Chapter 2: Institutional heterogeneity in social dilemma games: a Bayesian examination
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Social dilemma (SD) experiments, such as public good (PG) games and common pool resource (CPR) games, are designed to create a gap between the game-theoretic equilibrium strategy and the socially optimal course of action. This cleft in payoffs and the group structure of the experimental setup leaves considerable room for ‘other-regarding’ and ‘other-dependent’ forces such as altruism, inequity aversion, reputation-building, compliance with norms, and conditional cooperation to take root and affect observed outcomes. It is thus not surprising that in most existing applications experimentalists have focused on the identification of these different behavioral motives amongst SD game participants (e.g. Andreoni 1995; Anderson et al. 1998; Brandts and Schram 2001; Fischbacher et al. 2001; Kurzban et al. 2001; Velez et al. forthcoming(b)). However, in some SD games an equally important if not primary experimental focus rests on the effect of public institutions and policies on players’ allocation or extraction decisions (e.g. Ostrom et al. 1994; Ostmann 1998; Beckenkamp and Ostmann 1999; Cardenas et al. 2000; Vyrastekova and Soest 2003; Bischoff2007; Velez et al. forthcoming(a)). Such institutions are represented via exogenous treatments added to the game structure, such as quotas, penalties, open communication, and voting mechanisms.

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