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Paretian dictators: constraining choice in a voluntary contribution game

Robert J. Oxoby

Constitutional Political Economy ISSN 1043-4062 Volume 24 Number 2 Const Polit Econ (2013) 24:125-138 DOI 10.1007/s10602-013-9139-6

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J. Canada 123 . and social choice. ON. 2500 University Drive NW. allowing individuals to constrain the choices of others results in more efficient outcomes. Keywords Public goods Á Conditional cooperation Á Reciprocity Á Experiments C7 Á C9 Á D4 Á H4 JEL Classification 1 Introduction The tension between allowing unfettered individual choice and implementing efficient outcomes lies at the heart of the Pigouvian–Coasian debate inherent in the literature on public goods provision and constitutional design. Oxoby Published online: 17 May 2013 Ó Springer Science+Business Media New York 2013 Abstract We explore individuals’ preferences over limiting the choice sets of others in an environment with externalities. relative to a baseline treatment in which individuals make choices from the set of all contribution alternatives. we conduct public goods games in which participants can mandate the contributions of others or restrict choices to a subset of feasible contributions levels. We find that. Indeed while some have argued that individuals must face restrictions of liberties and choices in order to preserve social R. Specifically.Author's personal copy Const Polit Econ (2013) 24:125–138 DOI 10. The fundamental question here rests in the nature of restrictions on choice and how these restrictions map into benefits enjoyed by a populace. Calgary.1007/s10602-013-9139-6 ORIGINAL PAPER Paretian dictators: constraining choice in a voluntary contribution game Robert J. Canada e-mail: oxoby@ucalgary. J. University of Calgary. political institutions. Toronto. We discuss these results in light of the literature on behavioral theories of reciprocity and conditional cooperation and in regards to the literature on pre-constitutional design. Oxoby Canadian Institute for Advanced Research. Oxoby (&) Department of Economics. AB R.

and the entitlements of others to certain allocations (e. In this paper.g. individuals will make choices that are more efficient when they can eliminate or reduce uncertainty regarding the behavior of others.g. However. policies which one might consider to be supported based on theories of social preferences or equality of opportunity (e. demonstrating that there exists significant uncertainty regarding how different decision-makers will behave before the same policy.g. Moreover. J. procedural justice and equity theory). potentially by constraining the choices available under certain policy instruments. we explore the issues of freedom of choice and equal application of rules by considering how individuals choose to constrain or mandate others’ decisions in a simple experimental environment.g. a large literature (e. uncertainty. redistribution.g. implying (as in the constitutional design literature) that individuals may be willing to trade-off freedom of choice for the implementation of efficient outcomes. Tullock 1959. One approach to understanding how individuals value others’ choices and rights has been through theories of fairness (see Konow 2003) in which individuals have preferences over their own and others’ allocations (e. others (notably Hayek 1955. property rights. This suggests that there are fundamental issues regarding how individuals value their own and others’ rights (e.1 These debates largely focus on who reaps the costs and benefits of a proposed policy and how individuals will behave in the presence of a policy. indicating individuals’ differing views on how these policies affect outcomes. For example. as predicted by theories of social preferences (particularly those embodying reciprocity and conditional cooperation). and efficiency in the provision of public goods. welfare transfers. The key in efficient policy design may therefore lie in creating institutions in which individuals must act similarly in the face of a policy.g.Author's personal copy 126 R. while redistribution may be supported by theories of social preferences (e.g. This suggests that individuals may prefer different policies depending on how others’ choices or behaviors are limited. individuals will prefer rules that are universally and equally applied to all individuals over rules favoring an individual or group (even if they are a member of the favored group). property rights) in order to yield efficient outcomes.g. the processes yielding these allocations (e. 1960) have argued for unrestricted choices and the universal and equal enforcement of basic rights (e. Oxoby order. cooperation and reciprocity). the provision of public goods). while these theories have found support in laboratory and field experimentation. The use of a laboratory experiment to address these issues permits a stark analysis regarding the tensions between individuals’ decisions. These theories suggest that individuals value others’ rights and that ideals such as fair treatment and conditional cooperation may mitigate the conflict between self-interest and efficiency characterizing many economic environments (e. 1 For example. 123 . affirmative action) are hotly debated.g. We conjecture that. there are often difficulties reconciling theories of social preferences with observed behaviors. freedom of choice) that are entangled in the implementation of economic and social policies. as argued in the literature on political and legal institutions. Usher 1981) suggests that redistribution may lead to instability. fairness or inequity aversion). Fehr and Fischbacher 2002).

