Strong, Bold, and Kind: Self-Control and Cooperation in Social Dilemmas

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1 WORKING PAPERS IN ECONOMICS No 523 Strong, Bold, and Knd: Self-Control and Cooperaton n Socal Dlemmas Martn G. Kocher Peter Martnsson Krstan Ove R. Myrseth Conny Wollbrant January 2012 ISSN (prnt) ISSN (onlne) Department of Economcs School of Busness, Economcs and Law at Unversty of Gothenburg Vasagatan 1, PO Box 640, SE Göteborg, Sweden , (fax) nfo@handels.gu.se

2 Strong, Bold, and Knd: Self-Control and Cooperaton n Socal Dlemmas * Martn G. Kocher A,B Peter Martnsson B Krstan Ove R. Myrseth C Conny Wollbrant B Abstract: We develop a model relatng self-control, rsk preferences and conflct dentfcaton to cooperaton patterns n socal dlemmas. We subject our model to data from an expermental publc goods game and a rsk experment, and we measure conflct dentfcaton and self-control. As predcted, we fnd a robust assocaton between self-control and hgher levels of cooperaton, and the assocaton s weaker for more rsk-averse ndvduals. Free rders dffer from other contrbutor types only n ther tendency not to have dentfed a self-control conflct n the frst place. Our model accounts for the data at least as well as do other models. JEL: C91, D03, H40 Keywords: self-control, cooperaton, publc good, rsk, experment * Fnancal support from the Swedsh Research Councl (Vetenskapsrådet), Jan Wallander and Tom Hedelus foundaton and the Ideenfonds of the Unversty of Munch s gratefully acknowledged. We thank Amre Mare Lahno and partcpants at the EWEBE Workshop 2011 n Munch for excellent comments on the paper. A Department of Economcs, Unversty of Munch, and CESfo Munch, Geschwster-Scholl-Platz 1, D Munch, Germany; Ph E-mal martn.kocher@lrz.un-muenchen.de. B Department of Economcs, Unversty of Gothenburg, Box 640, SE Gothenburg, Sweden. E-mal peter.martnsson@economcs.gu.se and conny.wollbrant@economcs.gu.se. C ESMT European School of Technology and Management, Schlossplatz 1, D Berln, Germany. E- mal: myrseth@esmt.org.

3 1. Introducton Socal dlemmas, for nstance the prvate provson of a publc good, are characterzed by the tenson between ndvdual ratonalty dctatng free-rdng for selfsh agents and collectve ratonalty prescrbng cooperaton. Team work, voter turnout, tax honesty, and the tragedy of the commons may all be understood as examples of socal dlemmas. A substantal body of evdence from laboratory and feld studes documents that humans cooperate more than mpled by the selfsh free-rdng equlbrum (for surveys, see, e.g., Ledyard, 1995; Zelmer, 2003; Gächter, 2007; Chaudhur, 2011). Over the past 20 years, multple explanatons have been proposed for the observed levels of cooperaton n socal dlemmas among them the confuson of ndvduals, altrusm, warm-glow, nequty averson, effcency preferences, and recprocty (see, for nstance, Andreon, 1990, 1995; Palfrey and Prsbrey, 1997; Anderson et al. 1998; Houser and Kurzban, 2002). A more recent approach to publc goods experments, ntated by Fschbacher et al. (2001) usng the strategy method, has focused on classfyng ndvduals as types of contrbutors (see also Kelley and Stahelsk, 1970; Andreon, 1988; Keser and van Wnden, 2000; Fehr and Schmdt, 2006). The most promnent types n such publc goods experments are condtonal cooperators, who ncrease ther contrbuton wth the (expected) contrbuton of other group members; free-rders, who do not contrbute at all; and trangle (hump-shaped) contrbutors, who ncrease ther contrbutons to the publc good up to a certan level of (expected) others contrbutons and then reduce them (see, Herrmann and Thön, 2009; Kocher et al., 2008; Fschbacher and Gächter, 2010; Volk et al., 2011). Despte some dfferences n detal, the overall dstrbuton of types s surprsngly robust across studes and locatons, wth condtonal cooperators representng the most frequent type (usually around half of the decson makers or more), followed by free rders (around 20%-30%), and trangle contrbutors. The dstrbuton of types, and the multtude of motvatons that potentally explan contrbutons to publc goods, make theoretcal modelng dffcult. Moreover, there s a dscrepancy between emprcal results and theoretcal predctons. For nstance, many decson makers contrbute ntermedate amounts, whereas lnear models of other-regardng preferences (e.g., Fehr and Schmdt, 1999) predct corner solutons. Though one may solve the problem by assumng non-lnear forms of other-regardng preferences, most exstng models have dffcultes n explanng certan stylzed facts from publc goods experments, such as the decay of 2

4 contrbutons over tme. 1 One recent theoretcal contrbuton that comes close s Ambrus and Pathak (2011). They develop a model wth a recprocty-flavor, buldng on Kreps et al. (1982). Applyng ths approach, Ambrus and Pathak (2011) are able to explan many of the stylzed facts of repeated lnear publc goods experments, such as the decay of cooperaton and the re-start effect. Notably, ther model requres repeated nteracton. However, cooperaton has also been documented wdely for one-shot publc goods games. The am of ths paper s to contrbute to the lterature on cooperaton motves n socal dlemmas. We propose a dfferent route than that taken n the exstng lterature, whch has almost exclusvely examned preferences. In contrast, we present a model of ratonal self-control, whch captures the conflct between cooperatve (pro-socal) and selfsh behavor, and whch lends tself to straghtforward applcaton n socal dlemmas. 2 Our setup s smlar to dual-self models (e.g., Fudenberg and Levne, 2006), but there are notable dfferences. We model the conflct between free-rdng and contrbutng to the publc good as a two-stage decson problem, wth an dentfcaton stage and a contrbuton stage; wllpower self-control effort 3 and rsk preferences together determne the stochastc success of the nternal contest between selfsh and cooperatve behavor whch ultmately leads to cooperaton f the contest s won, or to defecton f the decson maker gves n to the temptaton of keepng hs or her entre endowment. Our model yelds predctons that we test n the laboratory by mplementng a lnear publc goods game, amended by elctng rsk preferences, and measurng trat self-control, and the percepton of conflct. Indvduals, who report n our experment that they experence conflct, contrbute sgnfcantly more f ther level of self-control s hgh. Moreover, controllng for selfcontrol levels, a hgher level of rsk averson s assocated wth relatvely lower levels of contrbutons, because the outcome of the nternal conflct s uncertan. That s, more rsk-averse ndvduals more lkely avod takng on the nternal struggle between free-rdng and cooperaton. Fnally, free-rders are much less lkely to experence conflct than are condtonal cooperators. 1 Obvously, a learnng model wth boundedly ratonal, selfsh agents can account for the decay over tme, but t s at odds wth the hgh fracton of condtonal cooperators observed. 2 A self-control problem s characterzed by an ntrapersonal conflct between better judgment and temptaton (e.g., Thaler and Shefrn, 1981; Schellng, 1984; Loewensten, 1996). In many crcumstances (though not all), there s reason to beleve that an ndvdual may mantan the better judgment to act prosocally, but smultaneously feel tempted to act selfshly (compelled by the mpulse colloqually known as greed ). 3 We use the terms wllpower and self-control (effort) synonymously. 3

