040 --> 00:47:52,850
you could just get
the information.

1049
00:47:52,850 --> 00:47:55,302
And since it's like free
there and entirely available.

1050
00:47:55,302 --> 00:47:57,010
Instead, what people
do is they just say,

1051
00:47:57,010 --> 00:47:58,810
oh, I'd rather not
know, and then they

1052
00:47:58,810 --> 00:48:02,620
choose the thing that's
at least potentially mean.

1053
00:48:02,620 --> 00:48:07,510
And so then not only is it
the case that 44% of people

1054
00:48:07,510 --> 00:48:11,920
choose not to find out, but also
the fraction of selfish people

1055
00:48:11,920 --> 00:48:13,330
goes up by a lot.

1056
00:48:15,890 --> 00:48:17,400
So I showed you--

1057
00:48:17,400 --> 00:48:19,930
this is a little bit
tricky-- but essentially

1058
00:48:19,930 --> 00:48:23,630
what I showed you here is
that there's a 50% chance

1059
00:48:23,630 --> 00:48:27,920
to be in scenario 1
versus in scenario 2.

1060
00:48:27,920 --> 00:48:32,090
And the 63% that I'm
going to show you here,

1061
00:48:32,090 --> 00:48:33,590
this is the fraction
who essentially

1062
00:48:33,590 --> 00:48:35,120
chose the selfish choice.

1063
00:48:35,120 --> 00:48:40,070
This is only looking at
the 50% chance for which x

1064
00:48:40,070 --> 00:48:42,080
equals 1 and y equals 5.

1065
00:48:42,080 --> 00:48:44,180
So essentially this
is taking the half

1066
00:48:44,180 --> 00:48:51,410
of the cases in
which, actually, x

1067
00:48:51,410 --> 00:48:53,900
equals 1 and y equals
5 was implemented.

1068
00:48:53,900 --> 00:48:57,422
These are cases where either
the person found out or not.

1069
00:48:57,422 --> 00:48:59,130
But when you take
those things together--

1070
00:48:59,130 --> 00:49:02,900
so these are like essentially
two scenarios or the sum of two

1071
00:49:02,900 --> 00:49:04,430
things that happened--

1072
00:49:04,430 --> 00:49:08,120
one is the person didn't find
out and chose Option A or B,

1073
00:49:08,120 --> 00:49:10,040
or the person
actually found out.

1074
00:49:10,040 --> 00:49:15,380
But taken together, essentially
63% of people in those cases

1075
00:49:15,380 --> 00:49:17,600
chose the selfish
option, Option A,

1076
00:49:17,600 --> 00:49:20,150
compared to the 26%
in the baseline case

1077
00:49:20,150 --> 00:49:21,510
that I showed you earlier.

1078
00:49:21,510 --> 00:49:23,420
So putting these things
together essentially

1079
00:49:23,420 --> 00:49:26,390
means that there's
quite a few people who

1080
00:49:26,390 --> 00:49:28,790
conveniently don't want to
find out whether they're mean

1081
00:49:28,790 --> 00:49:29,480
or not.

1082
00:49:29,480 --> 00:49:32,000
They choose, then,
the mean option,

1083
00:49:32,000 --> 00:49:35,690
and much more so than when
they don't have this whole--

1084
00:49:35,690 --> 00:49:39,920
what's called moral wiggle room,
which essentially is the option

1085
00:49:39,920 --> 00:49:42,410
to delude themselves,
and they're actually not

1086
00:49:42,410 --> 00:49:45,650
that mean because
probably, it was better

1087
00:49:45,650 --> 00:49:48,800
for everybody to choose Option
A. Does that make sense?

1088
00:49:55,780 --> 00:49:58,300
So now you might ask two things.

1089
00:49:58,300 --> 00:50:00,540
Well, it could be that
there's this concern

1090
00:50:00,540 --> 00:50:01,535
about others' beliefs.

1091
00:50:01,535 --> 00:50:02,910
This could be
about social image,

1092
00:50:02,910 --> 00:50:04,830
or could be about self-image.

1093
00:50:04,830 --> 00:50:08,190
Now the experiment is
precisely set up in a way

1094
00:50:08,190 --> 00:50:10,260
that, in fact, it's
not about social image.

1095
00:50:10,260 --> 00:50:14,190
The other person, in
fact, doesn't find out

1096
00:50:14,190 --> 00:50:16,470
whether you learned her payoff.

1097
00:50:16,470 --> 00:50:21,180
And so not learning doesn't
really help improve her.

1098
00:50:21,180 --> 00:50:23,140
The other person
only sees the result.

1099
00:50:23,140 --> 00:50:29,010
So whether I actually learn
about which scenario we're in

1100
00:50:29,010 --> 00:50:32,670
doesn't really actually help
improving the other person's

1101
00:50:32,670 --> 00:50:33,330
opinion.

1102
00:50:33,330 --> 00:50:35,910
The only person who actually
knows whether you found out

1103
00:50:35,910 --> 00:50:37,980
what scenario you're
in is actually you

1104
00:50:37,980 --> 00:50:40,020
yourself when you make
that choice, which

1105
00:50:40,020 --> 00:50:43,020
really suggests that this
is about saving face, about

1106
00:50:43,020 --> 00:50:44,340
self-image.

1107
00:50:44,340 --> 00:50:47,370
People essentially want to
delude themselves or make

1108
00:50:47,370 --> 00:50:49,710
themselves think that they're
nicer than they actually

1109
00:50:49,710 --> 00:50:54,090
are by avoiding information
that could actually help them

1110
00:50:54,090 --> 00:50:56,220
make the right choice or
be nicer if they really

1111
00:50:56,220 --> 00:50:57,900
wanted to be.

1112
00:50:57,900 --> 00:51:00,750
So if you really wanted to
be nice, what you would do

1113
00:51:00,750 --> 00:51:03,480
is you would really find out
which scenario you're in.

1114
00:51:03,480 --> 00:51:05,370
You would choose
Option A and Scenario 2

1115
00:51:05,370 --> 00:51:07,950
when it's better for everybody,
and you choose option B

1116
00:51:07,950 --> 00:51:10,410
if it's better for
the other person

1117
00:51:10,410 --> 00:51:14,350
or really costly for the other
person to choose Option A.

1118
00:51:14,350 --> 00:51:16,390
So let me sort of
summarize here.

1119
00:51:16,390 --> 00:51:18,810
So the most likely
explanation is

1120
00:51:18,810 --> 00:51:22,200
that it's really
based on how dictators

1121
00:51:22,200 --> 00:51:23,740
feel about themselves.

1122
00:51:23,740 --> 00:51:25,830
So the uncertainty in
whether the selfish action

1123
00:51:25,830 --> 00:51:29,580
helps or hurts the other person
gives an excuse to be selfish.

1124
00:51:29,580 --> 00:51:32,430
So now I can say, oh,
50% chance that this is

1125
00:51:32,430 --> 00:51:34,330
the right choice for everybody.

1126
00:51:34,330 --> 00:51:35,580
So that's an excuse.

1127
00:51:35,580 --> 00:51:39,227
So you can keep telling yourself
that you didn't mean any harm.