group size. Chan et al. individual display a preferences for outcomes that maximize total material payoffs (i. 1996. Cherry et al. Andreoni 1990. see Ledyard 1995 and Zelmer 2003). see Holt and Laury (2005). Other factors affecting contributions in linear public goods games include the marginal product of contributions. their behavior is tempered by concerns over others’ behavior. Indeed. 2001.g. Goeree et al. two stylized facts that emerge: (i) individuals rarely play their Nash strategies (i. individuals can either dictate the contributions of other participants or can limit their contribution options to a subset of potential contributions. 1994).e. characterized by either contribution matching/conditional cooperation (Croson et al. a majority of participants choose symmetric. Fehr and Ga 2 Throughout the paper we refer to the outcome yielding joint wealth maximization as the Pareto efficient outcome.g. in some cases.. minimal contributions) and (ii) individuals rarely achieve Pareto efficient outcomes (i. e. respond to coercion. Goeree et al. zero contribution). individuals display a preference for conditional cooperation or contribution matching: Even when individuals can dictate different contribution levels for themselves and others. Such would be the case in environments with transfers. punishment ¨ chter 2000.. 2002). contribute total wealth to the public good). This ability reduces (and in some cases eliminates) the opportunity to contribute less than other participants. In our setting.e. all participants making maximal contributions).g.4 by others for free riding.Author's personal copy Paretian dictators 127 To this end. 1998. Our results yield two insights: First. maximal) contributions on the part of other participants and prefer restricting others’ (and their own) choices to high level contributions.e. there is evidence that differences in the source of individuals’ endowments (and hence differences in individuals’ perceived 3 4 123 .e. have demonstrated that conditional cooperation is not enough to motivate high contributions in public goods games. That is. Additionally. Other research. we utilize a linear public goods game in which individuals can dictate or restrict the choices of others in their group. For discussions of behaviors in other types of public goods games. Within the linear public goods literature. Pareto efficient outcomes based on preferences over wealth): individuals dictate efficient (i. Anderson et al. Fischbacher et al. evidence suggests that contributions in public goods games are strongly influenced by concerns over reciprocity. Fehr and Schmidt 1999. 2001). and differences in wealth levels (Buckley and Croson 2006. optimal contributions for both themselves and others. The experimental literature on public goods games has focused to a large extent on voluntary contribution games (particularly linear public goods games.2 Secondly.. thereby providing a means to implement high contribution levels. Isaac et al.e. 2005. particularly Cettolin and Riedl (2011) and Fischbacher and Gaechter (2008). Other research has suggested that contributions are driven by decision errors (e. This suggests that if an individual can dictate that others behave in a fully cooperative manner (here.e. 2002). 2005. restricting the choice of others can be construed as a form of coercion in terms of mandating the contribution choices of others. individuals have a preference to contribute less than others and. Rather. there is a preference to behave in a similar manner even though maximizing private material payoffs predicts free-riding (i.3 This suggests that while individuals have preferences over their own and others’ wealth as suggested by models of altruism and inequity aversion (e. Keser and van Winden 2000) or the threat of negative reciprocity (i.