5 We see our model and ts mplcatons as complementary to exstng models that try to understand motves of cooperaton n socal dlemmas. However, our model may capture n a more convncng manner several behavoral regulartes from publc goods experments. Of course, we are not the frst lnkng self-control and the struggle between pro-socal and selfsh behavor n general. Loewensten (1996; 2000) suggests that selfsh behavor may be motvated by vsceral urges or drve-states, resemblng cravngs for relef of hunger, pan, and sexual deprvaton. O Donoghue and Loewensten (2007) argue that such selfsh urges may often conflct wth the colder, more abstract preferences for altrusm, as vsceral urges for sweets could conflct wth more abstract preferences for a fne fgure or good health. In the context of the prvate provson of publc goods, for nstance ndvduals asked for a charty contrbuton mght feel torn between the moral oblgaton to gve somethng back and the temptaton to keep the cash for prvate consumpton. Lkewse, a team member may feel conflcted between the better judgment to contrbute to team effort and the urge to free-rde on the efforts of others. 4 Only qute recently has the emprcal lterature started to explore n the context of publc goods provson how the queston of pro-socal versus selfsh behavor relates to those of selfcontrol and tme preferences. Curry et al. (2008) fnd n a publc goods game that ndvduals dscount rates are negatvely assocated wth ther contrbuton to the publc account. That s, more mpatent ndvduals contrbute less to the publc good than do patent ones. Movng to the feld, Fehr and Lebbrandt (2011) combne laboratory data on tme preferences, as well as extracton n a common pool resource problem, wth feld data on the catches of fshermen n Brazl. Ther data ndcate that those n the experment who exhbt more cooperatve and less mpatent behavor are n the feld less lkely to over-explot the common pool resource. 5 There s also a nascent lterature on the effects of self-control depleton on behavor n the ultmatum game. Achtzger et al. (2011) show that proposers, whose self-control resources are 4 Notably, O Donoghue and Loewensten (2007) also suggest the possblty that self-control conflct may stand between an urge to be altrustc (for example, by empathy toward a beggar) and better judgment to act selfshly (for example, knowng that the beggar wll squander the money for drugs). Recent evdence by Andreon et al. (2011) on solctor avodance shows that ths reverse temptaton seems to be mportant n the context of chartable gvng. We do not rule out reverse temptaton, but deem t the less plausble of the two n our (anonymous and abstract) laboratory expermental settng. We address the ssue n our concludng secton. 5 For consstent results n expermental psychology, see Pronn et al. (2008) and Sheldon and Fshbach (2011). 4

6 depleted, make lower offers; they become relatvely more selfsh. Responders wth depleted selfcontrol resources are more lkely to reject offers that are unfar to themselves. Halal et al. (2011) provde consstent results for responders, but wth a dfferent depleton task. We are the frst to formalze and study the lnk between self-control and cooperaton n a publc goods game. We buld on the desgn of Fschbacher et al. (2001), whch, n a standard lnear publc goods envronment, elcts condtonal contrbuton schedules through a varant of the strategy vector method (Selten, 1967), together wth an uncondtonal contrbuton and an expectaton of others contrbutons. Our setup allows us to study specfc aspects of self-control and also ts nteracton wth rsk preferences, as well as the percepton of conflct. Furthermore, we may n our data analyss assocate behavoral types wth levels of self-control. The remander of the paper s organzed as follows. Secton 2 ntroduces our model, and Secton 3 explans our expermental desgn. We present n Secton 4 the expermental results. Secton 5 dscusses our fndngs and concludes the paper. 2. The Model We propose a two-stage model wth a conflct dentfcaton stage (percepton of conflct) and a contrbuton stage (unravelng of the conflct). In the model, nature decdes n the frst stage whether or not an agent dentfes the conflct. If the conflct s not dentfed, the decson process ends, and the agent contrbutes zero. If t s dentfed, the agent decdes how much effort to nvest n the self-control conflct. More formally, we assume that the generalzed utlty functon U of ndvdual s gven by U x c, (1) where x s the ndvdual s monetary payoff, whch depends on the publc good technology and on contrbuton costs (.e., x f ( c, G( )) ; where G denotes the publc technology); c 0 s ndvdual s ' contrbuton to the publc good; ( ) wth '( c) 0 measures the agent s c senstvty towards utlty derved from contrbutng to the publc good; c s the (expected) average contrbuton of other group members; and 0 < α < 1 renders the utlty functon concave 5

7 (α may be nterpreted straghtforwardly as a parameter of rsk averson). 6 One may see that our utlty functon ncorporates other-regardng concerns n a way smlar to that of warm-glow, altrusm, or recprocty models. Regardng the publc good technology, we assume that G( ) / c n G( ) / c 1 n G( ) / c, (2). wth n representng the group sze. Condton (2) ensures that the problem s a socal dlemma as the selfsh ndvdual optmum and the collectve optmum are n conflct. The decson problem nvolvng self-control effort of ndvdual s llustrated n Fgure 1, wth payoffs at the end of each branch of the decson tree. For the sake of a straghtforward exposton, we dsplay the decson problem for two dscrete contrbuton levels, wth c c, mplyng ceters parbus x c ) x ( c ). However, the extenson to a larger number of dscrete ( contrbuton levels, and to contnuous dstrbuton levels, s straghtforward. At the conflct stage, decson makers may choose levels of self-control effort. The cost of ths effort s defned lnearly, wth e /, where e 0 denotes ndvdual cost of self-control effort, and 0 represents a wllpower parameter. 7 Notably, for any gven effort level less than nfnty, the ndvdual cannot know wth complete certanty the outcome of the self-control conflct. 8 Insert Fgure 1 around here 6 The exact specfcaton does not matter for our results. 7 Self-control effort can be thought of as a concept smlar to that of ego resources n the work by Baumester and colleagues (see, e.g., Baumester, 2002). 8 We use what we consder to be the most parsmonous model that preserves stochastc determnaton of behavor followng self-control conflct. Our model s smlar to that by Fudenberg and Levne (2006), who study the nteracton between a short-run self and a long-run self. Alternatvely, t can be understood as a stochastc verson of that by Gul and Pesendorfer, (2001; 2004), as n Bénabou and Pyca (2002). Because the focus of ths paper s not only theoretcal but also emprcal, we refran from a detaled dscusson regardng the smlartes and dfferences between the avalable models. The nterested reader s referred to Myrseth and Wollbrant (2011). 6

8 We demonstrate next how the ndvdual responds to self-control conflct and how the conflct s resolved. Identfcaton stage At the dentfcaton stage, nature decdes whether or not the agent dentfes conflct. The bnary dentfcaton functon {0,1} mples conflct dentfcaton when 1, and no conflct dentfcaton when 0. The model has a trval soluton n the case of 0; the agent does not dentfy conflct and hence contrbutes nothng. 9 Conflct stage At the conflct stage, when 1, the agent makes two decsons: she must determne () the level of contrbuton, c, to be attempted and () the level of self-control effort to be exerted n the servce of ths attempt, denoted e c In accordance wth our emprcal paradgm, we restrct attenton to dscrete contrbutons 0, C. For the agent to experence a self-control conflct to want to contrbute c c but smultaneously feel compelled not to gve at all we requre that f ( c, G( )) c f ( c, G( )) c. The agent wll experence a stronger selfsh mpulse for hgher contrbuton levels. Ths s because the agent stands to lose more. We may thus characterze temptaton strength by the functon t t( c ), wth t'( c) 0 and t''( c ) 0 Hence, we conclude that t( c ) t( c ). Every postve contrbuton level thus specfes a degree of temptaton strength aganst whch the agent by exertng costly effort may struggle. For the agent to be wllng to take on t( c ) t( c ), we requre the followng: 9 It s of course possble that a contrbutor does not even thnk of free-rdng and, therefore, contrbutes the entre amount wthout experencng conflct. In the sprt of parsmony, we abstract from such cases. 10 Our model does not to make clams about the behavoral process by whch ndvduals optmze ther choces. Rather, our model serves as an as-f -representaton of the decson problem. We recognze that the actual behavoral process mght be mperfect, bounded by cogntve constrants and guded by heurstcs. 7

9 CONDITION 1: The utlty from contrbutng c s greater than that from contrbutng, f ( c, G( )) c f ( c, G( )) c. When Condton 1 does not hold, an agent would not even attempt a hgher contrbuton level. The fnal outcome of any gven conflct s determned stochastcally by the probablty measure p p( e, t), such that p( e, t( c )) p( e, t( c )), and, where e H e, H L p( e, t) p( e, t). That s, the probablty that the agent succeeds n her struggle, and thus contrbutes to the publc good, ncreases n effort and falls n temptaton strength. Fnally, we have p(0, t) 0 for t 0 and p(, t) 1, for all t. Solvng the model backwards yelds the followng results. L CONDITION 2: Gven that the agent has dentfed conflct 1; f ( c, G( )) c f ( c, G( )) c 0, a necessary condton for hgher contrbutons s that 11 (, ( )) (, ( )) p p f c G c f c G c e e H L H L Expected margnal beneft of contrbutng c Margnal cost of contrbutng c c c (3) Proof. All proofs can be found n Appendx A. The condton n (3) states that the expected margnal beneft (left-hand sde) from a H L hgher contrbuton, p p f ( c, G( )) c f ( c, G( )) c, must exceed or equal the margnal cost of effort, e H e, where L H p denotes the probablty of succeedng n the struggle aganst temptaton to contrbute c, and L p denotes the probablty of succeedng n the attempt to contrbute c. Note that the beneft of a hgher contrbuton s postve whenever 11 Equvalently, the wllpower parameter n equaton (3) could of course be moved to the rght-hand sde of the equaton. Although t seems a bt counter-ntutve at frst sght, we prefer ths presentaton for analytcal and expostonal convenence as llustratons are more straghtforwardly nterpretable (see Fgure 2) and proofs of predctons smpler to derve. 8