1128
00:51:39,227 --> 00:51:40,560
I really didn't want to be mean.

1129
00:51:40,560 --> 00:51:42,750
I thought with a good
chance the other person will

1130
00:51:42,750 --> 00:51:43,820
be better off as well.

1131
00:51:49,000 --> 00:51:52,090
And this term is sort of
called moral wiggle room, which

1132
00:51:52,090 --> 00:51:54,520
essentially is
sort of helping you

1133
00:51:54,520 --> 00:51:58,090
be in an ambiguous situation
because once you haven't found

1134
00:51:58,090 --> 00:52:01,300
out, it's actually unclear
whether the other person is

1135
00:52:01,300 --> 00:52:03,430
better off or worse off by
choosing Option A and B.

1136
00:52:03,430 --> 00:52:05,050
The experiment is
set up in a way

1137
00:52:05,050 --> 00:52:08,440
that if you do not find out
which scenario you're in,

1138
00:52:08,440 --> 00:52:10,690
it's not clear what's better
for the other person what

1139
00:52:10,690 --> 00:52:12,430
to choose.

1140
00:52:12,430 --> 00:52:15,070
But of course, that's
amazing in some sense

1141
00:52:15,070 --> 00:52:17,787
because you could always
find out costlessly.

1142
00:52:17,787 --> 00:52:19,870
And sometimes you can
delude yourself and say, ah,

1143
00:52:19,870 --> 00:52:20,710
it's not clear.

1144
00:52:20,710 --> 00:52:21,730
What should we do?

1145
00:52:21,730 --> 00:52:23,018
I don't know.

1146
00:52:23,018 --> 00:52:25,060
Could be good for the
person, bad for the person,

1147
00:52:25,060 --> 00:52:27,010
whatever, but I'm choosing A.

1148
00:52:27,010 --> 00:52:29,780
But of course that's silly
because in some sense

1149
00:52:29,780 --> 00:52:32,290
that's not an explanation that
holds water because you could

1150
00:52:32,290 --> 00:52:34,207
always find out, if you
really wanted to know,

1151
00:52:34,207 --> 00:52:36,820
whether you wanted to be
nice to the other person.

1152
00:52:36,820 --> 00:52:39,530
It's very easy to find
out what's going on.

1153
00:52:39,530 --> 00:52:41,080
So that's essentially
to say people

1154
00:52:41,080 --> 00:52:43,420
want to save face in
front of themselves

1155
00:52:43,420 --> 00:52:46,990
as opposed to in
front of others.

1156
00:52:46,990 --> 00:52:48,100
Any questions on this?

1157
00:52:52,710 --> 00:52:53,510
OK.

1158
00:52:53,510 --> 00:52:56,360
So now a different
version of that is giving

1159
00:52:56,360 --> 00:52:59,360
and communication, which,
is, again in some ways,

1160
00:52:59,360 --> 00:53:02,720
about social image
concerns, about having

1161
00:53:02,720 --> 00:53:04,880
to deal with others'
reactions to you.

1162
00:53:04,880 --> 00:53:07,160
This could be about
self-image or social image.

1163
00:53:07,160 --> 00:53:09,890
But either way, it's about
some form of communication,

1164
00:53:09,890 --> 00:53:12,170
how others or you yourself feel.

1165
00:53:12,170 --> 00:53:16,430
So Ellingsen and Johannesson
modified the dictator game

1166
00:53:16,430 --> 00:53:20,660
by allowing for a very
limited form of communication.

1167
00:53:20,660 --> 00:53:23,030
One group of subjects played
the usual dictator game,

1168
00:53:23,030 --> 00:53:24,950
which is just as usual.

1169
00:53:24,950 --> 00:53:26,600
And the other group,
the recipients

1170
00:53:26,600 --> 00:53:28,910
only were allowed to
send anonymous messages

1171
00:53:28,910 --> 00:53:30,790
to the dictator after
receiving their share.

1172
00:53:30,790 --> 00:53:33,290
Is that the version you played,
or was it different for you?

1173
00:53:33,290 --> 00:53:36,220
Could you already
talk to them earlier,

1174
00:53:36,220 --> 00:53:37,791
when there was communication?

1175
00:53:42,392 --> 00:53:44,600
It might have been the exact
version that you played,

1176
00:53:44,600 --> 00:53:46,183
or it might have
been in your version,

1177
00:53:46,183 --> 00:53:48,800
you could actually talk to
the other person earlier.

1178
00:53:48,800 --> 00:53:52,972
AUDIENCE: You could only
message before you decided.

1179
00:53:52,972 --> 00:53:53,680
PROFESSOR: I see.

1180
00:53:53,680 --> 00:53:56,830
So that's a slightly different
version from what you played.

1181
00:53:56,830 --> 00:54:00,700
This one is a version where the
recipient could only respond.

1182
00:54:00,700 --> 00:54:04,750
So the dictator gets the
$10 or whatever is played.

1183
00:54:04,750 --> 00:54:07,480
The dictator makes a choice,
and then the recipient

1184
00:54:07,480 --> 00:54:09,790
can essentially
send a message back,

1185
00:54:09,790 --> 00:54:13,080
can in some way
reciprocate if you want.

1186
00:54:13,080 --> 00:54:17,110
Could be a nice message if
you give quite a bit of money,

1187
00:54:17,110 --> 00:54:20,920
or it could be a mean message if
you didn't give a lot of money.

1188
00:54:20,920 --> 00:54:25,030
And anticipating that might
affect the dictator's choices.

1189
00:54:25,030 --> 00:54:29,930
And so this is kind of what
they found in the paper.

1190
00:54:29,930 --> 00:54:33,520
So essentially, the
anticipation of a feedback

1191
00:54:33,520 --> 00:54:38,260
increased sharing from 25%
to 34% in this specific game.

1192
00:54:38,260 --> 00:54:39,770
That's quite a bit.

1193
00:54:39,770 --> 00:54:45,610
So most recipients, in fact,
do choose to send a message.

1194
00:54:45,610 --> 00:54:47,360
The messages vary quite a bit.

1195
00:54:47,360 --> 00:54:50,080
So it's about very
mean messages saying,

1196
00:54:50,080 --> 00:54:53,200
so you chose to take
all the money yourself,

1197
00:54:53,200 --> 00:54:54,520
you greedy bastard.

1198
00:54:54,520 --> 00:54:57,165
I was just wondering if there
was anyone who would do that.

1199
00:54:57,165 --> 00:54:58,540
And the answer is
apparently yes.

1200
00:54:58,540 --> 00:55:00,190
Apparently people
like you exist.

1201
00:55:00,190 --> 00:55:01,270
Have a nice evening.

1202
00:55:01,270 --> 00:55:02,990
So that's not a
very nice message.

1203
00:55:02,990 --> 00:55:06,530
I also censored a few messages
that were in there earlier.

1204
00:55:06,530 --> 00:55:08,470
Another one is, thank
you, greedy bastard.

1205
00:55:08,470 --> 00:55:11,080
You will like it as
investment banker.

1206
00:55:11,080 --> 00:55:13,728
I hope you will
buy something nice.

