Boosey, Luke A., Isaac, R. Mark and Ramalingam, Abhijit. (2024). Limiting the Leader: Fairness concerns in team production with leader-determined monitoring, Journal of Economic Behavior & Organization, 218, 209–244. [Show/Hide Abstract]
We use a laboratory experiment to investigate the extent to which leaders—faced with opportunistic incentives—employ monitoring to improve team production. Participants are assigned to teams, with one person appointed as the leader. The leader has the power to commit to a monitoring option, which replaces the default equal sharing rule with one that distributes team revenue in proportion to individual investments. Additionally, the leader can announce a claim to a portion of the team revenue, which is paid before shares are distributed. The resulting game possesses multiple equilibria involving monitoring and full investment, characterized by the largest claim the non-leaders are willing to tolerate by the leader. We appeal to behavioral considerations of fairness that help to form sharper predictions that pivot around the notion that non-leaders limit the leader to a `fair claim'. In the experiments, leaders are only moderately successful at increasing team production as they claim too much or forgo the monitoring option too often, especially when it is costly to monitor. Still, when there is no cost of monitoring, nearly half of the leaders successfully increase team production towards full investment, by relying on constant monitoring and resisting the temptation to issue unfair claims. These results highlight the potential for opportunistic incentives to undermine efficiency-enhancing leadership, even when the leader can commit to her decisions.
Boosey, Luke A. and Goerg, Sebastian J. (2020). The timing of discretionary bonuses - effort, signals, and reciprocity, Games and Economic Behavior, 124, 254–280. [Show/Hide Abstract]
In a real-effort experiment, we investigate the relationship between reciprocity and the timing of discretionary bonuses in a two-period principal-agent (manager-worker) setting. We vary the timing of the manager's bonus decision in order to examine two main channels, reward and trust, through which discretionary bonuses may operate. Average worker performance improves when bonus decisions are made between the two periods, since both channels are simultaneously active. First-period output significantly increases as workers attempt to signal their trustworthiness to managers. When the bonus decision is made upfront or at the end, average output is no different than in a baseline setting without the bonus mechanism. Furthermore, output after a bonus is not paid decreases substantially, consistent with negative reciprocity. Our main findings are reinforced by using time spent on the available real leisure activity as an alternative measure of subjects' effort.
Boosey, Luke A., Brookins, Philip and Ryvkin, Dmitry. (2020). Information disclosure in contests with endogenous entry: an experiment, Management Science, 66(11), 5128–5150. [Show/Hide Abstract]
We use a laboratory experiment to study the effects of disclosing the number of active participants in contests with endogenous entry. At the first stage, potential participants decide whether to enter competition, and at the second stage, entrants choose their investments. In a 2×2 design, we manipulate the size of the outside option, ω, and whether the number of entrants is disclosed between the stages. Theory predicts more entry for lower ω and the levels of entry and aggregate investment to be independent of disclosure in all cases. We find empirical entry frequencies decreasing with ω. For aggregate investment, we find no effect of disclosure when ω is low but a strong positive effect of disclosure when ω is high. The difference is driven by substantial overinvestment in contests with a small, publicly known number of players contrasted by more restrained investment in contests in which the number of players is uncertain and may be small. The behavior under disclosure is explained by a combination of joy of winning and entry regret.
Boosey, Luke A., Isaac, R. Mark, Norton, Doug and Stinn, Joseph. (2020). Cooperation, contributor types, and control questions, Journal of Behavioral & Experimental Economics, 85: 101489. [Show/Hide Abstract]
A large number of experimental studies use the strategy method procedure introduced by Fischbacher, Gächter, and Fehr (Econ. Lett. 71:397-404, 2001) to measure individuals’ attitudes towards cooperation. The procedure elicits subjects’ strategic-form decisions in a one-shot game and classifies each subject as one of several different contributor types. In this paper, we examine the robustness of the procedure and its capacity to help explain the pattern of contributions observed in a separate, repeated game setting. Overall, we show that the elicited contributor types can explain behavior fairly well in the repeated game. Free-rider types contribute less than conditional cooperators, although we observe evidence consistent with strategic cooperation in the early periods of the repeated game. Nevertheless, by the last period, classified free-rider types converge to pure free-riding behavior. In addition, we highlight a potential methodological concern related to the use of control questions. We find that the inclusion of control questions increases (decreases) the proportion of free rider (conditional cooperator) types, but also leads to substantial wait times for many subjects. This raises concerns about the psychological impact of long wait times, through boredom, frustration, or spite, on the cooperative behavior of subjects in the laboratory setting.