10 the agent has not reached the maxmum on her utlty functon,.e., whenever f ( c, G( )) c f ( c, G( )) c 0. However, hgher contrbuton levels also yeld a stronger temptaton not to contrbute at all, the struggle aganst whch requres greater effort (rght-hand sde). We next present a seres of comparatve statcs results that wll be tested emprcally later. PROPOSITION 1: Increasng wllpower rases the expected margnal beneft of contrbutng, thus weakly ncreasng contrbutons. The proposton follows from the left-hand sde of Condton 2. Rasng wllpower ncreases the expected margnal beneft from attemptng to contrbute c c. Whether the agent actually contrbutes more, depends, frst, on whether the necessary condton n (3) s satsfed, and, second, on whether she defeats her urges. Thus, rasng wllpower ncreases contrbutons whenever the addtonal wllpower causes Condton 2 to hold. Of course, for stronger ndvduals, for whom Condton 2 s already satsfed, rasng wllpower wll not nfluence contrbutons. Moreover, for some weaker ndvduals the addtonal wllpower may not prove suffcent to satsfy Condton 2. Taken together, we conclude ceters parbus that an ndvdual wth hgher wllpower n expectaton wll contrbute no less than an ndvdual wth lower wllpower (see Fgure 2). That s, rasng wllpower yelds weakly larger contrbutons. Thus, we expect a postve correlaton between wllpower and contrbutons to the publc good. PROPOSITION 2: Gven that the agent has dentfed conflct ( 1), rasng wllpower mples a smaller ncrease n contrbutons f rsk averson ncreases ( falls). As before, there s an ncrease n utlty from contrbutng more whenever the agent s not at the maxmum of her utlty functon. However, ths gven ncrease n expected utlty decreases when rsk averson ncreases. As seen on the left-hand sde of (1), H L p p f ( c, G( )) c f ( c, G( )) c, ncreasng rsk averson reduces the dstance between f ( c, G( )) c and f ( c, G( )) c, renderng the condton more dffcult to satsfy. Hence, the postve effect of wllpower on contrbutons dmnshes wth a hgher level of rsk averson. 9

11 A hgher level of rsk averson leads to a downward rotaton n the margnal beneft curve as the slope of the curve decreases (see Fgure 2). The same ndvduals, whose ncrease n wllpower was just suffcent to satsfy Condton 2, may now prefer not to attempt the hgher contrbuton level. PROPOSITION 3: Gven that the agent has dentfed conflct ( 1), rasng wllpower mples a larger ncrease n contrbutons for hgher levels of the others average contrbuton. Recall that the socal utlty parameter ncreases wth, the other group members average contrbuton level (, ). Thus, the expected margnal beneft of contrbutng ncreases when others contrbute more. In turn, ths mples that hgher levels of others average contrbutons ncrease the dstance between f ( c, G( )) c and f ( c, G( )) c, renderng Condton 2 easer to satsfy. When others rase ther contrbuton levels, the slope of the margnal beneft curve ncreases, mplyng an upward rotaton of the curve (see Fgure 2). For some of the ndvduals for whom the ncrease n wllpower alone s not suffcent to rase contrbutons, hgher contrbutons by others render the addtonal wllpower suffcent to satsfy Condton 2. PROPOSITION 4: Gven that the ndvdual has dentfed conflct ( 1), rasng wllpower yelds a smaller contrbuton ncrease from ncreases n the level of others average contrbuton f rsk averson ncreases ( falls). Proposton 4 s a combnaton of Propostons 2 and 3. Increasng rsk averson frst reduces the slope of the margnal beneft curve, and ncreasng the level of others average contrbuton ncreases t (See Fgure 2). Insert Fgure 2 around here Havng outlned the model and derved the man predctons, we next present the expermental desgn and procedure. 10

12 3. Expermental Desgn and Procedure 3.1 The Basc Publc Goods Game and the Strategy Vector Method In our experment, the publc goods game bulds on the followng lnear payoff functon for ndvdual n x 20 c 0.4 c, (4) j j1 where c ~ denotes the contrbuton of ndvdual to the publc good. Each group conssts of four randomly matched ndvduals, and each ndvdual receves an endowment of 20 expermental ponts (the expermental currency unt). The margnal per capta return (MPCR) from nvestng n the publc good s 0.4, fulfllng the condtons for a socal dlemma. Assumng that partcpants are ratonal and self-nterested, t s evdent that any MPCR < 1 yelds a domnant strategy to free-rde. From the perspectve of socal welfare, t s optmal to contrbute the whole endowment because MPCRn > 1. The preference elctaton and the ncentve mechansm n our experment closely follow Fschbacher et al. (2001). More specfcally, partcpants are asked to make two decsons: frst, to make an uncondtonal contrbuton to the publc good, and, then, to submt a condtonal contrbuton schedule. The uncondtonal contrbuton s a sngle nteger number that satsfes 0 c ~ 20. For the condtonal contrbuton, subjects partcpants ndcate how much they would contrbute to the publc good for any possble average contrbuton (rounded to ntegers) of the other three players wthn ther group. For each of the 21 possble averages from 0 to 20, partcpants must decde on a contrbuton between (and ncludng) 0 and 20. Ths s a varant of the strategy vector method (Selten, 1967). To ensure ncentve-compatblty, both the uncondtonal and the condtonal contrbutons are potentally payoff-relevant. For one group member, randomly determned by the toss of a four-sded de, 12 the condtonal contrbuton s relevant; ther uncondtonal contrbutons are relevant for the other three group members. More specfcally, the three uncondtonal contrbutons wthn a group, and the correspondng condtonal contrbuton (for the specfc average of the three uncondtonal contrbutons), determne the sum of contrbutons 12 Each group member s assgned a number from one to four. The de s rolled by a randomly selected partcpant n the sesson, and the roll of the de s montored by the expermenter. 11

13 to the publc good. One can then accordng to equaton (4) straghtforwardly compute ndvdual earnngs. In addton, partcpants are asked to guess the average uncondtonal contrbuton of the other three group members (rounded to ntegers). The guessng stage s mplemented after the contrbuton stages and s not mentoned n the wrtten nstructons. As n Gächter and Renner (2010), partcpants are monetarly rewarded dependng on the accuracy of ther guesses. However, we use a slghtly stronger ncentve mechansm. If a partcpant s guess equals exactly the average uncondtonal contrbuton of the other three group members, the partcpant earns nne addtonal ponts from the guess; f there s a dfference of one between the guess and the average, the partcpant earns sx addtonal ponts; and a dfference of two results n addtonal three ponts earned. Larger dfferences are nether rewarded nor punshed. 3.2 Elctaton of Rsk Preferences We employed the desgn by Holt and Laury (2002) to measure ndvdual rsk preferences. Each partcpant, wthout nteractng wth another partcpant, s requred to make ten rsky choces. For each choce, partcpants choose between two optons, labeled X and Y. Both optons nclude a lottery wth the same probabltes, but wth dfferent payoffs. Opton X s the relatvely safer opton; ts hghest outcome s lower than the hghest outcome from opton Y, but ts lowest outcome s hgher than the lowest outcome from opton Y. Payoffs are fxed throughout the choce sequence. However, n both optons the probablty of recevng the hgher payoff ncreases by ten percentage ponts, from 10% n decson 1 to 100% n decson As the partcpant moves down the sequence of choces, dependng on the partcpant s preference for rsk, the partcpant at some pont may swtch from Opton X (the relatvely safe choce) to Opton Y (the relatvely rsky choce). In the case of extreme rsk-lovng, the partcpant would always choose Opton Y. Swtchng from Y to X, or always choosng X s ncompatble wth consstent money-maxmzng behavor. 14 One can compute an ndvdual s 13 We provde the specfc numbers used for ths rsk elctaton procedure n Appendx D. 14 We have excluded ffteen subjects from our analyss that dd not provde consstent answers n the rsk experment. Conductng the analyses n our results secton wthout excludng nconsstent subjects, where rsk preferences were measured as the number of safe choces, leaves our results unaffected. 12