In our symmetric dictator (SD) treatment participants were asked to choose a contribution value cAll between zero and ten dollars which would be applied to all participants in their group. Kroll et al. 1994. Oxoby and Spraggon 2008).g. Hoffman and Spitzer 1985. 2002. Konow 2000. participants were endowed with ten dollars and randomly and anonymously assigned into four-participant groups. when working at the level of a social planner. Pareto efficiency emerges as a criterion for equilibrium selection (cf. each Footnote 4 continued property rights) affect allocation decisions (e. 5 Instructions available upon request.g. 123 . suggesting that efficiency can be achieved in these environments when the uncertainty surrounding others’ behaviors can be reduced. 3. Charness and Rabin 2002). Hoffman et al. J.5 In each treatment. cÀi Þ ¼ 10 À ci þ 0:4 4 X j ¼1 cj : ð 1Þ Our treatments were designed with an eye towards examining how individuals made choices when they could explicitly determine or significantly constrain the contributions made by others in a public goods environment while still maintaining a degree of freedom over their own choice. For this we implemented three treatments where an individual’s choice varied between to the extent in which they could determine or constrain the choices of others. The remainder of the paper is organized as follows: Sect. an individual’s payoffs were given by Pi  Pðci .Author's personal copy 128 R. Voigt 1997) in which there exist incentives to ex ante constrain others’ choices in order to implement optimal outcomes. 2 describes the experiment. see Cherry et al. Section 5 concludes. linear public good game. results are presented in Sect.e. 2007. 2004. that which maximizes total payoffs) when they can dictate the choices of others. This has implications for the structure of collective choice mechanisms. Oxoby Under our treatments in which participants can restrict the choice sets of others (and themselves) we find efficient outcomes are frequently implemented: We observe over 80 % of participants choosing the Pareto efficient outcome (i. Buchanan and Tullock 1962. In the asymmetric dictator (AD) treatment. In each treatment. 2 Experimental design Our experiment follows a one-shot. Thus. In our baseline treatment participants made simultaneous contribution decisions ci between zero and ten dollars (integer values). Section 4 discusses our results in light of theories of choice and constitutional design. This has important implications for our understanding of institutional design and our results shed light on issues of constitutional design and endogenous political institutions (e. Aghion et al. suggesting that individuals may coordinate on an efficient outcome if they are able to limit the extent to which others may shirk or free ride.

the menu {cA. participants completed a short demographic survey. Ga et al. 2008. this determined participants’ payoffs. cB. rather each individual makes a decision and one individual’s decision is randomly chosen and implemented. one individuals choice was randomly selected and implemented. all participants in a given treatment made decisions over cAll (SD treatment).g. cC} (QD treatment) prior to knowing whether their’s would be the role of dictator. Individuals then made simultaneous contribution choices based upon this menu. the analysis in Spraggon and Oxobby 2009). After all participants made their choices. cC g: In the baseline treatment. cOthers} (AD treatment) or {cA. in the QD treatment. Brandts and Charness 2000. 123 . among ¨ chter and Riedl 2005. 2001. Kocher others. In each of the dictator treatments. 1999. we used a one-shot game to avoid aspects of reputation building.6 After payoffs were revealed. 6 While some experiments find no difference in behavior resulting from the use of this elicitation procedure (e. Our choice to use a one-shot public good game was based on trying to provide the starkest environment in which constrained choice could affect decision making. cC} was implemented and participants made simultaneous contribution choices ci 2 fcA . Oxoby and McLeish 2004) other have found that the use of the strategy method affects behavior (e. cB .g. cC} from which participants in her group would choose (where cA \ cB \ cC).g. Goeree et al. 2003). each individual faced a 25 % probability that her initial choice would be implemented. Although many public goods experiments use repeated interactions to permit participants to learn the game or coordinate within their groups. a large literature has focused on individual behavior in one-shot public goods games (see. ci 2 fcA . once all participants had made their decisions a dictator was randomly chosen and her contribution choices were implemented within her group. cC g: These choices then determined participants’ payoffs. That is. {cOwn. After all participants made their choices regarding the three-element menu.Author's personal copy Paretian dictators 129 participant chose a contribution level for herself cOwn and a contribution level for all other individuals in her group cOthers. and Walker and Halloran 2004). signalling. In our quasi dictator (QD) treatment each participant was asked to provide a menu of three possible contribution levels {cA. cB. In each of these treatments. payoffs were revealed. cB . we employed a ‘strategy vector method’ in which individuals made choices prior to knowing whether or not they would be in the role of the dictator. cB. To this end. In the case of the SD and AD treatments. one individual was randomly selected and her menu was presented to members of her group. A brief comment is warranted on our use of a single-shot public goods game. or direct reciprocal actions that flow from repeated public goods games (e. Brosig et al. Note that our method is not strictly the strategy method (individuals are not making a schedule of decisions). individuals made simultaneous decisions and. after all participants made their decisions. each participant was asked for a constrained set of three contribution levels from which all members of her group could decide (thereby constraining group members’ decisions from a set of eleven elements to a set of three elements). Fischbacher et al. Note that given four-participant groups. That is.

