Research in recent years suggests that fairness concerns could mitigate hold-up problems. In this study, we report theoretical analysis and experimental evidence on an opposite possibility: that ...fairness concerns could also induce hold-up problems. In our setup, hold-up problems will not occur with purely self-interested agents, but theoretically could be induced by demand for distributional fairness among agents without sufficiently strong counteracting factors such as intention-based reciprocity. We observe a widespread occurrence of hold-up in our experiment. Relationship-specific investments occurred less than half of the time, resulting in significant inefficiencies. Moreover, whenever a relationship-specific investment was made: (a) it was typically not reciprocated by the partner; (b) nor did the investor’s offers at the bargaining stage exhibit expectations for reciprocity. Consequently, the partner extracted all the additional expected payoff from relationship-specific investments. Further experimentation suggested that our results were driven by a fundamental lack of intention-based reciprocity in fairness concerns, rather than self-serving bias.
Does competition affect moral behavior? This fundamental question has been debated among leading scholars for centuries, and more recently, it has been tested in experimental studies yielding a body ...of rather inconclusive empirical evidence. A potential source of ambivalent empirical results on the same hypothesis is design heterogeneity—variation in true effect sizes across various reasonable experimental research protocols. To provide further evidence on whether competition affects moral behavior and to examine whether the generalizability of a single experimental study is jeopardized by design heterogeneity, we invited independent research teams to contribute experimental designs to a crowd-sourced project. In a large-scale online data collection, 18,123 experimental participants were randomly allocated to 45 randomly selected experimental designs out of 95 submitted designs. We find a small adverse effect of competition on moral behavior in a meta-analysis of the pooled data. The crowd-sourced design of our study allows for a clean identification and estimation of the variation in effect sizes above and beyond what could be expected due to sampling variance. We find substantial design heterogeneity—estimated to be about 1.6 times as large as the average standard error of effect size estimates of the 45 research designs—indicating that the informativeness and generalizability of results based on a single experimental design are limited. Drawing strong conclusions about the underlying hypotheses in the presence of substantive design heterogeneity requires moving toward much larger data collections on various experimental designs testing the same hypothesis.
This research studies how payment decision timing—before versus after product delivery—influences consumer payment under pay-what-you-want (PWYW) pricing. The authors focus on situations where there ...is minimal change in consumer uncertainty regarding the product before versus after receiving it. The theoretical development suggests that people pay more after (vs. before) receiving the product when product value is high, but the effect is mitigated when product value is low and reversed when product value is sufficiently low. Results from a laboratory experiment and a field experiment lend support to the theoretical predictions, with preliminary evidence for the moderating effect of product value. An online experiment demonstrates the predicted payment decision timing effect at high product value and a reversal of the effect at low product value. Another online experiment extends the scope of the previous studies by examining PWYW transactions in a charitable donation context (which the authors label “contribute what you want”): the authors obtain evidence for the predicted payment decision timing effect for high product value and a mitigation of the effect for low product value, as well as process evidence for the theoretical mechanism. This work has implications for the management of PWYW schemes for firms, including nonprofits, social enterprises, and charities.
This dissertation reports a series of studies on social influences in decision making with wide ranging marketing implications in areas such as gamification initiatives, participative pricing ...mechanisms, and charity fundraising strategies. The body of this work comprises of three indepth, stand-alone studies. The first study, "Contagion of the Competitive Spirit: The Influence of a Competition on Non-Competitors", investigates the influence of a competition on noncompetitors who do not participate in it but are aware of it. In a series of experimental studies, the study shows that the mere awareness of a competition can affect a non-competitor's performance in similar tasks. These experiments provide confirmatory and process evidence for this contagion effect, showing that it is driven by heightened social comparison motivation due to mere awareness of the competition. In addition, the study finds evidence that the reward level for the competitors could moderate the contagion effect on the non-competitors. The second study, "The Negative Effects of Precommitment on Reciprocal Behaviour: Evidence from a Series of Voluntary Payment Experiments", examines the effects of precommitment on reciprocal behaviour towards a forthcoming benefit. Through a series of experiments in several countries, the study shows that precommitment often weakens reciprocal behaviour. In two field experiments, a laboratory and an online experiment, the study finds consistent evidence that voluntary payment amounts decrease for individuals who are asked to precommit their payment. The results from a final online trust-game experiment support the posited mental-accounting mechanism for the effect. The third study, "Hold-Up Induced by Demand for Fairness: Theory and Experimental Evidence", explores the domain of hold-up and fairness concerns. While recent research suggests that fairness concerns could mitigate hold-up problems, this study proposes a starkly opposite possibility: that fairness concerns can also induce hold-up problems and thus significant inefficiencies. The study reports theoretical analysis and experimental evidence of hold-up in scenarios in which it will not occur if agents are purely self-interested, but could occur if they care about fairness at ex post negotiation.