14 Y. 15 Upon completng ths task (and the rest of the experment), one of the ten lotteres s degree of rsk averson by usng the pont at whch he or she swtches from Opton X to Opton selected randomly and played for real. All lotteres are thus potentally payoff-relevant, and partcpants could n ths part earn up to 3.85 euro. 3.3 Measurement of Conflct Identfcaton and of Trat Self-Control After rsk preference elctaton, we mplement a standard measure of trat self-control: the Rosenbaum Self-Control Schedule (1980a), henceforth abbrevated RSS. 16 Ths measure has been valdated aganst a battery of relevant personalty measures, and aganst behavoral tasks assocated wth self-control, such as resstng pan (Rosenbaum, 1980b), copng wth stress (Rosenbaum and Smra, 1986; Rosenbaum 1989), copng wth mental dsablty (Rosenbaum and Palmon, 1984), copng wth seasckness (Rosenbaum and Rolnck, 1983), quttng smokng (Katz and Sngh, 1986), savng over spendng (Romal and Kaplan, 1995), and curtalng procrastnaton (Mlgram et al., 1988). We buld on the fndng from personalty psychology that the tendency to apply selfcontrol strateges represents a stable trat wthn the ndvdual over tme. Indeed, the tendency to apply self-control strateges remans remarkably consstent throughout lfe. For example, Mschel and colleagues found that a chld s performance at age 4 on an nstant gratfcaton task (one cooke now, or two cookes later) predcted later n lfe ther cogntve control (Egst et al., 2006), ablty to concentrate, self-control, nterpersonal competence, SAT scores, and ther drug use (Mschel et al. 1988; Mschel et al., 1989; Shoda et al., 1990; Ayduk et al., 2000). Crtcally, self-control strateges 17 are relevant to the decson to ndulge only when the ndvdual has dentfed self-control conflct. Therefore, one approach to nvestgatng whether the problem of pro-socal versus selfsh behavor resembles one of self-control s to test whether self-control strateges are postvely assocated wth pro-socal behavor when the ndvdual has 15 Swtchng ponts can readly be converted nto rsk averson parameters of parametrc models, such as CRRA. Snce the choce of a model would be arbtrary, we use the swtchng pont as a model-free measure n our analyss. 16 The Rosenbaum Self-Control Schedule (1980a) s ncluded n Appendx B. 17 Such self-control strateges may take a varety of forms, and common examples nclude counteractve self-control (e.g., Trope and Fshbach, 2000; Myrseth and Fshbach, 2009), and pre-commtment (e.g., Thaler and Shefrn, 1981; Schellng, 1984). 13

15 felt conflcted, but less so or not at all when the ndvdual has not. It s, therefore, necessary to measure experenced conflct. To capture recollecton of feelngs of mxed emoton, we employ a queston n the last part of the experment (but before admnsterng the RSS) that s smlar to the one used n Aaker et al. (2008): To what extent dd you experence conflct when decdng how much to contrbute? Partcpants answered ths queston on a contnuous scale rangng from 0 ( not at all ) to 100 ( very much ). The queston obvously captures subjectvely experenced strength of conflct Expermental Procedure The computer-based experment was conducted at the expermental laboratory MELESSA of the Unversty of Munch n October 2009 and n March 2010, usng the expermental software z- Tree (Fschbacher, 2007) and the organzatonal software Orsee (Grener, 2004). 144 undergraduate students from all dscplnes, except economcs, partcpated n sx sessons, each wth 24 partcpants. Approxmately 62% of partcpants were female. Sessons lasted up to 1½ hours, and the average payoff was 13.4 euro, ncludng a show-up fee of 4 euro. 19 Upon arrval, expermental partcpants were seated n separate cubcles. Each sesson started wth nstructons for the publc goods game. At ths stage t was made clear that there would be addtonal parts of the experments, but that the nstructons for these parts would only be handed out after the completon of the current part. It was also stressed to partcpants that decsons n one part would be completely unrelated to those n the other parts. Partcpants receved neutrally-framed, wrtten nstructons (see Appendx C), whch were read aloud. Everybody had the opportunty to ask questons n prvate. The experment contnued only after all partcpants had completed a seres of computerzed exercses (where they calculated profts for dfferent contrbuton levels n the publc goods game), and after all partcpants had correctly understood the procedures. It was made very clear that feedback and proft nformaton would only be gven at the very end of the experment. Ths was done to reduce the potental spllover effects of earnngs, from one part of the experment to the next. 18 Several alternatve measures for conflct dentfcaton are concevable, ncludng physologcal ones. It s nterestng to note that response tme for the contrbuton decson n our experment whch s an obvous canddate for an alternatve measure of conflct dentfcaton s not sgnfcantly correlated wth our selfreported measure. 19 Each expermental pont earned n an expermental sesson s exchanged at the pre-announced rate of 1 pont = 0.33 euro. 14

16 Upon completng the publc goods game (part 1), partcpants receved nstructons for the rsk preference elctaton (part 2). Results from part 3 a varant of the trust game are reported n Kocher et al. (2011), who analyze the assocaton between cooperaton, trust, and rsk. After part 3, partcpants answered the conflct experence queston, the RSS and a couple of questons regardng soco-demographcs and ndvdual background. The fnal stage of the experment ncluded extensve feedback on the decsons of group members n the publc goods game, chance moves, and the ndvdual earnngs. Payments were made prvately and n cash. 4. Expermental Results We hypotheszed that self-control would postvely correlate wth contrbutons to the publc good for ndvduals who had dentfed a self-control conflct between better judgment to cooperate and the temptaton to be selfsh. We dd not expect a sgnfcant correlaton for ndvduals who had not dentfed conflct. The RSS represents our proxy for self-control, and a dummy varable, extracted from partcpants self-reports of conflct ntensty, represents our proxy for partcpants dentfcaton of self-control conflct. Whle the response varable for conflct ntensty s contnuous, there s no reason to expect a lnear effect of experenced conflct on the mpact of trat self-control. Rather, a threshold effect of the former on the latter seems more approprate; ndvduals who dentfed self-control conflct would draw on ther self-control strateges to promote pro-socal behavor, whereas ndvduals who dd not would not (see Fgure 1). A natural, theoretcally motvated threshold for our analyss would, therefore, be the lowest postve, non-zero report of experenced conflct (dentfcaton). Our conflct dummy, therefore, takes the value of zero for partcpants reportng no conflct ( 0 on the conflct ntensty queston), and 1 otherwse. 20 Insert Table 1 around here 20 Our subsequent pattern of results, though slghtly weaker, s robust wth respect to the alternatve threshold of 50, whch corresponds to the mdpont of the scale. Smlarly, the pattern obtans when usng conflct as a contnuous ndependent varable n a regresson (see Appendx E). We prefer to present the data by usng a dchotomous varable, wth 1 as the threshold, as ths s most closely algned wth our theory. 15

17 The summary statstcs n Table 1 reveal that both uncondtonal and condtonal contrbutons n our sample resemble those reported n the related lterature (e.g., Fschbacher et al., 2001; Fschbacher and Gächter, 2010). Moreover, the RSS scores of our partcpants appear roughly smlar to those found n other studes: the standard devaton s wthn the range of those found n the orgnal samples studed by Rosenbaum (1980a, b), but the mean s slghtly below the correspondng range of means (16.7 vs. a range of 23 to 27). Overall, our summary statstcs do not suggest anythng out of the ordnary. 4.1 Condtonal Contrbutons n the Publc Goods Game We start by examnng contrbuton schedules. Remember that each of our partcpants had to ndcate 21 contrbuton levels for all possble average contrbuton levels (rounded to ntegers) of the other group members. The elctaton of the schedule was fully ncentvzed. Table 2 tests our four propostons from the model based on the condtonal contrbuton data. More specfcally, t presents an OLS analyss 21 of condtonal contrbutons as a functon of RSS scores (denoted RSS), rsk preferences based on the swtchng pont n the choce lst task (denoted Rsk), average contrbutons by others (denoted Others), and the respectve nteracton terms. We have splt the estmatons based on whether an ndvdual has dentfed self-control conflct (specfcatons (6)- (10), based on 99 ndvduals) or not (specfcatons (1)-(5), based on 30 ndvduals). 22 Specfcatons (1)-(4) and (6)-(9) all replcate a commonly found pattern: the level of others average contrbutons s a strong determnant of own contrbutons (e.g., Fschbacher and Gächter, 2010; Gächter, 2007; Kocher et al., 2008). It s noteworthy that ths varable does not appear sgnfcant n specfcatons (5) and (10), a pont to whch we shall soon return. Insert Table 2 around here 21 We present here and hereafter only OLS regressons but our pattern of results also holds for Tobt regressons that account for the lower and the upper contrbuton lmts; see Appendx E for robustness checks. 22 When we control for rsk atttude, we lose several observatons due to nconsstent choce patterns n the Holt-Laury-task. Note that we have 21 observatons per ndvdual, and we report robust standard errors to account for the dependence n the data. 16

