1 university of auckland winter week lectures third lecture 4 july 2007 associate professor ananish...
TRANSCRIPT
![Page 1: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/1.jpg)
1
University of Auckland Winter Week Lectures
Third Lecture4 July 2007
Associate Professor Ananish Chaudhuri
Department of Economics University of Auckland
![Page 2: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/2.jpg)
What affects beliefs and cooperation?• Mark Isaac and James Walker look at
• Group size• What happens when the size of the group changes
(small or large)• Collective action may be more difficult with larger
groups
• Marginal Per capita return (MPCR)• What happens when the return on the investment
goes up or goes down?• With 4 players if each dollar contributed is
DOUBLED and redistributed equally then the return per dollar is (2/4) = $0.50. If $1 is TRIPLED and divided by 4 then the return is (3/4) = $0.75
![Page 3: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/3.jpg)
3
What affects beliefs and cooperation?
• Amount placed in the private account for each player is known only by that particular player
• Everyone knows the total contribution to the group account
• Play for 10 periods
• Players are told their total earnings at the end of each round
![Page 4: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/4.jpg)
4
What affects beliefs and cooperation?
![Page 5: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/5.jpg)
5
![Page 6: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/6.jpg)
6
Results
Average contributions in percent
![Page 7: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/7.jpg)
7
Results
• Cooperation increases with MPCR for both groups of size 4 and groups of size 10.
• Cooperation increases with group size if MPCR is low (not when it is high).
• Cooperation decreases over time
![Page 8: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/8.jpg)
8
What happens if we use even larger groups?
• Isaac, Walker and Williams look at groups of 4, 10, 40 and 100
• Two MPCR treatments: • MPCR = 0.3• MPCR = 0.75
![Page 9: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/9.jpg)
9
n = 4
n = 10
n = 100
n = 40
Larger groups do better
Not much difference
LOW RETURNS HIGH RETURNS
![Page 10: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/10.jpg)
10
What happens if we use even larger groups?
• For MPCR = 0.3 larger groups are more cooperative
• For MPCR = 0.75 no strong difference but larger groups are certainly not less cooperative
![Page 11: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/11.jpg)
11
Would providing more disaggregated information help?
• In many social dilemma experiments we provide the participants information about average contributions for the group
• What if we showed them contributions made by individuals without revealing their identity?
• Turns out the this increases free-riding!
![Page 12: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/12.jpg)
12
![Page 13: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/13.jpg)
13
Communication & Voluntary Cooperation
• Groups of four • Two sequences with 10 periods each• Group composition remains unchanged
for the duration of the session.• Communication opportunities: Players
can discuss what they want to do in the experiment.
![Page 14: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/14.jpg)
14
Communication & Voluntary Cooperation: Treatments
• 1. Communication for 10 periods followed by No Communication for the next 10 periods (players have the same endowment.)
• 2. No Communication for the first 10 periods followed by Communication in the next 10 (players have the same endowment)
• 3. Communication followed by No Communication (asymmetric endowments).
![Page 15: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/15.jpg)
15
![Page 16: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/16.jpg)
16
Findings
• Start with Communication• High cooperation rates; also in the second
No Communication phase.
• Start with No Communication• Unraveling of cooperation in No
Communication but after Communication rapid increase in cooperation.
![Page 17: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/17.jpg)
17
Cooperation, Punishments and Social Norms
• A social norm is
•a behavioral regularity that rests on a common belief of how one should behave
•and might be enforced by formal or informal sanctions.
![Page 18: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/18.jpg)
18
A cooperation and punishment experiment
(Fehr and Gächter, 2000)
• Stage 1: • typical public goods game
• Stage 2: • Punishment opportunity• Subjects are informed about each
member’s contribution.• Subjects can punish other group
members at a cost to themselves.
![Page 19: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/19.jpg)
19
A cooperation and punishment experiment• Either groups are fixed – “partners” protocol
• Or players are randomly re-matched at the end of each round – “strangers” protocol
![Page 20: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/20.jpg)
20
Predictions
• If players are selfish and interested in maximizing their earnings then:
• No punishment
• No contribution regardless of whether there is a punishment opportunity.
![Page 21: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/21.jpg)
21
Predictions
• Players in the partner treatment who interact with the same people over and over again may be able to build up a group reputation • “There are punishers in the group, hence it
is better to cooperate”• Building such reputation would be difficult with
random re-matching where the interactions are short-lived
![Page 22: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/22.jpg)
22
![Page 23: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/23.jpg)
23
(18.5%) (57.5%) (9.5%) (61.5%)
![Page 24: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/24.jpg)
24
Who gets punished?