opting for a zero contribution ci = 0 and each obtaining Pi ¼ 10: In the SD treatment.25 (1. {cA. 3 Results One hundred and twenty-eight individuals participated in the experiment. We conducted analyses based on the demographic information but identified no differences in behavior based on gender or area of study.08 (1. that maximizing aggregate wealth) is realized when each individual contributes ci = 10. J. cOthers} = {0. in the quasi-dictator treatment.48) All amounts denominated in dollars Quasi-dictator 123 . the Nash prediction is for participants to fully free ride. yielding eight four-person groups per treatment (32 participants per treatment). Each session consisted of a single treatment and included 16 participants (i.Author's personal copy 130 R.00) 15.31 (1.58 (1. 10} yielding Pi ¼ 22 for the dictator and Pi ¼ 12 for all other individuals in the group.93) across treatments.87) 8. two sessions for each treatment yielding eight sessions). The experiments were conducted in a dedicated experimental economics laboratory at our university and programmed in z-Tree (Fischbacher 2007). 9.1 Predictions As a benchmark. Participants were drawn from the undergraduate student body at the University of Calgary and recruited using the software developed by Greiner (2004). Of our participants.e. Table 1 presents the summary statistics of elicited contributions for all participants by treatment. cC} = {8. In the baseline treatment.67) 9.55 (1. Oxoby 2.. On the other hand. cB.11) 9. with the largest single major being economics (36 %). cA = 8 and obtain Pi ¼ 14:80: In each treatment. consider the Nash prediction based on preferences only over an individual’s own wealth.47 (2.59 (2. the efficient outcome (i. Note that contributions in the three Table 1 Average contributions and payoffs (standard deviations) by treatment Treatment Baseline Symmetric dictator Asymmetric dictator n 32 32 32 32 Average contribution 3. a participant’s wealth maximizing menu is to restrict all participants to contributing at the upper interval of the choice set.59 (r = 1. Nonparametric Wilcoxon test results for comparisons of individual contributions across treatments are presented in Table 2.16 (1.99) 15. since the dictator can remove most uncertainty regarding the contribution of others.14) Average payoff 12. 10}. Participants earned an average of $14.15) 15. Given this menu. wealth maximization in the AD treatment implies choosing maximal contributions for all others and zero contribution for oneself: {cOwn.e. each agent should individually choose the lowest element. the wealth maximizing choice corresponds to the efficient choice of cAll = 10 yielding Pi ¼ 16 for all. 63 % were male and 78 % were members of the Faculty of Arts. Finally.