18 Consstent wth Proposton 1, specfcatons (7) and (9) yeld postve and sgnfcant correlatons between condtonal contrbutons and RSS for those who have dentfed conflct; no such postve correlaton s obtaned n specfcatons (2) and (4) for those who reported not havng dentfed conflct. Moreover, and consstent wth Proposton 2, specfcaton (9) yelds a negatve coeffcent on the nteracton term between RSS and rsk preferences for those who have dentfed conflct; ths coeffcent s, however, not sgnfcant at conventonal levels. That s, the postve assocaton between RSS and condtonal contrbuton seems to be slghtly weaker for more rsk-averse ndvduals, but for the tme beng one should not over-nterpret ths result. Rsk preferences themselves are never a sgnfcant predctor of condtonal contrbutons. Ths s not surprsng because condtonal contrbutons do not nvolve strategc uncertanty. Specfcaton (10) pertans to ndvduals who dentfed self-control conflct, and t ncludes all aforementoned varables and the respectve nteractons. Consstent wth Proposton 3, the nteracton between RSS and Others s postve and sgnfcant. That s, the greater s the level of others average contrbutons, the stronger the postve assocaton between self-control and condtonal contrbutons. Ths result s not obtaned for specfcaton (5), whch ncludes only those who dd not dentfy self-control conflct. We summarze our fndngs for condtonal contrbutons n Results 1, 2, and 3 correspondng to Propostons 1-3, respectvely. RESULT 1: Condtonal contrbutons are postvely correlated wth self-control, for ndvduals who have experenced conflct. RESULT 2: The postve correlaton between condtonal contrbutons and self-control dmnshes weakly, but not sgnfcantly, as rsk averson ncreases, for ndvduals who have experenced conflct. RESULT 3: The postve correlaton between condtonal contrbutons and self-control becomes stronger as the level of others average contrbuton ncreases, for ndvduals who have experenced conflct. Furthermore, specfcaton (10) yelds support for Proposton 4. The three-way nteracton between RSS, rsk preferences, and Others s negatve and sgnfcant. In other words, wth a hgher level of others average contrbutons, there s a weaker assocaton between selfcontrol and condtonal contrbutons for more rsk-averse ndvduals. Agan, we do not obtan the result from specfcaton (5), whch ncludes only those who dd not experence self-control 17

19 conflct. 23 We summarze the fndng n Result 4, correspondng to Proposton 4 n the theoretcal secton. RESULT 4: Wth hgher average contrbutons by others, the strength of the postve correlaton between condtonal contrbutons and self-control dmnshes wth hgher levels of rsk averson, for ndvduals who experenced conflct. To llustrate the results from specfcaton (10), we plot n Fgure 3 the unt ncrease n condtonal contrbuton, from a one-standard-devaton ncrease n RSS, at dfferent levels of rsk preference and others contrbutons. At low levels of Others, there s lttle dfference n condtonal contrbuton for varous levels of rsk preferences. Smlarly, at hgh levels of rsk averson, there s lttle dfference n condtonal contrbuton for varous levels of Others. However, a one-standard-devaton ncrease n RSS yelds hgher levels of condtonal contrbuton when there are both lower levels of rsk averson and hgher levels of Others. Insert Fgure 3 around here The man effect for Others, but also the sgnfcant effects of RSS and the nteracton of RSS wth Rsk, statstcally dsappear n specfcatons (5) and (10). It seems that f one ncludes the nteracton n the regresson, the drect effects become weaker and even non-sgnfcant because the nteracton coeffcents take over. Therefore, t s mportant to obtan further support for our man results. Before we do that by analyzng uncondtonal contrbutons (n Secton 4.3), we frst take a closer look on dfferent contrbutor types. 4.2 Types of Contrbutors n the Publc Goods Game We followed the standard approach n classfyng four types of contrbutors (see Fschbacher et al., 2001; Fschbacher and Gächter, 2010). Condtonal cooperators submtted a contrbuton 23 We have for expostonal purposes decded to splt the data accordng to conflct dentfcaton. When nstead aggregatng the data and ncludng n the specfcatons a dummy for conflct dentfcaton, the same patterns obtans. When we nteract the conflct dummy wth the relevant varables, the nteractons are sgnfcant and confrm the results n Tables 2 and 4. However, such specfcatons are more cumbersome to nterpret, n partcular the four-way nteracton between conflct dentfcaton, RSS, rsk preferences, and Others. 18

20 schedule dsplayng a (weakly, wth at least one strct step) monotoncally ncreasng contrbuton for an ncreasng average contrbuton by the other group members. 24 Free-rders were characterzed by zero condtonal contrbutons for every possble average contrbuton by the other members. Hump-shape contrbutors (also known as trangle contrbutors) exhbted (weakly, wth at least one strct step) monotoncally ncreasng contrbutons up to a certan average level of others contrbutons, above whch ther contrbutons schedule s (weakly, wth at least one strct step) monotoncally decreasng. The category referred to as Resdual consttutes the remanng partcpants. 25 The dstrbuton of types based on our data and shown n Table 3 corresponds to those found n past studes (e.g., Fschbacher et al., 2001; Kocher et al., 2008; Herrman and Thön, 2009; Fschbacher and Gächter, 2010). Insert Table 3 about here Gven that free-rders by defnton contrbute less than do other types, whch they of course also do n our experment, and gven that they happened to have about the same RSS score 26, and about the same rsk preferences, our model would mply that they were less lkely to dentfy a self-control conflct between keepng the money and contrbutng. Consequently, the model would predct that free-rders were less lkely to have drawn on ther self-control strateges to promote pro-socal behavor. Indeed, consstent wth ths mplcaton, free-rders reported a sgnfcantly lower average level of conflct than dd other types (p-values < 0.01; Mann- Whtney-U-tests 27 ). In other words, free rders seem to have contrbuted less because they were less lkely to see a self-control conflct n the frst place and were, therefore, less lkely to draw on 24 We also ncluded those wthout a weakly monotoncally ncreasng contrbuton, but wth a hghly sgnfcant (p-value < 0.01) postve Spearman rank correlaton coeffcent between own and others contrbutons (see Fschbacher et al., 2001; Fschbacher and Gächter, 2010). 25 We elect not to label ths category Others, as s conventonal n the lterature, because ths label s dentcal to the one that we have employed n our regresson analyses of condtonal contrbutons. To avod confuson, we nstead refer to the resdual class of contrbutor types as Resdual. 26 The RSS of free-rders s not sgnfcantly lower than that of ether condtonal cooperators or humpshape contrbutors (all p-values > 0.4). 27 All non-parametrc tests n ths paper are two-sded. 19

