Search

This paper studies how litigation and settlement behavior is affected by agents motivated by spiteful preferences under the American and the English fee-shifting rule. We conduct an experiment and find that litigation expenditures and settlement requests are higher for more spiteful participants. The relative increase in litigation expenditures due to spite is more pronounced under the American fee-shifting rule. We further find that the expected payoff for more spiteful societies is lower than for less spiteful societies. This effect is particularly pronounced for low-merit cases under the English rule compared to a constant cost under the American rule.

In this pilot study, we aim to collect data of 100 mTurk participants to test the real effort task that we plan to use in the main experiment. In the real effort task participants have to transcribe texts. They can choose to transcribe between 0 and 20 texts. Participants receive $.2 as a participation fee and for each transcribed text they receive a bonus. In our pilot study we very the bonus in 11 treatments between $.03 and $.13. We expect that participants take about 10 minutes in total for the pilot.

We contribute to the question of how the attribution of corporate corruption influences labor supply. We design the novel corporate corruption game and vary the attribution of punishment for corporate corruption on labor supply in multiple treatments. In our game, there are three actors: An executive, a group of workers, and society. The executive can dishonestly increase the corporation's payoff to the benefit of the workers and herself, but at society's expense. Workers – uninformed about potential corruption – can increase the firm's profit by working more. In case corporate corruption is detected and can be attributed to the executive, she must pay the punishment herself. In case corporate corruption is detected and the person responsible cannot be identified, the penalty has to be paid by the whole company (the executive and the workers).

In this paper we use an experiment to compare a theory of risk aversion and a theory of spite as an explanation for overbidding in auctions. As a workhorse we use the second-price all-pay and the first-price winner-pay auction. Both risk and spite can be used to rationalize deviations from risk neutral equilibrium bids in auctions. We exploit that equilibrium predictions in the second-price all-pay auctions for spiteful preferences are different than those for risk averse preferences. Indeed, we find that spite is a more convincing explanation for bidding behavior for the second-price all-pay auction. Not only can spite rationalize observed bids, also our measure for spite is consistent with observed bids.

We study how punishment influences conditional cooperation. We ask two questions: 1) how does conditional cooperation change if a subject can be punished and 2) how does conditional cooperation change if a subject has the power to punish others. In particular, we disentangle the decision to be a conditional cooperator at all from the strength of conditional cooperation. We find that the possibility of being punished increases the strength of conditional cooperation. At the same time the possibility of being punished increases the number of free riders. In our study the net effect on cooperation still is positive. The possibility of punishing others has two effects: Substitution and responsibility. Players substitute conditional cooperation with punishment which leads to a decrease in conditional cooperation. The power to punish means more responsibility which leads to an increase in conditional cooperation. In our design the overall effect of responsibility is stronger than the effect of substitution. We conclude that the threat of being punished and the power to punish changes conditional cooperation behavior in several, unexpected, ways.

We investigate power abuse of a single punisher in a public-goods-game subject to variations in punishment power and contribution transparency. We find a high amount of abuse across all conditions. More power led to more abuse over time, while transparency could only curb abuse in the high power conditions. These findings highlight the dangers of power centralization, but suggest a more complex relation of power and transparency.