![Page 25: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/25.jpg)
25
Even non-monetary punishments (scolding?) seem to matter!
• David Masclet and others look at a “partners” treatment where participants play for 30 periods divided into 3 segments
• No sanction (periods 1 through 10)
• Monetary Sanction OR Non-Monetary Sanction (Periods 11 through 20)
• No sanction (Periods 21 through 30)
![Page 26: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/26.jpg)
26
Group Contributions Over Time
Monetary punishment
Non-monetary punishment
![Page 27: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/27.jpg)
27
Formal vs. Informal Sanctions
• The availability of either type of sanctions increases contribution levels.
• The availability of non-monetary sanctions initially increases the contribution levels of subjects by as much as monetary sanctions.
• The increase in contribution resulting from non-monetary sanctions is not as durable as the increase from monetary sanctions.
![Page 28: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/28.jpg)
28
How effective are non-monetary punishments?
• Monetary punishment alone is a blunt tool to raise contributions than needed.
• A wider array of sanctions is more effective. • For many people, non-monetary sanctions
are sufficient to induce high contributions. • Costly monetary punishments can be
reserved for those that informal sanctions cannot influence.
![Page 29: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/29.jpg)
29
Are punishments essential?Creating culture in the laboratory
• A group of 5 subjects play the public goods game for 10 periods.
• After her participation, each agent is replaced by another, who plays the game for 10 periods again.
![Page 30: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/30.jpg)
30
The Inter-generational paradigm
• Players in any generation can leave free-form written advice to their successors
• Players get two payoffs – what they earn plus what their progeny earn
![Page 31: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/31.jpg)
31
Three Different Advice Treatments• In the private advice treatment
advice from generation “t” player is given only to her successor in generation “t+1”
• In the public advice almost common knowledge treatment advice from all players in generation “t” is given to all the players in generation “t+1”
![Page 32: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/32.jpg)
32
Three Different Advice Treatments• In the public advice common
knowledge treatment advice from all players in generation “t” is given to all the players in generation “t+1”and is also read aloud by the experimenter
• The advice treatments are compared to behavior in a control group
![Page 33: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/33.jpg)
33
The Inter-generational Paradigm
• In real-life when we are confronted with a social dilemma we often access to the wisdom of the past in the sense that predecessors, or at least immediate predecessors, of this person are available to give us advice.
![Page 34: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/34.jpg)
34
Pattern of Contributions 0
24
68
Ave
rage C
ontr
ibutio
n
0 2 4 6 8 10Period
No Advice Private Advice
Common Knowledge Almost Common Knowledge
Pooled DataCommon Knowledge advice
No advice
Private advice
![Page 35: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/35.jpg)
35
Evolution of Contributions Across Generations – Private Advice
0 1 2 3 4 5 6 7 8 9 10
Private Knowledge Generation 10
2
4
6
8
10
12
14
16
18
Percentage
Tokens
Private Know ledge Generation 1
![Page 36: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/36.jpg)
36
Evolution of Contributions Across Generations – Private Advice
0 1 2 3 4 5 6 7 8 9 10
Private Knowledge Generation 1
Private Knowledge Generation 2
0
5
10
15
20
25
Percentage
Tokens
![Page 37: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/37.jpg)
37
Evolution of Contributions Across Generations – Private Advice
0 1 2 3 4 5 6 7 8 9 10
Private Knowledge Generation 1
Private Knowledge Generation 2
Private Knowledge Generation 3
0
5
10
15
20
25
Percentage
Tokens
![Page 38: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/38.jpg)
38
Contributions Across Generations – Almost Common Knowledge
0 1 2 3 4 5 6 7 8 9 10
Almost Common Knowledge Generation10
5
10
15
20
25
30
Percentage
Tokens
Almost Common Know ledge Generation 1
![Page 39: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/39.jpg)
39
Contributions Across Generations – Almost Common Knowledge
0 1 2 3 4 5 6 7 8 9 10
Almost Common Knowledge Generation1
Almost Common Knowledge Generation2
0
5
10
15
20
25
30
Percentage
Tokens
![Page 40: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/40.jpg)
40
Contributions Across Generations – Almost Common Knowledge
0 1 2 3 4 5 6 7 8 9 10
Almost Common Knowledge Generation1
Almost Common Knowledge Generation2
Almost Common Knowledge Generation3
0
10
20
30
40
50
60
70
Percentage
Tokens
![Page 41: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/41.jpg)
41
Contributions Across Generations – Common Knowledge
0 1 2 3 4 5 6 7 8 9 10
Common Knowledge Generation 10
2
4
6
8
10
12
14
16
18
Percentage
Tokens
Common Know ledge Generation 1
![Page 42: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/42.jpg)
42
Contributions Across Generations – Common Knowledge
0 1 2 3 4 5 6 7 8 9 10
Common Knowledge Generation 1
Common Knowledge Generation 2
05
101520253035404550
Percentage
Tokens
![Page 43: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/43.jpg)
43
Contributions Across Generations – Common Knowledge
0 1 2 3 4 5 6 7 8 9 10
Common Knowledge Generation 1
Common Knowledge Generation 2
Common Knowledge Generation 3
05
101520253035404550
Percentage
Tokens
![Page 44: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/44.jpg)
44
Role of Advice
• Subjects were asked to indicate a specific contribution in addition to providing free-form advice
• Often, advice specified a dynamic rule:• “I would pick a high number for the first round like 9.