21 ther self-control strateges to promote pro-socal behavor. We summarze ths fndng for contrbutor types n Result RESULT 5: Free rders experence lower levels of conflct than do other types, but they do not hold dfferent rsk preferences or scores on the self-control measure (RSS). Fnally, though not too surprsng gven our fndngs so far, t s worth mentonng that the self-servng bas of condtonal cooperators (.e., the dfference between perfect condtonal cooperaton one s own contrbuton beng equal to the (expected) average contrbuton of the other group members and the actual condtonal contrbuton of an ndvdual) s related to trat self-control. In a regresson also controllng for rsk preferences, a hgher level of self-control exhbts a strong and sgnfcant (p < 0.01) negatve assocaton wth the sze of the ndvdual self-servng bas of condtonal cooperators. 29 Many condtonal cooperators exhbt a self-servng bas, and t s ntutvely obvous that ts sze s related to self-control 4.3 Uncondtonal Contrbutons n the Publc Goods Game Our experment elcted condtonal and uncondtonal contrbutons to the publc good. Whle we deem the contrbuton schedule (condtonal contrbutons) more sutable for testng our hypotheses, examnng partcpants uncondtonal contrbutons could provde valuable robustness checks. A frst straghtforward analyss of the data reveals the predcted assocaton between RSS and cooperaton also for partcpants uncondtonal contrbutons. When comparng the means of uncondtonal contrbutons by hgh vs. low RSS scores (above vs. below the mean) and by experenced conflct vs. no conflct among partcpants who reported conflct, those wth hgh RSS scores contrbuted more (on average, 8.94) than dd those wth low RSS scores (2.86). The dfference s hghly sgnfcant (p-value < 0.01; Mann-Whtney-U-test). However, among partcpants who dd not report havng dentfed conflct, those wth hgh RSS scores dd not contrbute sgnfcantly more (5.53) than dd those wth low RSS scores (6.93) (p-value = 0.13; Mann-Whtney-U-test). 28 The result provdes ex-post evdence for the assumpton n our model that no conflct dentfcaton mples no contrbuton. 29 The regresson table s avalable on request. 20

22 Insert Table 4 here Table 4 presents OLS regressons for uncondtonal contrbutons as a functon of RSS scores, rsk preferences, and the nteracton between the two. As wth condtonal contrbutons, we have splt the estmatons based on whether ndvduals dentfed self-control conflct (specfcatons (14)-(16)) or not (specfcatons (11)-(13)). Consstent wth Proposton 1, specfcatons (14) and (15), whch exclude the nteracton term, reveal that RSS s postvely correlated wth uncondtonal contrbutons for ndvduals who dentfed self-control conflct; the correspondng specfcatons (11) and (12) even show a sgnfcantly negatve correlaton between RSS and uncondtonal contrbutons. That s, gven that somebody dentfed a selfcontrol conflct, ndvduals wth hgher trat self-control, of whch RSS s our measure, contrbuted more to the publc good than dd those wth lower trat self-control. Specfcaton (16) ncludes the nteracton term between RSS and rsk preferences, and t ncludes only those who have dentfed self-control conflct. Consstent wth Proposton 2, the coeffcent for RSS s postve and sgnfcant, and the coeffcent on the nteracton term for RSS and rsk preferences s negatve and sgnfcant. In other words, the postve assocaton between RSS and uncondtonal contrbutons s weaker for more rsk-averse ndvduals. The correspondng estmaton for ndvduals who dd not dentfy conflct, specfcaton (13), reveals no clear pattern. We summarze these fndngs for uncondtonal contrbutons, whch renforce our conclusons from Secton 4.1, n results 6 and 7, correspondng to Propostons 1 and 2. RESULT 6: Uncondtonal contrbutons are postvely correlated wth trat self-control, for ndvduals who experenced conflct. RESULT 7: The postve correlaton between uncondtonal contrbutons and self-control dmnshes wth hgher levels of rsk averson, for ndvduals who experenced conflct. Propostons 3 and 4 are more dffcult to test wth data on uncondtonal contrbutons. Because we have elcted expectatons of others contrbutons mmedately after askng for uncondtonal contrbutons, the data are less suted than are the condtonal schedules. Ths s manly because of a potental nfluence of uncondtonal contrbutons on expectatons through anchorng or through the false consensus effect (Gächter, 2007). Nevertheless, the mpact of selfcontrol (.e., the RSS score) remans sgnfcant and strong for almost all specfcatons. However, 21

23 the nteractons of rsk preferences wth the RSS and expectatons wth the RSS, whle dsplayng the correct sgns, are often not sgnfcant at conventonal levels. 30 Note fnally that the coeffcent on Rsk alone does not explan uncondtonal contrbutons n any sgnfcant way, corroboratng results n Kocher et al. (2011). 5. Dscusson and Concluson We have explored the hypothess that ndvduals, when determnng whether to contrbute to a publc good, may experence a self-control conflct between actng n self-nterest and actng n the nterest of others. To ths end, we have developed a model, from whch we have derved and emprcally tested a seres of predctons. Our results clearly ndcate that a measure of selfcontrol s postvely assocated both wth condtonal and uncondtonal contrbutons n a lnear publc goods game. Moreover, as predcted, there s a weaker assocaton between self-control and cooperaton (stronger for uncondtonal than for condtonal contrbutons) for more rskaverse ndvduals. As further predcted, we fnd that hgher levels of others average contrbutons strengthen the assocaton between self-control and condtonal cooperaton. The aforementoned results n lne wth our model are obtaned only for ndvduals who reported feelng conflcted durng the allocaton task. We further study the dstrbuton of contrbutor types and behavoral determnants for the classfcaton. Our analyss reveals that free-rders are smlar to other types both n ther levels of self-control and n ther rsk preferences, but dffer n ther reported experence of conflct; free-rders seem to have cooperated less because they were less lkely to see a self-control conflct n the frst place and were hence less lkely to draw on ther self-control strateges to promote pro-socal behavor. Our results help corroborate pror fndngs n the psychologcal lterature, whch, based on paradgms dfferent from the publc goods game (Pronn et al., 2008; Sheldon and Fshbach, 2011), are consstent wth the dea that the decson to allocate between self and others may be understood as a problem of self-control, between the better judgment to act n the nterest of others and the temptaton to act n the nterest of oneself. We advance the lterature n at least three key respects. Frst, n the context of the publc goods game, we propose a model that s able to capture a varety of exstng stylzed behavoral results for ths game. Accordng to our model, 30 Regressons that nclude expectatons are provded n Appendx E. 22

24 f self-control s low, and/or rsk-averson s hgh, the margnal beneft from cooperaton due to hgher levels of average contrbuton levels by others wll not prove suffcent to mert takng the gamble of tryng to struggle aganst the mpulse of greed. Second, we derve four man propostons, all of whch are tested and supported. Thrd, we show that free-rders are dstngushed from others nether n ther levels of self-control, nor n ther rsk atttudes, but rather n ther tendency not to dentfy a self-control conflct n the frst place. Fourth, we provde an explanaton for the wdely observed self-servng bas among condtonal cooperators, meanng that they despte ther ncreasng contrbuton schedule tend to contrbute less than the average (expected) contrbuton of other group members. Indeed, regressons wth the self-servng bas as the dependent varable and the self-control measure as an ndependent varable, reveal that the self-servng bas decreases n hgher levels of self-control. 31 Our results notwthstandng, a note of cauton s due. The emprcal strategy that we used s based on an analyss of correlatons, and we should thus be careful n nferrng causalty. However, our theory makes clear causal predctons, wth whch our pattern of correlatons s consstent. It s dffcult to come up wth parsmonous alternatve accounts of our pattern of results, obtaned both for condtonal and uncondtonal cooperaton, but we do acknowledge that the queston of causalty merts further nvestgaton. Future studes mght, for example, manpulate the ndependent varables that here were measured, n partcular that of self-control. Whle we have provded evdence for the conceptualzaton that temptaton to act n the nterest of oneself may conflct wth better judgment to act n the nterest of others, we do not wsh to overstate the supposed generalty of our fndngs. We beleve that our conceptualzaton apples n stuatons where feelngs of greed domnate those (f any) to act pro-socally. Of course, as O Donoghue and Loewensten (2007) as well as Andreon et al. (2011) suggest, there s good reason to thnk that the pattern n other crcumstances may reverse. Specfcally, when empathetc emoton s partcularly strong, ndvduals may feel tempted to act pro-socally even knowng that they ought not to. 31 Note that our ratonale could, n prncple, also account for a decrease of contrbuton levels over and above a certan level of average others contrbutons, as we observe t for hump-shape contrbutors. It would requre, beyond that level, a strctly convex temptaton functon. 23

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30 Fgures and Tables Fgure 1 The decson problem for two dscrete contrbuton levels c and c where c Do not dentfy :1 Nature Identfy : c Agent f(0, G( )) 0 contrbute c contrbute c L L p( e, t( c )) 1 p( e, t( c )) H p( e, t( c H )) 1 p( e, t( c )) L L H f ( c, G( )) c e f (0, G( )) 0 e f ( c, G( )) c e f (0, G( )) 0 e H 29