Boosey, Luke A., Brookins, Philip and Ryvkin, Dmitry. (2019). Contests between groups of unknown size, Games and Economic Behavior, 113, 756–769. [Show/Hide Abstract]
We study group contests where group sizes are stochastic and unobservable to participants at the time of investment. When the joint distribution of group sizes is symmetric, with expected group size k, the symmetric equilibrium aggregate investment is lower than in a symmetric group contest with commonly known fixed group size k. A similar result holds for two groups with asymmetric distributions of sizes. For the symmetric case, the reduction in individual and aggregate investment due to group size uncertainty increases with the variance in relative group impacts. When group sizes are independent conditional on a common shock, a stochastic increase in the common shock mitigates the effect of group size uncertainty unless the common and idiosyncratic components of group size are strong complements. Finally, group size uncertainty undermines the robustness of the group size paradox otherwise present in the model.
Boosey, Luke A., Brookins, Philip and Ryvkin, Dmitry. (2017). Contests with group size uncertainty: Experimental evidence, Games and Economic Behavior, 105, 212–229. [Show/Hide Abstract]
In many contest situations, the number of participants is not observable at the time of investment. We design a laboratory experiment to study individual behavior in Tullock (lottery) contests with group size uncertainty. There is a fixed pool of n potential players, each with independent probability
of participating. We independently manipulate each of the parameters and test the implied comparative statics predictions. Our results provide considerable support for the theory, both in terms of comparative statics and point predictions. Most surprisingly, we find no evidence of overbidding in treatments where there is a nontrivial probability that group size is one. This stands in stark contrast to the robust overbidding observed in experimental contests with deterministic group size. We propose a one-parameter model that incorporates nonlinear probability weighting and a modified version of joy of winning, which we call Constant Winning Aspirations (CWA), and show that it neatly organizes all of our results.
Boosey, Luke A. (2017). Conditional cooperation in network public goods experiments, Journal of Behavioral & Experimental Economics, 69, 108–116. [Show/Hide Abstract]
This study investigates the pattern of contribution decisions in a network public goods game. In this game, each player’s payoff depends only on his own contribution and the contributions of his immediate neighbors in a circle network. As in the standard public goods game, we find substantial heterogeneity in behavior across subjects, including both unconditional free-riding and full cooperation, as well as conditional cooperation. We first examine the impact of different information conditions on conditional cooperation. At the aggregate level, we find that players who observe average payoff information about others contribute significantly less than those who observe average contribution information. We then investigate the extent to which conditional cooperators facilitate the spread of cooperation and free-riding behavior across the network. In groups with a single free-rider type, we show that individual contributions decay faster for players who are closer in the network to the free rider. On the other hand, in groups with a single unconditional full contributor type, players do not respond by converging to full cooperation. Instead, we find that proximity to the unconditional full contributor seems only to mitigate (or delay) the typical decline in contributions over time. These contrasting effects are consistent with the widespread claim that conditional cooperation is imperfect, or exhibits a self-serving bias.
Boosey, Luke A. and Isaac, R. Mark (2016). Asymmetric network monitoring and punishment in public goods experiments, Journal of Economic Behavior & Organization, 132 Part A, 26–41. [Show/Hide Abstract]
We extend the recent experimental literature on incomplete punishment networks in linear public goods games. In these games, we use an exogenous network to restrict both monitoring and the set of feasible punishment flows. In addition to two baseline structures (the Complete network and the Circle network), we examine a novel Asymmetric network in which both punishment responsibility and exposure differ across players. Average contributions are significantly lower in the Asymmetric network, driven entirely by the under-monitored player who faces only one potential punisher. We formulate and examine the hypothesis that asymmetry among a player's potential punishment targets may lead to discriminatory patterns of punishment. In particular, players might wish to punish targets for whom they are solely responsible discriminately more than targets for whom they share responsibility. The experimental data do not support this hypothesis, although they do suggest a compelling explanation as to why. Specifically, we find that the under-monitored player in the network retaliates against previous punishment significantly more often than others in the group, which deters their only potential punisher from issuing stronger sanctions. Thus, an additional complication of asymmetry in the network is that it may lead to more instances of anti-social retaliation, inhibiting the effectiveness of the decentralized punishment institution.
Boosey, Luke A. (2016). Competition in a posted-salary matching market under private information, The B.E. Journal of Theoretical Economics, 16(2), 599–631. [Show/Hide Abstract]
We study a posted-salary labor market in which firms engage in salary competition. Firms’ preferences over workers are private information, creating uncertainty about competitive pressure for different workers. We consider a baseline 2-firm, 2-worker model, then extend the analysis to larger markets by replicating the baseline. We characterize the unique Bayesian-Nash equilibrium, in which each firm type chooses a distributional strategy with interval support in the salary space. The main result shows that competition is localized, in the sense that firm types with a common most preferred worker choose non-overlapping, adjacent supports. We also provide numerical results to show that the equilibrium strategies in finite replicated markets converge to the corresponding equilibrium strategies in a market with a continuum of firms and workers.
Boosey, Luke A., Isaac, R. Mark and Norton, Douglas A. (2016). Passionate providers and the possibility of public commitment, in The WSPC Reference of Natural Resources and Environmental Policy in the Era of Global Change, Volume 4: Experimental Economics, edited by Anabela Botelho. Editor-in-Chief: Ariel Dinar. Singapore: World Scientific, chapter 3, pp. 43–69.