1207
00:55:13,728 --> 00:55:15,520
And then there's sort
of positive messages,

1208
00:55:15,520 --> 00:55:17,770
presumably, when people are
actually given quite a bit

1209
00:55:17,770 --> 00:55:20,373
of money, which is like,
there's hope for a better world.

1210
00:55:20,373 --> 00:55:22,540
With the help of your
generosity and your big heart,

1211
00:55:22,540 --> 00:55:26,530
I can tonight break the
black pudding curse.

1212
00:55:26,530 --> 00:55:28,000
No more pea soup.

1213
00:55:28,000 --> 00:55:30,460
You have a standing invitation
to dinner at my place.

1214
00:55:30,460 --> 00:55:32,435
The door is always
open with love.

1215
00:55:32,435 --> 00:55:34,060
So you know that
varies by quite a bit.

1216
00:55:34,060 --> 00:55:36,370
And anticipating those
kinds of messages,

1217
00:55:36,370 --> 00:55:38,547
you can see how
dictators then might,

1218
00:55:38,547 --> 00:55:40,630
particularly if they play
this repeatedly and have

1219
00:55:40,630 --> 00:55:47,210
some experience with it,
might opt into giving more.

1220
00:55:47,210 --> 00:55:49,330
So this indicates that
sort of beyond caring

1221
00:55:49,330 --> 00:55:53,620
about the recipient's
reaction, dictators

1222
00:55:53,620 --> 00:55:55,760
care how shielded
they are from it.

1223
00:55:55,760 --> 00:55:57,865
So it's not just
about, you might

1224
00:55:57,865 --> 00:56:00,490
feel bad-- so what I showed you
previously in the costless exit

1225
00:56:00,490 --> 00:56:03,952
thing, it was more about I'm
worried about you feeling bad,

1226
00:56:03,952 --> 00:56:06,160
and I don't want you to feel
bad even if I don't have

1227
00:56:06,160 --> 00:56:08,410
to face you in any situations.

1228
00:56:08,410 --> 00:56:11,350
This one is about, I might
worry about you feeling bad,

1229
00:56:11,350 --> 00:56:17,590
but I also might
worry about receiving

1230
00:56:17,590 --> 00:56:18,507
that message from you.

1231
00:56:18,507 --> 00:56:20,298
So there are some people
who might actually

1232
00:56:20,298 --> 00:56:22,630
be fine about the other person
feeling bad as long as I

1233
00:56:22,630 --> 00:56:24,490
don't have to face it.

1234
00:56:24,490 --> 00:56:26,740
But now, if I actually
have to face the message

1235
00:56:26,740 --> 00:56:31,713
from the other person, I might
behave nicer in some ways

1236
00:56:31,713 --> 00:56:33,880
because I didn't have to
actually deal with the fact

1237
00:56:33,880 --> 00:56:38,260
or face the fact that perhaps
I'm not a nice person.

1238
00:56:38,260 --> 00:56:40,960
In our version--
I looked this up--

1239
00:56:40,960 --> 00:56:44,650
it seems like there's not
much evidence of communication

1240
00:56:44,650 --> 00:56:46,267
affecting behavior.

1241
00:56:46,267 --> 00:56:48,850
This could be, perhaps, because
the version with communication

1242
00:56:48,850 --> 00:56:52,270
was different from
what was played here.

1243
00:56:52,270 --> 00:56:54,730
So it doesn't seem like
once the person gave,

1244
00:56:54,730 --> 00:56:57,310
I think the game was
just over, as opposed

1245
00:56:57,310 --> 00:57:01,390
to once the person gave, you
could send a message back

1246
00:57:01,390 --> 00:57:04,430
and reciprocate in some way.

1247
00:57:04,430 --> 00:57:05,890
So here you can see that.

1248
00:57:05,890 --> 00:57:08,582
In a dictator game
without communication,

1249
00:57:08,582 --> 00:57:10,540
notice that the axes are
changing a little bit.

1250
00:57:10,540 --> 00:57:13,360
This is like the monetary
stakes, no communication.

1251
00:57:13,360 --> 00:57:14,600
This is with communication.

1252
00:57:14,600 --> 00:57:15,960
Notice that the axis changes.

1253
00:57:15,960 --> 00:57:17,710
I can't really fix
this from the software,

1254
00:57:17,710 --> 00:57:21,460
but if you look at the average
offer, with no communication,

1255
00:57:21,460 --> 00:57:23,800
it's 38%.

1256
00:57:23,800 --> 00:57:26,200
With communication, it's
37%, so if anything,

1257
00:57:26,200 --> 00:57:27,880
it's a little bit lower.

1258
00:57:27,880 --> 00:57:30,910
The comparison is a little
bit unclean because over time,

1259
00:57:30,910 --> 00:57:32,740
maybe later in the
game, you play different

1260
00:57:32,740 --> 00:57:34,573
than earlier in the
game, and it's not quite

1261
00:57:34,573 --> 00:57:35,740
cleanly randomized.

1262
00:57:35,740 --> 00:57:37,420
But it doesn't
seem, in your case,

1263
00:57:37,420 --> 00:57:39,520
like the communication
mattered very much.

1264
00:57:39,520 --> 00:57:41,920
Again, perhaps that's because
the nature of the game

1265
00:57:41,920 --> 00:57:43,045
is somewhat different.

1266
00:57:46,630 --> 00:57:47,130
Sorry.

1267
00:57:47,130 --> 00:57:48,672
This is actually
not a dictator game.

1268
00:57:48,672 --> 00:57:51,410
This is the ultimatum game.

1269
00:57:51,410 --> 00:57:52,710
This is a typo at the top.

1270
00:57:52,710 --> 00:57:57,222
For the ultimatum game, it
seems like communication matters

1271
00:57:57,222 --> 00:57:58,680
a little bit when
you look at this.

1272
00:57:58,680 --> 00:58:01,800
When you look at the very
left, people giving 0,

1273
00:58:01,800 --> 00:58:04,050
for whatever reason, I don't
know how you communicated

1274
00:58:04,050 --> 00:58:06,600
and what you said, but it seems
like your communication made

1275
00:58:06,600 --> 00:58:08,670
people more likely
to give 0, and then

1276
00:58:08,670 --> 00:58:11,930
these 0 options being rejected.

1277
00:58:11,930 --> 00:58:14,430
So this is what you see on the
very left is in the ultimatum

1278
00:58:14,430 --> 00:58:17,100
game, the red is
essentially, these

1279
00:58:17,100 --> 00:58:19,200
are offers that are rejected.

1280
00:58:19,200 --> 00:58:22,290
Without communication,
nobody was giving 0.

1281
00:58:22,290 --> 00:58:25,080
With communication, somehow
people are giving 0,

1282
00:58:25,080 --> 00:58:27,280
and then these
offers were rejected.

1283
00:58:27,280 --> 00:58:30,900
So perhaps some of you gave very
negative messages or threats

1284
00:58:30,900 --> 00:58:32,820
or whatever, and that
really pissed off

1285
00:58:32,820 --> 00:58:35,910
the dictator, the other
person, and then essentially

1286
00:58:35,910 --> 00:58:37,470
that really backfired.