31 Fgure 2: Vsual summary of Propostons 1-4. Note: The graph depcts the margnal beneft and cost of contrbutng rather than as functons of wllpower As per left-hand sde (LHS) of equaton (3), the margnal beneft s an ncreasng functon of wllpower. The slope of ths functon, however, s reduced for hgher levels of rsk averson (Proposton 2) and ncreased by the average contrbuton of others (Proposton 3). In addton, these two effects nteract such that an ncrease n margnal beneft resultng from an ncrease n average contrbutons by others can be dmnshed by a hgher level of rsk averson (Proposton 4). 30

32 Fgure 3. Unt ncrease n condtonal contrbuton due to a one-standard-devaton ncrease n RSS, evaluated at dfferent values of Rsk and Others. 4 3 Unt ncrease n condtonal contrbuton Others Rsk averson Note: The margnal effect of RSS s evaluated usng specfcaton (10) n Table 2. The change n condtonal contrbutons due to a change n RSS can be approxmately wrtten as: ΔCondtonal contrbuton = ( Rsk Others RskOthers)ΔRSS. The values chosen for each varable are the mean, one-standard-devaton above the mean and one-standard-devaton below the mean (N=129). 31

33 Table 1 Summary statstcs Varable Descrpton Number of observatons Uncondtonal contrbuton Condtonal contrbuton* Conflct ntensty** Conflct Rsk RSS Hgh RSS Uncondtonal contrbuton to the publc good Condtonal contrbuton to the publc good A contnuous varable, rangng from 0 ("not at all") to 100 ("very much), n response to the queston "To what extent dd you experence conflct when decdng how much to contrbute?" A dummy varable takng zero f the partcpant responded 0 to the queston "To what extent dd you experence conflct when decdng how much to contrbute?" takng one f the partcpant ndcated a postve number. Rsk ndex derved from the rsk experment (swtchng pont) The Rosenbaum Self-Control Schedule score A dummy varable equal one f the partcpant has a RSS score larger than the mean (17) and zero otherwse Mean Std. Dev Mn Max Others* A vector of nteger numbers between and ncludng 0 and 20 ndcatng all possble average contrbutons of the other three group members n the condtonal contrbuton task Note: * denotes a varable constructed usng the strategy method. ** denotes a response varable not used n the analyss, but transformed to a dummy. Overall 36 out of 144 respondents reported zero, ndcatng "Not at all" as a response. 32

34 Table 2. Condtonal contrbutons by conflct: OLS regresson results Conflct dentfcaton: NO NO NO NO NO YES YES YES YES YES Model specfcaton: (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Dependent varable: Coeff. Coeff. Coeff. Coeff. Coeff. Coeff. Coeff. Coeff. Coeff. Coeff. Condtonal contrbuton Others 0.34*** 0.34*** 0.34*** 0.34*** *** 0.483*** 0.483*** 0.483*** (3.96) (3.95) (3.95) (3.95) (0.69) (10.13) (10.13) (10.13) (10.12) (0.78) RSS -0.09* *** 0.15*** -0.09* (-1.87) (-0.41) (0.23) (4.95) (2.75) (-1.80) Rsk (0.71) (0.17) (0.53) (-0.00) (0.37) (-1.44) RSSxRskx ** (-0.21) (-1.07) (-1.56) (2.28) RSSxOthersx *** (-0.59) (3.25) RskxOthersx (-0.20) (1.53) RSSxRskxOthersx ** (0.59) (-2.54) Constant * *** * (1.31) (1.82) (-0.35) (0.24) (0.07) (3.32) (0.54) (0.75) (-0.23) (1.93) Number of observatons R Note: *** denotes sgnfcance and the 1% level, ** at the 5% level and * at the 10% sgnfcance level. Robust standard errors clustered on the ndvdual level; t-statstcs n parenthess. 33

35 Table 3 Frequency of contrbutor types and varable means by types (N =129) Contrbutor type Frequency Uncondtonal contrbuton RSS Rsk Conflct Conflct ntensty Free rder 20.16% 1.12 (4.01) (19.03) 6.20 (1.52) 0.50 (0.51) (27.38) Condtonal cooperator 58.14% 8.11 (5.75) (23.16) 6.27 (1.40) 0.85 (0.36) (33.45) Hump-shape contrbutor 11.63% 6.80 (5.13) (25.40) 5.73 (1.71) 0.87 (0.35) (30.11) Resdual 10.08% 9.31 (5.71) 8.85 (25.04) 6.00 (1.08) 0.69 (0.48) (32.43) Note: Free rders contrbute less uncondtonally than do all other types (p-values < 0.01; Mann-Whtney-U-test). Free rders also reports less conflct than all other types (p-values < 0.01; Mann-Whtney-U-test), although free rders' RSS s not sgnfcantly lower than that of other types (p-values > 0.4; Mann-Whtney-U-tests); standard devatons n parenthess. 34

36 Table 4. Uncondtonal contrbutons by conflct dentfcaton: OLS regresson results Conflct dentfcaton: NO NO NO YES YES YES Model specfcaton: (11) (12) (13) (14) (15) (16) Dependent varable: Coeff. Coeff. Coeff. Coeff. Coeff. Coeff. Uncondtonal contrbuton RSS -0.11** -0.12** *** 0.08*** 0.37*** (-2.24) (-2.33) (-0.97) (3.49) (3.52) (4.69) Rsk (-1.05) (-0.76) (-0.75) (0.53) RSSxRsk *** (0.39) (-3.97) Constant 6.86*** 11.18** *** 7.80*** 4.57* (3.80) (2.18) (1.41) (8.86) (2.98) (1.74) Number of observatons R Note: *** denotes sgnfcance and the 1% level, ** at the 5% level and * at the 10% sgnfcance level. Robust standard errors; t-statstcs n parenthess. 35

37 Appendx A: Proofs Dervaton of Condton 2. If the ndvdual has not dentfed conflct, by assumpton the perceved value of contrbuton s zero, and so the ndvdual would not consder contrbutng anythng. We next consder what the ndvdual would do should she dentfy conflct. The ndvdual wll prefer to attempt contrbute f and only f the followng two condtons hold: f ( c, G( )) c f ( c, G( )) c f (0, G( )) 0 (Condton 1), and H H H e pe, t( c ) f ( c, G( )) c 1 pe, t( c ) f (0, G( )) 0 > L L L e pe, t( c ) f ( c, G( )) c 1 pe, t( c ) f (0, G( )) 0 To smplfy the condton, we can use the followng: Gven L e and p( e, t( c )) p( e, t( c )) for some c H L c, and, p( e, t) p( e, t), e e H L such that we have H ( H p p e, t( c )) p( e L, t( c )) p L. Smplfyng, the condton above and usng a normalzaton where f(0, G( )) 0 0 then yelds,, ( ), ( ) p p f c G c f c G c e e H L H L Condton 2, where the left hand sde (LHS) s the expected margnal beneft of attemptng to contrbute c rather than attemptng to contrbute c 36

38 Proof Proposton 1. It s clear that the LHS of ths condton ncreases f ncreases as the p p f c, ( ), ( ) 0 G c f c G c H L dervatve proposton., whch proves the Proof Proposton 2. From and the defnton of the utlty from the payoff x f ( c, G( )), t follows that utlty for any contrbuton level ncreases as ncreases. Consequently, both f ( c, G( )) c and f ( c, G( )) c ncrease n. LHS of Condton 2 s postve, but ncreasng rsk averson reduces the postve dstance between the two utltes and approaches ( c c) zero as 0, whch proves the proposton. Proof Proposton 3. From ( ), we have that c H L p p f c, G( ) ( c) c f c, G( ) ( c) c Snce '( c) 0, ncreasng c wll ncrease the postve dstance n square brackets, and so ncreasng the level of others average contrbuton wll enhance the effect of wllpower. Proof Proposton 4 Agan usng the expresson H L p p f c, G( ) ( c) c f c, G( ) ( c) c we recall that lettng α approach zero (ncreasng concavty of the utlty functon) reduces the postve dstance n square brackets, whch proves the proposton. 37