But when you see the average start to drop, pick a small number so you don’t lose money.”
![Page 45: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/45.jpg)
45
Role of Advice
• In the later generations of common knowledge public advice, subjects advised unconditional contribution:
• “Keep faith! No one should mess it up for the others. All 10 for all 10 rounds!”
• “For goodness’ sake don’t be that morally vacant girl who prioritizes her own profit & takes advantage of everyone else!”
![Page 46: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/46.jpg)
46
Histogram of Advice Left – Private Advice
0 5 5.5 6 6.5 7 7.5 8 8.5 9 10
Private Generation 10
5
10
15
20
25
30
Percentage
Advice Left
Private Generation 1
![Page 47: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/47.jpg)
47
Histogram of Advice Left – Private Advice
0 5 5.5 6 6.5 7 7.5 8 8.5 9 10
Private Generation 1
Private Generation 2
0
5
10
15
20
25
30
35
Percentage
Advice Left
![Page 48: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/48.jpg)
48
Histogram of Advice Left – Private Advice
0 5 5.5 6 6.5 7 7.5 8 8.5 9 10
Private Generation 1
Private Generation 2
Private Generation 3
0
5
10
15
20
25
30
35
Percentage
Advice Left
![Page 49: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/49.jpg)
49
Histogram of Advice Left – Almost Common Knowledge
03
57
810
Almost Common Generation 1
0
5
10
15
20
25
30
35
40
45
50
Percentage
Advice Left
Almost Common Generation 1
![Page 50: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/50.jpg)
50
Histogram of Advice Left – Almost Common Knowledge
0 3 5 7 8 10
Almost Common Generation 1
Almost Common Generation 2
0
5
10
15
20
25
30
35
40
45
50
Percentage
Advice Left
![Page 51: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/51.jpg)
51
Histogram of Advice Left – Almost Common Knowledge
0 3 5 7 8 10
Almost Common Generation 1
Almost Common Generation 2
Almost Common Generation 3
0
10
20
30
40
50
Percentage
Advice Left
![Page 52: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/52.jpg)
52
Histogram of AdviceCommon Knowledge
0 5 6 7 7.5 8 8.5 9 9.5 10
Common Generation 1
0
5
10
15
20
25
30
35
Percentage
Advice Left
Common Generation 1
![Page 53: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/53.jpg)
53
Histogram of Advice Common Knowledge
0 5 6 7 7.5 8 8.5 9 9.5 10
Common Generation 1
Common Generation 2
0
5
10
15
20
25
30
35
40
45
50
Percentage
Advice Left
![Page 54: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/54.jpg)
54
Histogram of Advice Common Knowledge
0 5 6 7 7.5 8 8.5 9 9.5 10
Common Generation 1
Common Generation 2
Common Generation 3
0
10
20
30
40
50
60
Percentage
Advice Left
![Page 55: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/55.jpg)
55
Beliefs
• We elicit subjects’ beliefs about round 1 contributions made by each member of the group
• Common knowledge generates much more exhortative advice
• This in turn creates more optimistic beliefs
![Page 56: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/56.jpg)
56
Implication for the punishments literature• In the presence of conditional
cooperators, communities may be able to create social norms that lead to high contribution to the public good.
• Subjects with optimistic beliefs about one another may be able to sustain cooperation even without the explicit threat of punishments.
![Page 57: 1 University of Auckland Winter Week Lectures Third Lecture 4 July 2007 Associate Professor Ananish Chaudhuri Department of Economics University of Auckland](https://reader035.vdocuments.mx/reader035/viewer/2022062516/56649e495503460f94b3cde4/html5/thumbnails/57.jpg)
57
Questions?