Keser and van Winden 2000).01 0. Note that the character of play in each of the dictator treatments is fundamentally different. As a result. even in a sub-sample of the population.0229 dictator treatments are all significantly different from those in the baseline treatment. cOthers) = (0.g. teams of two dictators make offers which display a greater regard for others’ payoffs than single dictators. each of the dictator treatments yield similar results. This suggests that communication. This result is consistent with theories of contribution matching and conditional cooperation (Croson et al. and QD treatments. However. Cason and Mui (1997) find that. That only one individual chose the Nash contributions (cOwn. individuals made different types of choices regarding their behavior and that of others.01 AD \0. 2005. but also that once participants have means to mitigate others’ free-riding (here.Author's personal copy Paretian dictators Table 2 Nonparametric Wilcoxon p values for individuals’ contributions in each treatment 131 Baseline Baseline SD AD SD \0.7 The difference we identify between the AD and QD treatments (while finding no difference between the SD and AD treatment nor the SD and QD treatments) appears to be driven by the fact that only one group in the AD treatment had a dictator that did not choose efficient contributions for themselves and all others. their own contributions are consistent with implementing the Pareto efficient allocations. We find that 68.1298 0. That 27 of 32 participants in the SD treatment (84 %) chose the maximum contribution of ten dollars demonstrates that individuals recognize the Pareto efficient outcome and know how to implement this outcome. demonstrating that not only do individuals recognize the efficient outcome. Fehr and Schmidt 1999) and efficient outcomes (as discussed in Charness and Rabin 2002) and Kantian decision making as discussed by Laffont (1975) and Bilodeau and Gravel (2004) in which the universalization of moral actions result in efficient outcomes. consistent with Social Comparison Theory.75 %) of participants chose Pareto efficient contributions in the AD treatment. results in greater cooperative behavior. 2001. and QD treatments. relative to the baseline treatment. 22 of 32 (68. Fischbacher et al. In a related experimental design. 123 . 10) while 78 % of 7 Such high observed contributions are similar to pubic goods games with communication such as Cason and Khan (1999) and Isaac and Walker (1988) where communication between subjects results in higher contribution levels which (in the latter) are maintained and approach the efficient provision of the public good. Note that this behavior conforms with the wealth maximizing Nash prediction in this treatment. preferences for inequity aversion (e. Perhaps more importantly. That is. AD. AD. As such we cannot directly compare the initial choices made by participants in the SD.75 % of participants were willing to give up $6 in favor of behaving in a cooperative manner and matching others’ maximal contributions. 7 of 8 groups in the AD treatment implemented the Pareto efficient outcome. median and modal choices in the SD. by dictating others’ contributions).01 0.2862 QD \0. in each dictator treatment. Table 3 presents the average (standard deviation).

In our quasi-dictator treatment. AD. indicating their recognition of the potential for efficient contributions. 68 % of participants chose ci = 10 while only 18 % chose ci = 8.Author's personal copy 132 Table 3 Summary statistics for choices in the SD. This result is akin to the menu dependency discussed by Sen (1997) and identified in the experiments ¨ th et al. and quasi-dictator treatments R. In these two groups. Indeed. cOthers g: This suggests that ideas of contribution matching and reciprocity drive individuals to make contributions which are ‘‘close’’ to those of others. 8. cC} = {5.28 (2. (2001) in which ‘‘less fair’’ outcomes are rejected less when ‘‘more of Bolton et al.44) 9.00) Median 10 10 10 8 9 10 Mode 10 (84. It is interesting to note that 27 of 32 participants in the AD treatment chose contributions levels such that cOwn 2 fcOthers À 2. 9.50 (1.00 (r = 2.50) 10 (100.e. From a signalling perspective. 8 123 . (1993) in which auction bids served as signals of individuals’ intended strategies. Given contributions matching. cC} = {8. demonstrating that participants recognize the Pareto efficient outcome and constrain themselves and others to choosing contributions ‘‘close’’ to the efficient contribution. 10} and {cA.94 (3.25 (2.5). the individual who chose the implemented menu) would freeride.00) Numbers in parentheses are standard deviations. there is It is interesting to note that two groups in the QD treatment had implemented menus of {cA. (2005) and Gu equal’’ allocations are unavailable. cOthers À 1. a value of cA significantly less than cC). participants interpreted this as a signal that the quasi-dictator (i.80) 10.75 (r = 1. this result is similar to the behaviors of decision makers in Van Huyck et al.11) 7. cB. 10}.50) 8. Moreover. notice that the distribution of payoffs in dictator treatments are relatively less unequal than in the baseline treatment: Table 4 presents the average Gini coefficient for each treatment (average of the Gini coefficients for each group in a treatment) and average inequality in each treatment relative to the baseline treatment.38) 8 (87.5 %) followed the Nash strategy and chose to constrain individuals’ choices to {cA. J. 7. every individual in the quasi-dictator treatment chose cC = 10. average contributions were 5. Numbers in brackets are the percentage of respondents choosing the modal value participants chose cOwn C 5 demonstrates how the potential breakdown in contribution matching influences the relatively low contributions observed in standard voluntary contribution games (e.75) 10 (84.e.00 (0. Oxoby Treatment SD AD cAll cOwn cOthers QD cA cB cC Mean 9. cB. when faced with this constrained choice set.8 Table 4 presents the average earnings in each treatment.38) 10 (68. Moreover. our baseline treatment). This suggests that when the implemented menu left open the possibility for substantial free-riding (i. In line with the contributions reported in Table 1. cC} = {4.g.50) 9 (87.00) and 5.09) 7.75 (0. cB. 28 of 32 participants (87. 10}. earnings are higher in the dictator treatments relative to the baseline treatment.