1287
00:58:37,470 --> 00:58:40,260
So I don't know who is teaching
you how to communicate,

1288
00:58:40,260 --> 00:58:43,170
but maybe you want to think
about this in future games.

1289
00:58:43,170 --> 00:58:45,720
Somehow communication,
if anything,

1290
00:58:45,720 --> 00:58:51,270
made things worse compared
to the no communication case.

1291
00:58:51,270 --> 00:58:55,860
But even there, if you
look at the average offer

1292
00:58:55,860 --> 00:58:59,380
is 47% here on the top.

1293
00:58:59,380 --> 00:59:03,940
And again, 46%
with communication.

1294
00:59:03,940 --> 00:59:07,020
So it doesn't make a huge
difference either way.

1295
00:59:07,020 --> 00:59:08,550
OK?

1296
00:59:08,550 --> 00:59:09,680
Any questions on that?

1297
00:59:16,310 --> 00:59:17,990
So then we're going
to talk a little bit

1298
00:59:17,990 --> 00:59:21,710
about intentions-based
social preferences.

1299
00:59:21,710 --> 00:59:26,660
Let me tell you a
brief tale about this

1300
00:59:26,660 --> 00:59:28,910
that sort of illustrates
this point quite nicely.

1301
00:59:28,910 --> 00:59:32,930
So a boy finds two ripe apples
as he walks home from school.

1302
00:59:32,930 --> 00:59:37,760
He keeps the larger one, gives
a smaller one to his friend.

1303
00:59:37,760 --> 00:59:43,230
The friend says, it wasn't
nice to keep the larger one.

1304
00:59:43,230 --> 00:59:45,900
The boy says, well, what
would you have done?

1305
00:59:45,900 --> 00:59:49,350
And the friend says, I'd
have given you the larger one

1306
00:59:49,350 --> 00:59:51,300
and kept the smaller one.

1307
00:59:51,300 --> 00:59:54,400
And the boy says, well, we
each got what you wanted.

1308
00:59:54,400 --> 00:59:56,680
So what are you
complaining about?

1309
00:59:56,680 --> 00:59:58,230
And so what does
that illustrate?

1310
00:59:58,230 --> 01:00:01,890
It illustrates that
it's not always

1311
01:00:01,890 --> 01:00:04,710
about outcomes or the
distribution, even,

1312
01:00:04,710 --> 01:00:06,210
of outcomes or the like.

1313
01:00:06,210 --> 01:00:10,290
What seems to
matter is some form

1314
01:00:10,290 --> 01:00:15,210
of like justice or fairness in
how the allocation came about.

1315
01:00:15,210 --> 01:00:17,910
In most of the economics,
essentially, we

1316
01:00:17,910 --> 01:00:19,920
assume that our
satisfaction of outcomes,

1317
01:00:19,920 --> 01:00:22,590
like how much we like certain
outcomes and so on, when

1318
01:00:22,590 --> 01:00:25,710
you look at people's utility
function, often, essentially,

1319
01:00:25,710 --> 01:00:26,790
it's outcome-based.

1320
01:00:26,790 --> 01:00:29,680
What matters is essentially how
much you consume, and so on.

1321
01:00:29,680 --> 01:00:31,590
So the satisfaction
with outcomes

1322
01:00:31,590 --> 01:00:34,440
doesn't depend on how
the outcome came about.

1323
01:00:34,440 --> 01:00:37,410
And here, when you
look at these apples,

1324
01:00:37,410 --> 01:00:41,092
how the apples are distributed,
the friend actually

1325
01:00:41,092 --> 01:00:43,050
doesn't seem to care that
much about whether he

1326
01:00:43,050 --> 01:00:44,910
gets the larger or
the smaller apple.

1327
01:00:44,910 --> 01:00:47,280
What the friend cares about
is, is your other friend

1328
01:00:47,280 --> 01:00:50,160
a nice person, or is the
allocation of the outcome fair,

1329
01:00:50,160 --> 01:00:52,860
and a sense of didn't
he just keep the larger

1330
01:00:52,860 --> 01:00:57,070
apple because he could, and
then was mean to his friend.

1331
01:00:57,070 --> 01:01:00,583
So really what seems to
matter quite a bit is--

1332
01:01:00,583 --> 01:01:03,000
and there's quite a bit of
work in organizational behavior

1333
01:01:03,000 --> 01:01:04,650
and economics and
social psychology--

1334
01:01:04,650 --> 01:01:07,170
is the idea of
procedural justice.

1335
01:01:07,170 --> 01:01:09,990
Fairness in the process
used to allocate resources

1336
01:01:09,990 --> 01:01:12,340
seems to matter quite a bit.

1337
01:01:12,340 --> 01:01:14,790
So maybe another
way to put this,

1338
01:01:14,790 --> 01:01:17,160
it's kind of OK,
actually, for most people.

1339
01:01:17,160 --> 01:01:20,430
If some people are richer
than others that's fine,

1340
01:01:20,430 --> 01:01:25,020
but it's much less if
they obtained money

1341
01:01:25,020 --> 01:01:27,990
as coming in some
corrupt process,

1342
01:01:27,990 --> 01:01:32,130
or if it's just kind of unfair
because some person was born

1343
01:01:32,130 --> 01:01:35,670
really rich, and the other
person was born really poor,

1344
01:01:35,670 --> 01:01:40,650
and there's no mobility
or opportunity in society.

1345
01:01:40,650 --> 01:01:43,560
That's sort of relating
to the idea that in a way,

1346
01:01:43,560 --> 01:01:45,960
the American dream is
everybody can become rich,

1347
01:01:45,960 --> 01:01:47,460
and that's essentially
the key here.

1348
01:01:47,460 --> 01:01:49,660
And then if some people
are richer than others,

1349
01:01:49,660 --> 01:01:51,810
people often think that's OK.

1350
01:01:51,810 --> 01:01:54,180
What's not OK, however,
is if some people

1351
01:01:54,180 --> 01:01:56,280
have vastly different
opportunities or chances

1352
01:01:56,280 --> 01:01:57,090
than others.

1353
01:01:57,090 --> 01:01:59,580
Or if there's lots of
corruption, where essentially

1354
01:01:59,580 --> 01:02:04,860
some people get certain jobs
not because they're qualified,

1355
01:02:04,860 --> 01:02:07,470
but rather because their
parents or their family

1356
01:02:07,470 --> 01:02:10,050
or their friends or
whatever are very powerful

1357
01:02:10,050 --> 01:02:12,150
or they have corrupted
others in other ways.

1358
01:02:17,370 --> 01:02:20,100
Now there's a
question of fairness,

1359
01:02:20,100 --> 01:02:23,350
and then there's a
question of reciprocity,

1360
01:02:23,350 --> 01:02:26,880
which is essentially the idea
that so fairness, people have

1361
01:02:26,880 --> 01:02:27,960
preferences for fairness.

1362
01:02:27,960 --> 01:02:31,690
They like fair outcomes more
than others, unfair outcomes.

1363
01:02:31,690 --> 01:02:33,750
Another form of
that is reciprocity,

1364
01:02:33,750 --> 01:02:38,160
is people like to treat
others as others have treated

1365
01:02:38,160 --> 01:02:39,240
or treating them.

