2.6 Appendix A2
3.4.2 Competition & Conditional Cooperation (Experiment 2)
First, we analyze the results from the classification of subjects into types from the condi- tional cooperation exercise. To do so, we compare the contribution behavior of subjects in the conditional cooperation exercise with competition (from Experiment 2, treatment COMP-OS for one-shot) and without competition (part one from Experiment 1, treat- mentBASE-OS). For the analysis on one-shot interactions, we have 192 observations in BASE-OS from part one of Experiment 1 as described above and 96 observations from another experiment that was identical in the structure to Experiment 1 but did not have a modification until part two, such that we can use the data in exactly the same way as the data from Experiment 1.20 In total, we thus have 288 independent observations in
the BASE-OS treatment and 48 in the COMP-OS treatment.
Preferences for types identified When we look at aggregate contribution levels for all subjects, we find - not surprisingly and consistent with the literature - a positive slope of the conditional contribution function in the BASE-OS treatment (see left panel of Figure 3.3). In the COMP-OS treatment this slope is considerably reduced compared to the base treatment. For all average contribution levels by the other group members which are higher than 3 EP, we find significant differences between the two treatments (p <0.01,
Mann-Whitney-U-test). This difference can stem either from a different contribution behavior in every identified type group or from a shift in the distribution of types. To further explore the issue, we display the contribution functions for every type group separately for the two treatments in the middle and right panel of Figure 3.3. The classification of types is done as described in section 3.2. We compare contribution levels between the two treatments at the individual level with a Mann-Whitney-U-test for each 20Results from later parts of this additional experiment are not reported in this chapter. To exclude any effect from including the additional data in the analysis, we report in appendix A3.1 all analyses also without the additional 96 observations. In short, there are no differences in the reduced dataset compared to the results we report here.
Figure 3.3: Conditional Contribution
Aggregate levels of conditional contribution for all subjects (left panel) and contribution patterns for determined types in treatments BASE-OS and COMP-OS (middle and right panel)
type group. Table 3.3 lists the significance levels of these pairwise tests. For conditional cooperators, we cannot identify major changes in behavior and especially no increase or decrease of the self-serving bias at the 5% level.21 In a similar vein, subjects classified
as humpshape contributors or ”others“ do not contribute more or less under competition than in the control treatment.
The elicited contribution patterns within all four groups of different types identified are robust to the introduction of competition. The fact that contribution patterns of those subjects classified as conditional cooperators are not affected by the possibility to win the prize is strong evidence that the classification method yields indeed a stable picture of subjects’ underlying preferences. We sum this up in the next result:
21We also do the same exercise for the classification of conditional cooperators according to the weak monotonicity rule and find identical results. We take this as evidence that our results do not rely on the way subjects are classified into different type groups.
Table 3.3: Differences in Conditional Contribution
Others’ All Conditional
Humpshaped Other
Contribution Subjects Cooperators
0 - - - - 1 - - - - 2 - - - - 3 ** - - - 4 *** - - - 5 *** - - - 6 *** * - *** 7 *** * - * 8 *** * - ** 9 *** * - ** 10 *** - - * 11 *** * - - 12 *** - - * 13 *** - - - 14 *** - - * 15 *** - - - 16 *** - - - 17 *** - - - 18 *** - - - 19 *** - - - 20 *** - - - obs Total 336 237 20 38 obs BASE-OS 288 212 17 31 obs COMP-OS 48 25 3 7
Significance Levels of Mann-Whitney-U-tests on individual conditional contribution differences between BASE-OS and COMP-OS for every average contribution level of the other group members. *** represents significance at p=0.01, ** at p=0.05 and * at p=0.10. Classification of Conditional Cooperators according to the Spearman correlation.
Result 3.4 There is no change in preferences from competition within a classified con- tribution type group. Especially, competition does not amplify the self-serving bias of conditional cooperators.