10} suggests that restricting others’ choice sets may be sufficient to create assurances which motivate efficient contributions. Our results suggest that obtaining an efficient allocation is a desire of individuals.10 Indeed.046 Inequality Rel.99 1. Andreoni (1988) suggests that individuals may choose larger-than-Nash contributions strategically in repeated public goods environments. this ability is largely eliminating.48 The average Gini coefficient in a treatment is the average of the Gini coefficients for each group within the treatment substantially less inequality in the dictator treatments. 9. As such.088 0.15 1. In our experiments. Fehr and Schmidt 1999). theories of social preferences based on inequity aversion (e.58 15.g.Author's personal copy Paretian dictators Table 4 Payoff statistics in each treatment Treatment Average payoff 12. if agents are inequity averse (as in Bolton and Ockenfels 2000. one way to interpret the linear public goods game is as an assurance game in which relatively low contributions are the result of participants (who may have preferences over reciprocity or conditional cooperation) hedging their contributions in the face of uncertainty regarding the behavior of others. Charness and Rabin 2002) suggest that individuals have reasons to contribute more than the dominant strategy zero-contribution.55 15. when participants have a means to mandate contribution matching we observe individuals choosing contributions which implement the Pareto efficient outcome.0 4. 9 Alternate measures of inequality (e. permitting a means for groups to implement high contributions from all participants. as in Fehr and Schmidt. That we observe 68 % of participants choosing ci = 10 when restricted to choosing a contribution level in {8. Gini coefficient 0. Falk and Fischbacher 2006).16 r Avg. Dufwenberg and Kirchsteiger 2004.5 52 133 Baseline Symmetric dictator Asymmetric dictator Quasi-dictator 1.00 1. In our setting.08 15.004 0. 10 123 . to baseline (%) 100 0. 4 Discussion Perhaps the most curious aspect about behavior in linear public goods environments is not that individuals contribute non-zero amounts. Atkinson’s index) yield similar results regarding the relative inequality across the treatments.g. our results build on those of Fischbacher and Gaechter (2008) who identify individuals preference to contribute less than other. As such.g. but that concerns over the contributions of others reduces one’s own contributions to the low levels frequently observed in linear public goods games. reciprocity (e.9 Thus. and encompassing efficiency concerns (e. but that they do not contribute more.000 0. 1999) this points to another aspect in which outcomes in the dictator treatments Pareto dominate those in the baseline treatment.g.