39 Appendx B: The Rosenbaum Self-Control Schedule Note: * = tem s reverse-scored. Drectons - Indcate how characterstc or descrptve each of the followng statements s of you by usng the code gven below +3 very characterstc of me, extremely descrptve +2 rather characterstc of me, qute descrptve +1 somewhat characterstc of me, slghtly descrptve -1 somewhat uncharacterstc of me, slghtly undescrptve -2 rather uncharacterstc of me, qute undescrptve -3 very uncharacterstc of me, extremely nondescrptve l. When I do a borng job, I thnk about the less borng parts of the job and the reward that I wll receve once I am fnshed. 2. When I have to do somethng that s anxety arousng for me, I try to vsualze how I wll overcome my anxetes whle dong t. 3. Often by changng my way of thnkng I am able to change my feelngs about almost everythng. 4. I often fnd t dffcult to overcome my feelngs of nervousness and tenson wthout any outsde help.* 5. When I am feelng depressed I try to thnk about pleasant events. 6. I cannot avod thnkng about mstakes I have made n the past.* 7. When I am faced wth a dffcult problem, I try to approach ts soluton n a systematc way. 8. I usually do my dutes qucker when somebody s pressurng me.* 38

40 9. When I am faced wth a dffcult decson, I prefer to postpone makng a decson even f all the facts are at my dsposal.* 10. When I fnd that I have dffcultes n concentratng on my readng, I look for ways to ncrease my concentraton. 11. When I plan to work, I remove all the thngs that are not relevant to my work. 12. When I try to get rd of a bad habt, I frst try to fnd out all the factors that mantan ths habt. 13. When an unpleasant thought s botherng me, I try to thnk about somethng pleasant. 14. If I would smoke two packages of cgarettes a day, I probably would need outsde help to stop smokng.* 15. When I am n a low mood, I try to act cheerful so my mood wll change. 16. If I had the plls wth me, I would take a tranqulzer whenever I felt tense and nervous.* 17. When I am depressed, I try to keep myself busy wth thngs that I lke. 18. I tend to postpone unpleasant dutes even f I could perform them mmedately.* 19. I need outsde help to get rd of some of my bad habts.* 20. When I fnd t dffcult to settle down and do a certan job, I look for ways to help me settle down. 39

41 21. Although t makes me feel bad, I cannot avod thnkng about all knds of possble catastrophes n the future.* 22. Frst of all I prefer to fnsh a job that I have to do and then start dong the thngs I really lke. 23. When I feel pan n a certan part of my body, I try not to thnk about t. 24. My self-esteem ncreases once I am able to overcome a bad habt. 25. In order to overcome bad feelngs that accompany falure, I often tell myself that t s not so catastrophc and that I can do somethng about t. 26. When I feel that I am too mpulsve, I tell myself "stop and thnk before you do anythng." 27. Even when I am terrbly angry at somebody, I consder my actons very carefully. 28. Facng the need to make a decson, I usually fnd out all the possble alternatves nstead of decdng quckly and spontaneously. 29. Usually I do frst the thngs I really lke to do even f there are more urgent thngs to do.* 30. When I realze that I cannot help but be late for an mportant meetng, I tell myself to keep calm. 31. When I feel pan n my body, I try to dvert my thoughts from t. 32. I usually plan my work when faced wth a number of thngs to do. 40

42 33. When I am short of money, I decde to record all my expenses n order to plan more carefully for the future. 34. If I fnd t dffcult to concentrate on a certan job, I dvde the job nto smaller segments. 35. Qute often I cannot overcome unpleasant thoughts that bother me.* 36. Once I am hungry and unable to eat, I try to dvert my thoughts away from my stomach or try to magne that I am satsfed. 41

43 Appendx C: Expermental nstructons 32 Welcome to the experment and thank you for partcpatng! Please stop talkng to other partcpants from now on. General Ths s an experment on economc decson makng. You wll earn real money that wll be pad out to you n cash at the end of the experment. Durng the experment all partcpants wll be asked to make decsons. Your decsons and the decsons of other partcpants determne your earnngs from the experment accordng to the followng rules. The experment wll last two hours. If you have any questons or f anythng s unclear, please rase your hand, and one of the expermenters wll come to you and answer your questons prvately. Durng the experment a part of your earnngs wll be calculated n ponts. At the end of the experment all ponts that you earn wll be converted nto euro at the exchange rate of 1 pont = 0.33 euro (3 ponts = 1 euro). In the nterest of clarty, we wll only use male terms n the nstructons. Anonymty You wll learn nether durng nor after the experment, wth whom you nteract(ed) n the experment. The other partcpants wll nether durng nor after the experment learn, how much you earn(ed). We never lnk names and data from experments. At the end of the experment you wll be asked to sgn a recept regardng your earnngs whch serves only as a proof for our sponsor. The latter does not receve any other data from the experment. Means of help You wll fnd a pen at your table whch you, please, leave behnd on the table when the experment s over. Whle you make your decsons, a clock wll run down at the top of your computer screen. Ths clock wll gve you an orentaton how long you should need to make your decsons. But you can nevertheless exceed ths tme. The nput screens wll not be dsmssed once tme s over. However, the pure output screens (here you do not have to make a decson) wll be dsmssed. Experment The experment conssts of three parts. You wll receve nstructons for a part after the prevous part has ended. The parts of the experment are completely ndependent; decsons n one part have no consequences for your earnngs n later parts. The sum of earnngs from the dfferent parts wll consttute your total earnngs from the experment. 32 Translated from German. 42

44 Part I The decson stuaton The basc decson stuaton wll be explaned to you n the followng. Afterwards you wll fnd control questons on the screen whch should rase your famlarty wth the decson stuaton. You wll be a member of a group consstng of 4 people. Each group member has to decde on the allocaton of 20 ponts. You can put these 20 ponts nto your prvate account or you can put them fully or partally nto a group account. Each pont you do not put nto the group account wll automatcally reman n your prvate account. Your ncome from the prvate account: You wll earn one pont for each pont you put nto your prvate account. For example, f you put 20 ponts nto your prvate account (and therefore do not put anythng nto the group account) your ncome wll amount to exactly 20 ponts out of your prvate account. If you put 6 ponts nto your prvate account, your ncome from ths account wll be 6 ponts. No one except you earns somethng from your prvate account. Your ncome from the group account: Each group member wll proft equally from the amount you put nto the group account. On the other hand, you wll also get a payoff from the other group members n-payments nto the group account. The ncome for each group member out of the group account wll be determned as follows: Income from group account = Sum of all group members contrbutons to the group account 0.4 If, for example, the sum of all group members contrbutons to the group account s 60 ponts, then you and the other members of your group each earn 60 x 0.4 = 24 ponts out of the group account. If the four group members contrbute a total of 10 ponts to the group account, you and the other members of your group each earn 10 x 0.4 = 4 ponts out of the group account. Total ncome: Your total ncome s the sum of your ncome from your prvate account and that from the group account: Income from your prvate account (= 20 contrbuton to group account) + Income from group account (= 0,4 sum of contrbutons to group account) = Total ncome Before we proceed, please try to solve the control questons on your screen. If you want to compute somethng, you can use the Wndows calculator by clckng on the respectve symbol on your screen. 43

45 Procedure of Part I Part I ncludes the decson stuaton just descrbed to you. The decsons n Part I wll only be made once. On the frst screen you wll be nformed about your group membershp number. Ths number wll be of relevance later on. If you have taken note of the number, please clck next. Then you have to make your decsons. As you know, you wll have 20 ponts at your dsposal. You can put them nto your prvate account or you can put them nto the group account. Each group member has to make two types of contrbuton decsons whch we wll refer to below as the uncondtonal contrbuton and the contrbuton table. In the uncondtonal contrbuton case you decde how many of the 20 ponts you want to put nto the group account. Please nsert your uncondtonal contrbuton n the respectve box on your screen. You can nsert nteger numbers only. Your contrbuton to the prvate account s determned automatcally by the dfference between 20 and your contrbuton to the group account. After you have chosen your uncondtonal contrbuton, please clck next. On the next screen you are asked to fll n a contrbuton table. In the contrbuton table you ndcate how much you want to contrbute to the group account for each possble average contrbuton of the other group members (rounded to the next nteger). Thus, you can condton your contrbuton on the other group members average contrbuton. The contrbuton table looks as follows: The numbers n each of the left columns are the possble (rounded) average contrbutons of the other group members to the group account. Ths means, they represent the amount each of the other group members has put nto the group account on average. You smply have to nsert nto the nput boxes how many ponts you want to contrbute to the group account condtonal on the ndcated average contrbuton. You have to make an entry 44