Ernesto Reuben

We investigate the intrinsic motivation of individuals to report, and thereby sanction, fellow group members who lie for personal gain. We further explore the changes in lying and reporting behavior that result from giving individuals a say in who joins their group. We find that enough individuals are willing to report lies such that in fixed groups lying is unprofitable. However, we also find that when groups can select their members, individuals who report lies are generally shunned, even by groups where lying is absent. This facilitates the formation of dishonest groups where lying is prevalent and reporting is nonexistent.

We experimentally study the common wisdom that money buys political influence. In the game, one special interest (i.e., a corporate firm) has the opportunity to influence redistributive tax policies in her favor by transferring money to two competing candidates. The success of the investment depends on whether or not the candidates are willing and able to collude on low-tax policies that do not harm their relative chances in the elections. In the experiment, successful political influence never materializes when the firm and candidates interact just once. By contrast, it yields substantially lower redistribution in about 40% of societies with finitely-repeated encounters. However, investments are not always profitable, and profit-sharing between the firm and candidates depends on prominent equity norms. Our experimental results shed new light on the complex process of buying political influence in everyday politics and help explain why only relatively few firms do actually attempt to influence policymaking.

We study the interaction between competitive markets and income redistribution that reallocates unequal pre-tax market incomes away from the rich to the poor majority. In one setup, participants earn their income by trading in a double auction (DA) with exogenous zero or full redistribution. In another setup, after trading, they vote on redistributive tax policies in a majoritarian election with two competing candidates. This results in virtually full redistribution, even when participants have the opportunity to influence taxes by transferring money to the candidates. We find that the high redistribution reduces trading efficiency, but not as much as predicted if market participants trade randomly. This is because, rather than capitulating to the much lower trading incentives, many participants respond to redistribution by asking and bidding more conservatively in the DA, and in this way help to prevent further efficiency losses.

Why humans are prone to cooperate puzzles biologists, psychologists and economists alike. Between-group conflict has been hypothesized to drive within-group cooperation. However, such conflicts did not have lasting effects in laboratory experiments, because they were about luxury goods, not needed for survival (“looting”). Here, we find within-group cooperation to last when between-group conflict is implemented as “all-out war” (eliminating the weakest groups). Human subjects invested in helping group members to avoid having the lowest collective pay-off, whereas they failed to cooperate in control treatments with random group elimination or with no subdivision in groups. When the game was repeated, experience was found to promote helping. Thus, not within-group interactions alone, not random group elimination, but pay-off-dependent group elimination was found to drive within-group cooperation in our experiment. We suggest that some forms of human cooperation are maintained by multi-level selection: reciprocity within groups and lethal competition among groups acting together.

We investigate the emergence and enforcement of contribution norms to public goods in homogeneous and heterogeneous groups. With survey data we demonstrate that uninvolved individuals hold well defined yet conflicting normative views of fair contribution rules related to efficiency, equality, and equity. In the experiment, in the absence of punishment no positive contribution norm is observed and all groups converge towards free-riding. With punishment, strong and stable differences in contributions emerge across group types and individuals in different roles. In some cases these differences result from the emergence of an efficiency norm where all fully contribute. In the cases where full efficiency is not attained, these differences result from the enforcement of different relative contribution norms. Hence, our experimental data show that, even in heterogeneous groups, individuals can overcome the collective action problem inherent in public good games by agreeing on and enforcing a contribution norm.

We present evidence from an experiment in which groups select a leader to compete against the leaders of other groups in a real-effort task that they have all performed in the past. We find that women are selected much less often as leaders than is suggested by their individual past performance. We study three potential explanations for the underrepresentation of women, namely, gender differences in overconfidence concerning past performance, in the willingness to exaggerate past performance to the group, and in the reaction to monetary incentives. We find that men’s overconfidence is the driving force behind the observed prevalence of male representation.

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We propose a novel experimental method that disentangles strategically- and non-strategically-motivated behavior. We apply it to an indefinitely-repeated prisoner's dilemma game to observe simultaneously how the same individual behaves in situations with future interaction and in situations with no future interaction, while controlling for expectations. This method allows us to determine the extent to which strategically-cooperating individuals are responsible for the observed pattern of cooperation in experiments with repeated interaction, including the so-called endgame effect. Our results indicate that the most common motive for cooperation in repeated games is strategic.