The behavior in our environment may also be reflective of the norms a decision maker thinks she and others should abide by. our results are in spirit to that arising under rebate rules for threshold public goods. That is. 12 123 . 1997). suggesting that Pareto efficiency may serve as an equilibrium selection device when individuals can make choices at a constitutional level. These restrictions are similar to those arising in the context of communication and face-to-face interactions in which individuals’ actions are constrained (perhaps socially) in such a way to reduce transaction costs and the need for costly monitoring (Cason and Khan 1999). Our results have implications for issues surrounding pre-constitutional design. ‘‘less inclusive’’ rules over contribution levels reduce the cost of uncertainty over others’ behavior. thereby enabling Pareto efficient outcomes even in our quasi-dictators treatment. conditional contribution is often not enough to garner high contributions. these outcomes are also efficient in that the inputs individuals have contributed are proportional to the outputs they receive. but also her own contribution. Such rules are often utilized to for the provision of public goods or in the cases of motivating charitable contributions (see the discussions in Marks and Croson 1998). as following (see Voigt. Note that the observed outcomes not only satisfies Pareto efficiency based on aggregate wealth maximization. Thus our results lend experimental support for the provision of referenda which assist in mandating the behavior of others in environments where individuals have a desire to coordinate on efficient outcomes. one may interpret this result as arising from reciprocity (as suggested in Dufwenberg and Kirchsteiger 2004) or. It should be noted that the work of Kocher et al. but also yields an outcome consistent with conditional cooperation and inequity aversion. Indeed our results suggest that a publicly selected provision mechanism may yield greater cooperation by restricting individuals to match one another’s contributions. less inclusive voting rules reduce costs. Boudreaux and Lipford (1998) use a Buchanan-Tullock framework to argue for less inclusive voting rules in the European Union.Author's personal copy 134 R. as shown by Cettolin and Riedl (2011). 9. Our results also suggest that individuals may be amenable to rules mandating certain behaviors from themselves and others. resulting in in more efficient outcomes. perhaps more appropriately. Oxoby Moreover. For example. note that a voting mechanism would have yielded similar results in our environment. 2005): In choosing a set {8. In our environment. anticipatory reciprocity (Cherry et al. voting over group contribution levels would have yielded outcomes very similar to those observed. This may serve as a signal of her behavior in which she anticipates others to behave in a reciprocal manner. J.11 In terms of policy. (1989) and Marks and Croson (1998) find that such rules increase voluntary contributions.. In terms of limiting choices. 1978). suggesting that individuals have preferences in which they are willing to restrict others’ choices as a means to implementing more efficient outcomes.12 That 11 From the stance of equity theory (Walster et al. Our implemented means of restricting others’ choices buttresses motives of conditional contributions. given the results in Table 3. Experimentally. 10} the dictator has not only restricted the contributions of others. (2011) has demonstrated that risk preferences alone are not sufficient to explain contributions in public good games. Isaac et al. as suggested by the ‘‘Kantian norms’’ discussed in Bilodeau and Gravel (2004). The central idea here is that as group size and heterogeneity increases. Alternately. This in turn facilitates the functioning of development programs and the provision of local public goods. While our experiments considered only a dictator choosing contribution levels (or potential levels).

participants eschewed an asymmetric.e.g. it is interesting to note that in each of our dictator treatments. unlimited choice) and democracy in which individuals may democratically support restrictions in choice when such restrictions facilitate implementing efficient allocations. 123 . or quasi-dictaor) remains an area of future research.13 Relatedly. Thus. In our simple setting. this also implies that a (super) majority of individuals preferred an outcome in which the ‘‘rule of law’’ was equally applied to all decision makers. individuals are able to restrict the choices of themselves and others and thereby constrain the set of possible outcomes. asymmetric. That is. Aghion et al. As purely constitutional approach (e. when given the opportunity to discriminate between themselves and others. our results demonstrate that universally applied restrictions on individuals’ choice sets can also be used to implement efficient outcomes. our research falls in line with that of Kroll et al. This preference is manifest through almost 70 % of participants choosing symmetric contributions such that cOwn = cOthers = 10. (2007) in which the focus is on the efficiency implications of voting rules with and without punishment. the results of our experiments suggest that limiting individuals’ choices (particularly when individuals are concerned about coordination or matching) may yield superior outcomes. As such. This falls in line with the research of Iyengar and Lepper (2000) who find that individuals’ subjective 13 A possible interpretation of this result is in broad terms as evidence that individuals prefer equality in treatment. as discussed by Hayek (1955. Harstad (2005). Moreover. 1976). This suggests an important trade-off between liberty (i. suggesting that (when incentives are appropriately aligned) efficient outcomes receive the lion’s share of support. Just as Harstad (2005) argues that majority rules can be designed to internalize externalities and implement efficient outcomes. as in before the law or by the government. Pareto efficient payoffs). in our environment where the strategic interdependence of individual choices may result in Pareto inferior outcomes. (2004). In our AD treatment.Author's personal copy Paretian dictators 135 is. From a constitutional perspective. individuals constrained the choices of others (and themselves) when these constraints facilitated implementing efficient allocations. To this end. contributions) in order for individuals to enjoy improved outcomes (here. a majority of participants chose to abide by the contribution rules they would have imposed on others. 14 Our experiment does not consider individuals’ willingness to give up some choices nor the value assigned to ‘‘freedom of choice’’ discussed by Hayek (1960) and Sen (1976). we observe individuals demonstrating a preference for ‘‘equality under the rule of law’’ (particularly in our AD treatment) in which all individuals choices (including those of the dictator) are constrained in the same manner.14 Finally. this is akin to mandating certain behaviors on the part of individuals (here. Our results may also shed light on the tension between Pareto efficiency and liberty as discussed by Sen (1970. and others emphasize the importance of super-majorities and majority rules in legislation and constitutional design. one in which participants can choose whether to have a symmetric. individually wealth maximizing set of group contributions in favor of an equally applied contribution rule. the efficient outcome was chosen by a super majority. 1960).