1366
01:02:42,330 --> 01:02:45,060
More generally, the way we treat
others, essentially, depends

1367
01:02:45,060 --> 01:02:46,478
on the way they treat us.

1368
01:02:46,478 --> 01:02:48,020
So if somebody is
mean to you, you're

1369
01:02:48,020 --> 01:02:48,990
going to be mean to them.

1370
01:02:48,990 --> 01:02:50,407
If somebody is
nice to you, you're

1371
01:02:50,407 --> 01:02:51,550
going to be nice to them.

1372
01:02:51,550 --> 01:02:53,390
And that's really
important motivation

1373
01:02:53,390 --> 01:02:55,500
in a lot of behavior.

1374
01:02:55,500 --> 01:02:59,430
Now this gets us back
to the ultimatum game--

1375
01:02:59,430 --> 01:03:01,810
I'm going to talk about
this only very briefly--

1376
01:03:01,810 --> 01:03:06,433
which is the question of why
do responders reject low offers

1377
01:03:06,433 --> 01:03:07,350
in the ultimatum game?

1378
01:03:07,350 --> 01:03:08,370
We talked about
this a little bit.

1379
01:03:08,370 --> 01:03:10,530
You can think about
distributional preferences.

1380
01:03:10,530 --> 01:03:14,520
We talked about [INAUDIBLE] and
Rabin and about the preferences

1381
01:03:14,520 --> 01:03:16,182
about being behind versus not.

1382
01:03:16,182 --> 01:03:17,640
There's an explanation
that's based

1383
01:03:17,640 --> 01:03:19,170
on distributional
preference where you just

1384
01:03:19,170 --> 01:03:21,240
don't want to be really
behind, and therefore you

1385
01:03:21,240 --> 01:03:23,580
reject the unfair offers.

1386
01:03:23,580 --> 01:03:26,100
But another one is you think
you've really treated unfairly,

1387
01:03:26,100 --> 01:03:29,730
and you're willing to punish the
proposer for such unfairness.

1388
01:03:29,730 --> 01:03:33,360
And in a simple
ultimatum game, you

1389
01:03:33,360 --> 01:03:36,630
can't really tell whether
it's hypothesis one or two.

1390
01:03:36,630 --> 01:03:40,200
But-- and we talked
about this already--

1391
01:03:40,200 --> 01:03:43,290
you can compare responders'
choices in the ultimatum game

1392
01:03:43,290 --> 01:03:45,210
to choices when the
offer isn't generated

1393
01:03:45,210 --> 01:03:51,000
by the other person, the
recipient or the other person.

1394
01:03:51,000 --> 01:03:54,060
For example, you
can look at choices

1395
01:03:54,060 --> 01:03:58,110
that were generated by the
computer, by a third person

1396
01:03:58,110 --> 01:03:59,000
and so on.

1397
01:03:59,000 --> 01:04:02,670
So if it's generated by the
third person, you might say,

1398
01:04:02,670 --> 01:04:05,790
I shouldn't punish the
other person in the game

1399
01:04:05,790 --> 01:04:08,240
because it's not that
person who chose it.

1400
01:04:08,240 --> 01:04:10,240
It's some other person,
so it's not their fault.

1401
01:04:10,240 --> 01:04:11,640
So why should I punish them?

1402
01:04:11,640 --> 01:04:14,250
Similarly, if the
computer chose, again,

1403
01:04:14,250 --> 01:04:16,748
if I have less than the other
person, that might be OK.

1404
01:04:16,748 --> 01:04:18,540
I might not be happy
about it, but it's not

1405
01:04:18,540 --> 01:04:21,930
the other person's fault.
It's the computer who chose.

1406
01:04:21,930 --> 01:04:24,180
In the next lecture, we're
going to talk about a field

1407
01:04:24,180 --> 01:04:25,080
application of that.

1408
01:04:25,080 --> 01:04:28,730
It's a very nice paper by
Emily Breza and co-authors,

1409
01:04:28,730 --> 01:04:32,430
which is about the morale
effects of pay inequality.

1410
01:04:32,430 --> 01:04:36,690
This is about how workers
behave in a work environment

1411
01:04:36,690 --> 01:04:39,180
when people are paid unequally.

1412
01:04:39,180 --> 01:04:43,728
And the short summary of this
paper is that when workers--

1413
01:04:43,728 --> 01:04:45,270
this is a field
experiment in India--

1414
01:04:45,270 --> 01:04:52,680
when workers are paid unequally,
they might be really unhappy

1415
01:04:52,680 --> 01:04:56,937
and be less productive at
their work because essentially,

1416
01:04:56,937 --> 01:04:58,770
and particularly if
they have to collaborate

1417
01:04:58,770 --> 01:05:01,110
with other workers who
are paid more than them.

1418
01:05:01,110 --> 01:05:03,120
But in particular, what
they seem to care about

1419
01:05:03,120 --> 01:05:06,850
is, is it fair that the
other person earns more?

1420
01:05:06,850 --> 01:05:09,000
So if you earn
more than I do, it

1421
01:05:09,000 --> 01:05:11,010
might actually be OK
if I can understand

1422
01:05:11,010 --> 01:05:12,560
that you are much
smarter, faster,

1423
01:05:12,560 --> 01:05:13,840
or better at what you do.

1424
01:05:13,840 --> 01:05:15,690
So if in some
observable ways, I can

1425
01:05:15,690 --> 01:05:18,720
tell that you're better than
I am, then, in some sense,

1426
01:05:18,720 --> 01:05:20,700
I might be perfectly
fine with you

1427
01:05:20,700 --> 01:05:22,830
earning like 10%, 20%,
50% or whatever percent

1428
01:05:22,830 --> 01:05:25,710
more money because I know
you're a better worker.

1429
01:05:25,710 --> 01:05:27,600
So OK, fine, you're paid more.

1430
01:05:27,600 --> 01:05:30,600
That seems fine and OK.

1431
01:05:30,600 --> 01:05:32,935
However, in some
other situation where

1432
01:05:32,935 --> 01:05:35,310
it's kind of not that obvious,
where it looks like you're

1433
01:05:35,310 --> 01:05:36,768
doing the same
thing that I'm doing

1434
01:05:36,768 --> 01:05:38,790
and not really faster
or better and so on,

1435
01:05:38,790 --> 01:05:42,060
yet you're paid more, I might
be really annoyed and unhappy

1436
01:05:42,060 --> 01:05:43,092
about it.

1437
01:05:43,092 --> 01:05:44,550
And you might also
be uncomfortable

1438
01:05:44,550 --> 01:05:48,000
because you feel bad about being
paid more than I do for doing

1439
01:05:48,000 --> 01:05:49,540
exactly the same thing.

1440
01:05:49,540 --> 01:05:52,190
So the experiment by
Emily Breza and coauthors

1441
01:05:52,190 --> 01:05:55,410
is doing exactly that, looking
at situations where workers are

1442
01:05:55,410 --> 01:06:00,060
paid unequally versus the
same, and situations where this

1443
01:06:00,060 --> 01:06:02,400
is justified versus
not, and really

1444
01:06:02,400 --> 01:06:05,130
seems to be that fairness
matters, or perceived fairness

1445
01:06:05,130 --> 01:06:06,930
matters quite a bit
for these workers.