This experimental study investigates how behavior changes after receiving punishment. The focus is on how proposers in a power-to-take game adjust their behavior depending on their fairness perceptions, their experienced emotions, and their interaction with responders. We find that fairness plays an important role: proposers who take what they consider to be an unfair amount experience higher intensities of prosocial emotions (shame and guilt), particularly if they are punished. This emotional experience induces proposers to lower their claims. We also find that fairness perceptions vary considerably between individuals. Therefore, it is not necessarily the case that proposers who considered themselves fair are taking less from responders than other proposers. Lastly, we provide evidence that suggests that eliciting emotions through self-reports does not affect subsequent behavior.

This paper reports a positive and statistically significant relation between short-term discount rates elicited with a monetary and a primary reward (chocolate). This finding suggests that high short-term discount rates are related to an underling individual trait.

We test if cooperation is promoted by rank-order competition between groups in which all groups can be ranked first, i.e. when everyone can be a winner. This type of rank-order competition has the advantage that it can eliminate the negative externality a group's performance imposes on other groups. However, it has the disadvantage that incentives to outperform others are absent, and therefore it does not eliminate equilibria where all groups cooperate at an equal but low level. We find that all-can-win competition produces a universal increase in cooperation and benefits a majority of individuals if the incentive to compete is sharp.

This paper experimentally explores how the enforcement of cooperative behavior in a social dilemma is facilitated through institutional as well as emotional mechanisms. Recent studies emphasize the importance of anger and its role in motivating individuals to punish free riders. However, we find that anger also triggers retaliatory behavior by the punished individuals. This makes the enforcement of a cooperative norm more costly. We show that in addition to anger, "social" emotions like guilt need to be present for punishment to be an effective deterrent of uncooperative actions. They play a key role by subduing the desire of punished individuals to retaliate and by motivating them to behave more cooperatively in the future.

We study experimentally the effect of expectations on whether trust is repaid. Subjects respond with untrustworthy behavior if they see that little is expected of them. This suggests that guilt aversion plays an important role in the repayment of trust.

In public-good provision, privileged groups enjoy the advantage that some of their members find it optimal to supply a positive amount of the public good. However, the inherent asymmetric nature of these groups may make the enforcement of cooperative behavior through informal sanctioning harder to accomplish. In this article, the authors experimentally investigate public-good provision in normal and privileged groups with and without decentralized punishment. The authors find that compared to normal groups, privileged groups are relatively ineffective in using costly sanctions to increase everyone's contributions. Punishment is less targeted toward strong free riders, and they exhibit a weaker increase in contributions after being punished. Thus, the authors show that privileged groups are not as privileged as they initially seem.

This is an experimental study of negative reciprocity in the case of multiple reciprocators. We use a three-player power-to-take game where a proposer is matched with two responders. We compare a treatment in which responders are anonymous to each other (strangers) with one in which responders know each other from outside the lab (friends). We focus on the responders' decisions, beliefs, and emotions. Our main findings are: (1) friends punish the proposer more than strangers, (2) friends are more likely to coordinate their punishment (without communication), and (3) both punishment and coordination are explained by the responders' emotional reactions.

The ability of groups to implement efficiency-enhancing institutions is emerging as a central theme of research in economics. This paper explores voting on a scheme of intergroup competition which facilitates cooperation in a social dilemma situation. Experimental results show that the competitive scheme fosters cooperation. Competition is popular but also that the electoral outcome depends strongly on specific voting rules of institutional choice. If the majority decides, competition is almost always adopted. If likely losers from competition have veto power, it is often not, and substantial gains in efficiency are foregone.

We propose an experimental game to identify the importance of two types of reciprocal heuristics: reciprocation conditional on future interaction and reciprocation unconditional on future interaction. Even though any form of reciprocation is a logical error for a rational payoff-maximizing individual, we show that reciprocal behavior is common and is the result of using the abovementioned heuristics. We find that the frequency of reciprocation conditional on future interaction is sensitive to the benefit of mutual cooperation whereas the frequency reciprocation unconditional on future interaction is not. These results suggest that the former heuristic is driven by calculation errors and that the latter is driven by motivational concerns.

We conduct a study to test whether emotional intelligence can be taught effectively in a short course. We randomly assign MBA students to an emotional intelligence course and two control courses. We measure the impact of the course is two ways. First, we compare the students' emotional intelligence, as measured by the MSCEIT, before and after the course. Second, we evaluate whether the course impacts the students' ability to sell themselves to potential employers, an ability for which the skills associated with emotional intelligence are useful. We find that, unlike students in the control courses, students in the emotional intelligence course increased their MSCEIT score by 0.358 standard deviations and their odds of being deemed worthwhile for a job interview by around 65 percent.