(2004). Endogenous political institutions. (2004) find that participation in 401(k) plans is greater when there are fewer option choices. Andreoni. Brandts. group heterogeneity. 119(2). Journal of Public Economics.. 297–323. & Ockenfels. they do so in a manner which facilitates the realization of Pareto efficient outcomes. & Holt. Bolton.Author's personal copy 136 R.. J. Boudreaux. Although not true in all decision environments.. Quarterly Journal of Economics. Acknowledgments We thank Robin Boadway. cold: Sequential responses and preference stability in experimental games. 1054–1076. G. and competition. P. Group size. Experimental Ecnoomics.. 5 Conclusion How individuals anticipate and account for the behavior of others when making decisions is a fundamental question in game theory and decision analysis.. Sethi-Iyengar et al. Economic Journal. 70. A. Andreoni. We find that when individuals can mandate or restrict the choices of others. J. A. Bolton. Journal of Public Economics. in our setting such restrictions on choice sets creates the potential for more efficient and more preferred outcomes to be realized.15 By restricting the choices of others (even to a single event). 133–152.. Theories of reciprocity and conditional cooperation postulate that individual’s behavior is highly sensitive to what they think others will do. 30(1). Hot vs. P. (1998). E. N. the potential for free-riding) are significantly reduced in our dictator treatments. 2. (1990).. S. J. References Aghion. G. A. The Economic Journal. J. (1988). Michael McKee. 166–193. Why free ride? Strategies and learning in public goods environments. John Boyce.. and voting rule: An application of the Buchanan-Tullock model to the European Union. (2005). J. 565–611. Journal of Public Economics. 123 . Alesina. 291–304. 15 In a similar spirit. G. Erin Krupka. J. C. A theoretic analysis of altruism and decision error in public goods games. Impure altruism and donations to public goods: A theory of warm glow giving. & Charness. 115. Kendra McLeish and John Spraggon for suggestions. Bilodeau. F. (2000). 70. 645–666. & Trebbi.. our results suggest that individuals may be willing to trade ‘‘liberty’’ (in the form of freedom of choice via larger choice sets) for increased facility in implementing socially superior outcomes. E. 88(3–4). reciprocity. European Journal of Law and Economics. 227–238. A theory of equity. (2000). M. (2004). uncertainty and strategic interdependence (i. Goeree. American Economic Review. Francisco Gonzalez. & Gravel. 5. Brandts. Oxoby evaluation of a chosen good is lower when the choice was made from a larger set than from a smaller set. Anderson. J. 464–477. Financial support was provided by the Social Sciences and Humanities Research Council of Canada and the Canadian Institute for Advanced Research. Fair procedures: Evidence from games involving lotteries. (1998). K.. In this paper we report on a public goods experiment in which individuals had the opportunity to either make decisions for others or restrict others’ contribution choices to a subset of previously available choice alternatives. & Ockenfels. K. Voluntary provision of a public good and individual morality. From the standpoint of pre-constitutional design.e. A. & Lipford. 70.

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