1446
01:06:06,930 --> 01:06:11,550
When workers can justify being
paid less in some way, or more

1447
01:06:11,550 --> 01:06:13,470
than others, that's OK.

1448
01:06:13,470 --> 01:06:15,030
When it's unjustified,
they really

1449
01:06:15,030 --> 01:06:17,400
get annoyed and
produce a lot less

1450
01:06:17,400 --> 01:06:18,570
in that particular setting.

1451
01:06:21,740 --> 01:06:23,060
OK.

1452
01:06:23,060 --> 01:06:25,557
So let me now start with
some field evidence.

1453
01:06:25,557 --> 01:06:28,140
We're going to talk a lot more
about field evidence next time.

1454
01:06:28,140 --> 01:06:31,020
Let me briefly talk about this
paper here, and the next time,

1455
01:06:31,020 --> 01:06:33,540
I'm going to tell you
a lot more about that.

1456
01:06:33,540 --> 01:06:36,080
So this is a very nice paper
by Bandiera et al which

1457
01:06:36,080 --> 01:06:40,370
looks at the impact of
relative pay versus piece rates

1458
01:06:40,370 --> 01:06:41,600
on productivity.

1459
01:06:41,600 --> 01:06:43,640
Piece rates is just like
whatever you produce,

1460
01:06:43,640 --> 01:06:46,490
you're going to be paid
by unit of your output.

1461
01:06:46,490 --> 01:06:50,630
You just get some fixed
payment per each unit of output

1462
01:06:50,630 --> 01:06:52,220
that you produce.

1463
01:06:52,220 --> 01:06:55,580
Relative pay is
essentially your workers

1464
01:06:55,580 --> 01:06:57,630
are paid relative to others.

1465
01:06:57,630 --> 01:07:01,370
So if I'm working
50% more than you do,

1466
01:07:01,370 --> 01:07:05,720
I get paid a lot
more than you do.

1467
01:07:05,720 --> 01:07:09,830
Now why does this matter
for people, worker behavior?

1468
01:07:09,830 --> 01:07:12,350
Well, there's a
negative externality now

1469
01:07:12,350 --> 01:07:13,623
on me working really hard.

1470
01:07:13,623 --> 01:07:14,540
What's an externality?

1471
01:07:14,540 --> 01:07:21,110
Essentially an effect
on you that you're not

1472
01:07:21,110 --> 01:07:22,580
really compensated for.

1473
01:07:22,580 --> 01:07:24,320
That is to say, if
I worked really hard

1474
01:07:24,320 --> 01:07:26,690
and I'm really good at
my work, not only am

1475
01:07:26,690 --> 01:07:29,180
I getting paid more,
but also you're

1476
01:07:29,180 --> 01:07:33,980
going to be paid less because
essentially relatively,

1477
01:07:33,980 --> 01:07:35,630
you're going to
look worse than me

1478
01:07:35,630 --> 01:07:37,170
if you work in the same team.

1479
01:07:37,170 --> 01:07:39,110
So relative pay
essentially has this issue

1480
01:07:39,110 --> 01:07:41,750
about where it matters
for social preferences

1481
01:07:41,750 --> 01:07:44,720
because essentially,
any increase in my pay

1482
01:07:44,720 --> 01:07:47,078
comes at a reduction
of your pay.

1483
01:07:47,078 --> 01:07:48,620
To be clear, the
relative pay is such

1484
01:07:48,620 --> 01:07:49,995
that there's an
average pay which

1485
01:07:49,995 --> 01:07:52,430
depends on the average
productivity of everybody.

1486
01:07:52,430 --> 01:07:54,380
And then the relative
pay is on top of that,

1487
01:07:54,380 --> 01:07:56,960
is like the workers
who work more,

1488
01:07:56,960 --> 01:07:58,610
are more productive
relative to others,

1489
01:07:58,610 --> 01:08:00,305
are paid more than others.

1490
01:08:03,380 --> 01:08:05,280
And so how do you
think about this?

1491
01:08:05,280 --> 01:08:07,520
You can think about a
model of pure altruism.

1492
01:08:07,520 --> 01:08:09,260
We talked about
this already before.

1493
01:08:09,260 --> 01:08:12,740
There's self has a payoff of x.

1494
01:08:12,740 --> 01:08:16,640
The other person has a
payoff of x0 for other.

1495
01:08:16,640 --> 01:08:19,939
The self assigns weight alpha
to the other person's utility.

1496
01:08:19,939 --> 01:08:21,979
This is sort of the
typical model that's

1497
01:08:21,979 --> 01:08:23,432
been used by Becker and others.

1498
01:08:23,432 --> 01:08:24,890
We don't really
think that's really

1499
01:08:24,890 --> 01:08:26,569
the right model for
many situations,

1500
01:08:26,569 --> 01:08:29,100
but it's a really
useful benchmark model.

1501
01:08:29,100 --> 01:08:33,979
And so now, if I have positive
weight on this other person,

1502
01:08:33,979 --> 01:08:37,319
what I'm going to
do is I'm going to,

1503
01:08:37,319 --> 01:08:40,189
in the relative pay
scheme, I might not

1504
01:08:40,189 --> 01:08:42,350
work particularly
hard because I know

1505
01:08:42,350 --> 01:08:47,810
if I'm working really hard, I'm
going to make you worse off.

1506
01:08:47,810 --> 01:08:49,410
Does this make sense?

1507
01:08:49,410 --> 01:08:49,910
OK.

1508
01:08:49,910 --> 01:08:54,420
So I'm going to show
you, essentially,

1509
01:08:54,420 --> 01:08:56,348
briefly the
experiment, the impact,

1510
01:08:56,348 --> 01:08:58,390
the impact of social
preference in the workplace.

1511
01:08:58,390 --> 01:09:03,750
So what they do is they have
really nice data from the UK--

1512
01:09:03,750 --> 01:09:07,620
sorry, the microphone
doesn't really work--

1513
01:09:07,620 --> 01:09:14,100
from the UK on fruit pickers
under different compensation

1514
01:09:14,100 --> 01:09:15,810
schemes.

1515
01:09:15,810 --> 01:09:17,500
They have a
quasi-field experiment.

1516
01:09:17,500 --> 01:09:20,760
They have eight weeks
in a 2002 picking season

1517
01:09:20,760 --> 01:09:22,979
where fruit pickers
are compensated

1518
01:09:22,979 --> 01:09:24,660
on a relative
performance scheme.

1519
01:09:24,660 --> 01:09:29,910
That is to say, the
per fruit piece rate

1520
01:09:29,910 --> 01:09:32,430
is decreasing in the
average productivity.

1521
01:09:32,430 --> 01:09:34,439
So the incentive is to
keep the productivity low

1522
01:09:34,439 --> 01:09:35,500
if you care about others.

1523
01:09:35,500 --> 01:09:38,250
Essentially, the
more you produce,

1524
01:09:38,250 --> 01:09:40,950
the more you get yourself,
but the other person,

1525
01:09:40,950 --> 01:09:42,210
everybody else, gets less.