We use a combination of lab and field evidence to study whether preferences for immediacy and the tendency to procrastinate are connected as in O'Donoghue and Rabin (1999a). To measure immediacy, we have participants choose between smaller-sooner and larger-later rewards. Both rewards are paid by check to control for transaction costs. To measure procrastination, we record how fast participants cash their checks and complete other tasks. We find that individuals with a preference for immediacy are more likely to procrastinate. We also find evidence that individuals differ in the degree to which they anticipate their own procrastination.

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We study an experimental labor market where, in spite of equal performance across genders, individuals discriminate against women. We show that discrimination is neither taste-based nor based on a correct statistical inference. Instead, it is rooted in biased beliefs of women's abilities. The gender gap increases when candidates are allowed to influence expectations by declaring their expected performance and it narrows if individuals receive accurate information of the performance of the applicants. However, even when accurate information is transmitted, the gender gap persists because individuals do not completely update their initially-biased belief. Furthermore, we show, by using the Implicit Association Test, that unconscious stereotypes are partly responsible for the initial bias in beliefs and the subsequent lack of updating.

We study the role of fairness principles as focal points in coordination problems with homogeneous and heterogeneous agents. To this end we elicit normatively fair ways of how the coordination game should be played. We find that in homogeneous groups people implicitly agree on a unique fair way of playing the game while in heterogeneous groups well-defined multiple but conflicting fairness principles prevail. In the subsequent repeated coordination game homogeneous groups most of the time successfully coordinate on the equilibrium consistent with the unique fairness principle of equality. In heterogeneous groups coordination often fails or is inefficient. Interestingly, heterogeneous groups are equally likely as homogeneous groups in achieving coordination but are less likely to stay coordinated. In both types of groups only equilibria consistent with a fairness principle are stable. Individual level analysis reveals that individual fairness principles and expectations about others' fairness principles are, on the one hand, important for staying coordinated but, on the other hand, also responsible for leaving even efficient coordination equilibria that are not in concordance with one of the fairness principles. Hence, fairness principles can lead to success but may also induce failure in coordination problems.

Most models of conflict concentrate on how players allocate resources between productive and fighting efforts. After a conflict, the winner is assumed to take control of all the resources of the loser. In this paper we show experimentally that this simplification misses an important component of a conflict, namely the reaction of the defeated player. We find that, if given the choice to destroy some of their resources, many defeated players prefer to do so rather than let the winner take any of it. Given this, incentives to invest in weapons as opposed to production change and in some cases lower levels of conflict are achieved. Furthermore in settings with repeated interaction, the behavior of players in post-conflict stages can serve as a form of costly communication which enables players to reach a peaceful outcome in the future.

Strategic analysts require a systematic approach to model and analyze their decisions, and firms often turn to game theory when thinking about competitive dynamics. This case gives students a game theory primer by putting them in the role of strategists working for Coca-Cola Enterprises who have been asked to determine how a planned bottling plant in Wisconsin will affect the company's profitability. Students learn the benefits of this approach as a strategic tool, and also explore recent advances in the behavioral aspects of game theory.

This document describes the data analyzed in the Chicago-Templeton longitudinal study. The study is based on the entire 2008 generation of MBA students from the University of Chicago Booth School of Business. The data described in this document are obtained from three different sources: surveys, laboratory experiments, and the school's admission department. We give a brief overview of each data source, in addition to a detailed description of the data-collection procedures.

Fairness norms are an elusive and yet important characteristic of our societies. In many situations of interest to economists, the active enforcement of fairness norms affect behavior in significant ways. This thesis studies the motivations of individuals to comply with and to enforce fairness norms. Furthermore, the circumstances under which the enforcement of fairness norms leads to desirable outcomes are investigated. Particular attention is given to the effects of punishment, fairness perceptions, and emotions on an individual's willingness to behave in a fair manner. Latter chapters study norm enforcement in public good settings. First, in groups with heterogeneous endowments, and second, in groups that have less free riding incentives but suffer from the fact that high cooperation levels are no longer supported by fairness norms.

This paper describes how our understanding of collective action has evolved over the years. I use Olson's model of collective action to relate six essentially different approaches. For each approach, I highlight its contribution as well as its main drawbacks. We still do not have a satisfactory explanation for collective action. However, recent work on cognitively and emotionally bounded agents promises to deliver significant insights.