Distribution of types We find a decrease in average levels of conditional contribu- tion across all subjects between the two treatments, but since we are not able to explain this difference with altered behavior within the identified groups of types, we next take a look at the frequencies of types in the population. Table 3.4 lists the absolute numbers and the frequencies for both treatments, BASE-OS and COMP-OS. In the BASE-OS treat- ment, there is a clear majority of about 74 % of the subjects (212 out of 288) classified as
conditional cooperators with the Spearman method.22 10 % of the subjects (28 out of 288)
do not contribute positive amounts and are classified as freeriders. The two remaining categories comprise 6 % (triangle contributors) and 11 % (not classifiable) respectively. The heterogeneity of types in the population is in line with the literature, the exact dis- tribution of types, however, is somewhat different from the findings of Fischbacher et al. (2001) or Fischbacher and Gächter (2010) who find roughly 50 % of subjects to be con- ditional cooperators and up to 30 % to be freeriders. This is likely to be partly due to differences in the subject pool and partly to a different MPCR of 0.4 compared to 0.5 in
our experiments.
Table 3.4: Distribution of Types
Freerider Conditional Humpshape Other Total Cooperator
COMP-OS 27.1%13 52.1%25 6.3%3 14.6% 100%7 48 BASE-OS 9.7%28 73.6%212 5.9%17 10.8% 100%31 288 Total 12.2%41 70.5%237 6.0%20 11.3% 100%38 336
Number of observations and treatment frequencies of the observed types. Classification of Conditional Cooperators according to the Spearman correlation.
Introducing competition has a strong effect on the proportion of freeriders and conditional cooperators in the population. The share of freeriders increases from below 10 % to more than 27 % and the percentage of conditional cooperators is decreased from about 74 % to 52 %. The difference between the distribution of the four types in the population is highly significant (Fisher exact test andχ2 test, p < 0.01). Tests on different frequencies
of each specific type in the two treatments confirm that the proportions of freeriders and conditional cooperators are significantly different (χ2 test, p < 0.01), but not for hump-
shape contributors and the residual category (χ2 test, p >0.46).
The introduction of competition leads to a significant change of the distribution of contri- bution types according to Fischbacher et al. (2001) in the population towards more selfish subjects. We therefore find evidence for Hypothesis 3.3 that the loss of control over final payoff allocations through competition is at the heart of a weakening of other-regarding 22Using the stricter weak monotonicity rule as a classification methodology for conditional cooperators, 185 subjects (i.e., 64 %) fall into this category.
preference in the population. Our results show that a substantial part of the population is ”shifting“ from pro-social behavior in the form of conditional cooperation to the free- riding behavior. Rather than ”reducing“ their other-regarding concerns, subjects cease to behave pro-socially altogether what we summarize in our next result.23
Result 3.5 The introduction of competition leads to a significant shift in the distribution of the different contribution types away from conditional cooperators to more freeriders in the population.
We can explain the decrease in average conditional contributions caused by the intro- duction of competition through a change in the distribution of underlying types in the population but not through changed preferences within an identified type of contribu- tion behavior. Standard classification exercises of subjects into types may thus have only limited predictive power when the strategic environment becomes more competitive.
3.5
Conclusion
In this chapter, we investigate the impact of competition on cooperation behavior of sub- jects with heterogeneous other-regarding preferences. In the context of a social dilemma, we show that competition at the individual level alters the distribution of types in the population as measured in the conditional cooperation exercise and weakens incentives to build up a strategic reputation for selfish individuals in repeated interactions.
Our study is among the first to account for the differences in behavior between heteroge- neous types in the population to an exogenous intervention. Our results shed an inter- esting light on the interpretation of experimental results on other-regarding preferences as they underline the importance of controlling for individual preferences when analyzing an aggregate treatment effect. The impact of an intervention through modified incentives may thus have a different impact on different types identified. For the implementation of e.g. a policy or a change in incentives within a firm, it is crucial to have information 23We do not have data on this, but the results suggest that in our setup the size of the bonus determines the extent to which conditional cooperators convert into freeriders, i.e., the share of the population that ”gives up“ social concerns to act as selfish.
about types ex-ante in order to induce the desired change in behavior ex-post. The imple- mentation of behaviorally optimal contracts thus hinges on the availability of information on the precise nature of type heterogeneity and the knowledge about the effects of the policies on types.
In this context it is important to note that our results may underestimate the effect of different incentive schemes on different people since there is no selection of individuals of similar preferences into groups in our laboratory experiment. If preferences are ho- mogeneous within a group through selection into tasks or professions (Dohmen and Falk (2011)), the discrepancy between the change in behavior of two groups from an identical intervention may be considerable which constitutes a promising field of research that we leave for future investigation.