1526
01:09:42,210 --> 01:09:44,069
So essentially, now
you have an incentive

1527
01:09:44,069 --> 01:09:46,410
to not work too hard because
if you work too hard,

1528
01:09:46,410 --> 01:09:49,170
other people around you
are going to be paid less.

1529
01:09:49,170 --> 01:09:52,109
In the next eight weeks,
however, the compensation

1530
01:09:52,109 --> 01:09:55,080
switched to a flat
piece rate per fruit.

1531
01:09:55,080 --> 01:09:56,900
And so now the
externality is shut down.

1532
01:09:56,900 --> 01:09:58,650
However, it doesn't
really matter for you.

1533
01:09:58,650 --> 01:10:00,450
It doesn't matter
how much I produce.

1534
01:10:00,450 --> 01:10:06,340
You essentially get
however much you produce,

1535
01:10:06,340 --> 01:10:09,240
or the payment for that.

1536
01:10:09,240 --> 01:10:13,360
The switch was announced on the
day when the change took place.

1537
01:10:13,360 --> 01:10:15,340
So it's kind of a
surprise to workers.

1538
01:10:15,340 --> 01:10:17,580
So workers were working
for eight weeks,

1539
01:10:17,580 --> 01:10:19,788
and then for another eight
weeks, there was a switch,

1540
01:10:19,788 --> 01:10:22,205
and they didn't know that this
change was going to happen.

1541
01:10:22,205 --> 01:10:24,120
This was a surprise
change so we shouldn't

1542
01:10:24,120 --> 01:10:26,760
see any anticipatory
effects of that.

1543
01:10:26,760 --> 01:10:29,520
Now the relative effects,
now, of this policy

1544
01:10:29,520 --> 01:10:32,040
depends now on this alpha term.

1545
01:10:32,040 --> 01:10:34,500
If I don't care about others
at all, it shouldn't matter.

1546
01:10:34,500 --> 01:10:36,750
I should just work really
hard, as hard as I can,

1547
01:10:36,750 --> 01:10:39,150
because I want to
increase my relative pay.

1548
01:10:39,150 --> 01:10:42,270
However, if my alpha
is high, I might

1549
01:10:42,270 --> 01:10:44,820
work not so hard because I'm
worried about, essentially,

1550
01:10:44,820 --> 01:10:49,047
my friends or co-workers
being paid less.

1551
01:10:49,047 --> 01:10:50,130
And here's what they find.

1552
01:10:50,130 --> 01:10:53,258
Essentially find a dramatic
increase in productivity.

1553
01:10:53,258 --> 01:10:55,800
So on the left-hand side, you
see essentially the first eight

1554
01:10:55,800 --> 01:10:58,750
weeks, which essentially
is their productivity.

1555
01:10:58,750 --> 01:11:03,690
This is kilograms per hour of
fruit that are being collected.

1556
01:11:03,690 --> 01:11:06,510
That goes up dramatically
in the second half.

1557
01:11:06,510 --> 01:11:09,410
You see on the left side, you
essentially see no pre-trend.

1558
01:11:09,410 --> 01:11:11,910
It doesn't look like people are
getting just more productive

1559
01:11:11,910 --> 01:11:14,280
over time, maybe because
they become more experienced

1560
01:11:14,280 --> 01:11:17,790
or they understand
better how to work fast.

1561
01:11:17,790 --> 01:11:20,010
It seems really flat
on the left-hand side.

1562
01:11:20,010 --> 01:11:22,770
On the right-hand side
it goes up by quite a bit

1563
01:11:22,770 --> 01:11:27,420
pretty much very quickly after
this policy is announced.

1564
01:11:27,420 --> 01:11:29,640
It doesn't seem there's any
other significant change.

1565
01:11:29,640 --> 01:11:33,120
It really seems like worker
productivity per hour goes up.

1566
01:11:33,120 --> 01:11:35,940
For example, the number of
workers in the same field

1567
01:11:35,940 --> 01:11:37,050
stays the same and so on.

1568
01:11:37,050 --> 01:11:39,248
It doesn't seem to be
lots of other effects.

1569
01:11:39,248 --> 01:11:41,040
Really, the main thing
that seems to happen

1570
01:11:41,040 --> 01:11:43,620
is that workers'
productivity goes up.

1571
01:11:43,620 --> 01:11:47,280
Is this a response to
changes in the piece rate?

1572
01:11:47,280 --> 01:11:49,590
No, in fact, the
piece rate went down.

1573
01:11:49,590 --> 01:11:53,730
How much you were rewarded
for the marginal kilogram

1574
01:11:53,730 --> 01:11:56,930
that you collected
actually went down.

1575
01:11:56,930 --> 01:11:59,460
In fact, there were incentives
to work less if you only

1576
01:11:59,460 --> 01:12:01,410
cared about your own output.

1577
01:12:01,410 --> 01:12:03,510
Also this is robust
to controlling.

1578
01:12:03,510 --> 01:12:10,380
So now what's going on
here, it seems to me

1579
01:12:10,380 --> 01:12:12,930
that workers care about others.

1580
01:12:12,930 --> 01:12:15,540
But not only do they
care about others,

1581
01:12:15,540 --> 01:12:18,000
it also seems to be
that the effects are

1582
01:12:18,000 --> 01:12:22,060
larger the more friends
somebody had on the field.

1583
01:12:22,060 --> 01:12:23,730
So some workers
have lots of friends

1584
01:12:23,730 --> 01:12:25,230
on the field in
the same field that

1585
01:12:25,230 --> 01:12:27,897
are sort of their comparison
group, and others did not.

1586
01:12:27,897 --> 01:12:30,480
Now why does it matter how many
friends you have in your field

1587
01:12:30,480 --> 01:12:33,040
if care presumably you care
more about your friends

1588
01:12:33,040 --> 01:12:34,300
than other people?

1589
01:12:34,300 --> 01:12:38,280
So now, you might have
social preferences.

1590
01:12:38,280 --> 01:12:40,727
You work less to help others
because if you work not very

1591
01:12:40,727 --> 01:12:42,185
much, they're going
to be paid more

1592
01:12:42,185 --> 01:12:44,260
and you might care about them.

1593
01:12:44,260 --> 01:12:46,710
So you work even
less when the friends

1594
01:12:46,710 --> 01:12:50,530
benefit because you care more
about your friends than others.

1595
01:12:50,530 --> 01:12:52,350
So then you should
see stronger effects

1596
01:12:52,350 --> 01:12:55,920
if you have more friends
on the field of the piece

1597
01:12:55,920 --> 01:12:58,210
rates versus the other effects.

1598
01:12:58,210 --> 01:13:00,390
The second part is it's
also like a repeated game,

1599
01:13:00,390 --> 01:13:02,920
and that's kind of a
trickier to deal with,

1600
01:13:02,920 --> 01:13:05,880
which is your friends might sort
of punish you in various ways.

1601
01:13:05,880 --> 01:13:09,420
If I work really hard, they can
see, I'm working really hard.

