economic games on the internet: the effect of $1 stakes ofra amir, david g. rand and yaakov (kobi)...

Economic games on the internet: the effect of $1 stakes

Ofra Amir, David G. Rand and Ya’akov (Kobi) Gal

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Background – Amazon Mechanical Turk

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Background – Amazon Mechanical Turk

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Motivation – experiments with online markets

• Fast, cheap, low effort

• Incentive compatible

• Cross-cultural

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But aren’t the stakes too low?• Payments on MTurk are usually low

• Previous studies found quantitative agreement between low-stakes games on Mturk and high-stakes games in the lab

[Suri & Watts 2011; Horton Rand Zeckhauser 2011]

• Contributions of the current study:– Testing, within one consistent experimental platform,

whether having $1 stakes matters on Mturk

– Comparing the effect of stakes on MTurk to the effect of stakes in physical labs

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Experimental Design• Four canonical economic games – – dictator game– public goods game– ultimatum game– trust game

• Two payoff conditions: – stakes condition– no-stakes condition

• 1129 subjects, each assigned randomly to one of the four games and one of the two conditions.

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Related work – the effect of stakes• Dictator Game (Forsythe, 1991; Carpenter et al., 2005)

– Significant difference in decisions between stakes and no stakes

• Public goods game (Kocher, 2008)

– No significant difference in contributions when raising stakes

• Ultimatum Game (Forsythe, 1991; Carpenter et al., 2005; Hoffman et al. 1996)

– No significant difference in offers between stakes and no stakes

– Player 2 rejection rate – No difference \ decreases when raising stakes

• Trust Game (Johansson-Stenman et al., 2005; Sutter & Kocher, 2007)

– No effect in behavior \ Decrease in fraction sent when raising stakes

– No change in fraction returned by the trustee

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Results - Dictator game

• Mean transfers of player 1 (stakes condition transferred 10 units less on average)

Stakes No Stakes

Play

er 1

tran

sfer

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• Distribution of transfers(sig. difference, p-value=0.022)

Dictator game

Stakes

No Stakes

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Public goods game

• Mean contribution to the public goods, possible contribution between 0-40

Stakes No Stakes

Cont

ributi

on

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Public goods game

• Distribution of contributions (no sig. difference, p-value=0.656)

Stakes

No Stakes

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Ultimatum game – player 1

• Mean player 1 offers

Stakes No Stakes

Offe

r

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Ultimatum game – player 1

• Distribution of player 1 offers(no sig. difference, p-value=0.1659)

Stakes

No Stakes

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Ultimatum game – player 2

• Minimum accepted offer (p-value= 0.1941)

Stakes No Stakes

Min

imum

Ac

cept

ed

Offe

r

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Ultimatum game – player 2

• Probability to reject by player 1 offer

Fraction offered

Reje

ction

pr

obab

ility

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Trust game – player 1

• Means of player 1 transfers, possible values between 0-40

Stakes No Stakes

Tran

sfer

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Trust game – player 1

• Distribution of player 1 transfers(no sig. difference, p-value=0.3863)

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Trust game – player 2

• Fraction returned by player 2

Fraction transferred by player 1

Frac

tion

retu

rned

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Comparison with labs results

• Dictator game:

616 studiesfrom Engel

2010

Real money: mean = 0.332

Hypothetical: mean = 0.44

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Comparison with labs results

• Trust game – player 1:

Real money: mean = 0.58

Hypothetical: mean = 0.551

Fraction sent by P1

143 studiesfrom Johnson

&Mislin2010

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Comparison with labs results

• Trust game – player 2:

Real money: mean = 0.47

Hypothetical: mean = 0.45

Fraction returned by P2

143 studiesfrom Johnson

&Mislin2010

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Summary

• Significant decrease in transfers in Dictator Game when using $1 stakes compared to no stakes

• No effect of stakes in public goods, ultimatum game and trust game

• Consistent with previous lab studies that used higher stakes

• Supports findings from replication studies which validated results of experiments run on MTurk

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Questions?