1602
01:13:09,420 --> 01:13:12,510
They might sort of punish
you socially at night,

1603
01:13:12,510 --> 01:13:13,867
or they might sort of be mean.

1604
01:13:13,867 --> 01:13:16,450
They might just not want to be
your friends anymore and so on.

1605
01:13:16,450 --> 01:13:18,630
It's really a mean thing
to do to your friends.

1606
01:13:18,630 --> 01:13:23,700
So if you do that,
you might actually not

1607
01:13:23,700 --> 01:13:25,568
want to work hard,
not because you

1608
01:13:25,568 --> 01:13:27,360
care that much about
the others, but you're

1609
01:13:27,360 --> 01:13:29,027
worried about,
essentially, retribution.

1610
01:13:29,027 --> 01:13:31,050
You're worried about
them punishing you

1611
01:13:31,050 --> 01:13:34,482
if you are working too fast.

1612
01:13:34,482 --> 01:13:35,940
Now what kind of
variation could we

1613
01:13:35,940 --> 01:13:39,237
look at to disentangle
those two types of effects?

1614
01:13:39,237 --> 01:13:41,820
So they have different types of
fruit, I can tell you already.

1615
01:13:41,820 --> 01:13:43,380
But what kind of
variation would we

1616
01:13:43,380 --> 01:13:45,664
need to disentangle
those two explanations?

1617
01:13:57,300 --> 01:13:58,450
Or let me ask differently.

1618
01:13:58,450 --> 01:14:03,060
What's crucial in part number
two for that explanation?

1619
01:14:03,060 --> 01:14:04,310
So I'll give you another hint.

1620
01:14:04,310 --> 01:14:06,800
There's raspberries
and strawberries.

1621
01:14:06,800 --> 01:14:08,840
For strawberries,
you can see very well

1622
01:14:08,840 --> 01:14:09,980
what the other person does.

1623
01:14:09,980 --> 01:14:12,088
For raspberries, you cannot.

1624
01:14:12,088 --> 01:14:13,130
And why does that matter?

1625
01:14:18,152 --> 01:14:20,110
AUDIENCE: Because then
your friends won't know.

1626
01:14:20,110 --> 01:14:22,830
[INAUDIBLE]

1627
01:14:22,830 --> 01:14:23,790
PROFESSOR: Exactly.

1628
01:14:23,790 --> 01:14:27,900
If your friends don't know--

1629
01:14:27,900 --> 01:14:29,700
well, if it's
explanation number one,

1630
01:14:29,700 --> 01:14:31,180
you really care
about your friends,

1631
01:14:31,180 --> 01:14:32,972
it doesn't matter
whether your friends know

1632
01:14:32,972 --> 01:14:35,490
or not how much you produce.

1633
01:14:35,490 --> 01:14:36,990
If you care about
them a lot, you're

1634
01:14:36,990 --> 01:14:39,780
not going to work particularly
hard because working really

1635
01:14:39,780 --> 01:14:42,330
hard is bad for your friends.

1636
01:14:42,330 --> 01:14:44,902
If instead, you're
worried about retribution,

1637
01:14:44,902 --> 01:14:46,860
well, then it matters a
lot whether your friend

1638
01:14:46,860 --> 01:14:48,090
can see what you do.

1639
01:14:48,090 --> 01:14:50,670
If you do the strawberries,
which [INAUDIBLE] on the field,

1640
01:14:50,670 --> 01:14:54,120
you can see really
easily what you do.

1641
01:14:54,120 --> 01:14:57,210
If that's the case, you're
going to depress your effort

1642
01:14:57,210 --> 01:14:58,440
in the relative pay scheme.

1643
01:15:02,460 --> 01:15:05,760
And then there's going to
be large effects once you

1644
01:15:05,760 --> 01:15:08,040
have your individual pay.

1645
01:15:08,040 --> 01:15:12,930
However, if you can hide
what you're doing, then

1646
01:15:12,930 --> 01:15:15,330
in some sense you might
work secretly really hard

1647
01:15:15,330 --> 01:15:16,805
in some of the bushes.

1648
01:15:16,805 --> 01:15:18,930
Your friends will never be
able to tell whether you

1649
01:15:18,930 --> 01:15:20,402
will be working hard.

1650
01:15:20,402 --> 01:15:22,110
And then you should
see less of an effect

1651
01:15:22,110 --> 01:15:24,480
when the switch happens.

1652
01:15:24,480 --> 01:15:25,920
And this is exactly that.

1653
01:15:25,920 --> 01:15:28,140
Productivity is observed
for the strawberries.

1654
01:15:28,140 --> 01:15:29,910
It's unobserved for raspberries.

1655
01:15:29,910 --> 01:15:32,310
And so what we see,
essentially, is no impact

1656
01:15:32,310 --> 01:15:35,850
of the piece rate for food type
number two, which essentially

1657
01:15:35,850 --> 01:15:39,030
is to say if you can
hide from your friends,

1658
01:15:39,030 --> 01:15:42,580
you will, in fact,
work really hard,

1659
01:15:42,580 --> 01:15:45,420
which is essentially
suggestive that you don't care

1660
01:15:45,420 --> 01:15:46,800
that much about your friends.

1661
01:15:46,800 --> 01:15:49,050
Instead, what you care
about is social sanctions

1662
01:15:49,050 --> 01:15:51,840
or some form of punishment,
which only happens

1663
01:15:51,840 --> 01:15:55,080
for the strawberries because
that's when people can actually

1664
01:15:55,080 --> 01:15:58,410
see what you produce.

1665
01:15:58,410 --> 01:16:01,620
I can maybe briefly
recap this next time.

1666
01:16:01,620 --> 01:16:04,620
Let me just stop here.

1667
01:16:04,620 --> 01:16:09,900
Next lecture, I'm going to
show you a lot more field

1668
01:16:09,900 --> 01:16:12,640
evidence from various settings.

1669
01:16:12,640 --> 01:16:15,480
Essentially, the
paper by Breza et al

1670
01:16:15,480 --> 01:16:18,150
that have morale effects and
so on, essentially looking at

1671
01:16:18,150 --> 01:16:21,180
in field situations,
I'm going to show you

1672
01:16:21,180 --> 01:16:23,742
that social preferences
seem to matter quite a bit.

1673
01:16:23,742 --> 01:16:25,200
And then in
particular, we're going

1674
01:16:25,200 --> 01:16:28,470
to look at the malleability
of prosociality, which

1675
01:16:28,470 --> 01:16:31,900
is the question of, well, should
we take social preferences

1676
01:16:31,900 --> 01:16:32,670
as given?

1677
01:16:32,670 --> 01:16:37,770
Or are there some interventions
or some policies that perhaps

1678
01:16:37,770 --> 01:16:42,750
could make people become
nicer or more prosocial

1679
01:16:42,750 --> 01:16:43,710
in some situations?

1680
01:16:43,710 --> 01:16:46,770
Is it something that the
government or companies

1681
01:16:46,770 --> 01:16:52,888
could do to get workers or
people to be more prosocial?

1682
01:16:52,888 --> 01:16:53,680
That's all for now.

1683
01:16:53,680 --> 01:16:55,400
Thanks so much.