Yu-Hsuan Lin Catholic University of Korea, Korea University of York, U.K. 5 th Congress of EAAERE, Taipei, 06 th – 07 th August 2015

 Motivation  Literature review  Model  Experimental design and results  Conclusion 2

 Since Barrett (1994), the literature on IEAs largely assumes that countries join an IEA for their self- interests.  However, recent experimental evidences on IEAs suggest that people are far less likely to free ride and more likely to cooperate than the theory suggests (Kosfeld et al., 2009; Burger and Kolstad, 2010).  Existing research on IEAs largely presume that an individual's preference is egoistic/selfish. However, the assumption of a pure egoistic preference may not be enough to capture players behaviours. 3

 Kosfeld et al. (2009), Lin (2014) employed the inequality- averse preference (proposed by Fehr and Schmidt, 1999) and confirm with laboratory-based evidence that when inequality-averse players exist, the coalition is no longer a Nash prediction, and the grand coalition becomes an expected equilibrium outcome.  Kolstad (2012) adopts Charness and Rabin's (2002) social preferences theory which suggest that agents mainly care about three things : private payoff, fairness in payoffs, and overall efficiency.  Individual incentives for participating in a coalition are still unclear. 4

 Does players change their decisions if they are altruists?  How do individuals' social preferences affect their own incentives for participating in a public good game?  The hypothesis of this study assumes that the attitude of altruism would influence the equilibrium differently from the egoistic preference. This entails that a coalition would be formed differently when individuals care about others agents’ payoffs. 5

Models 6

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Experimental Design and Results 11

12  The experiment was conducted at the centre for EXperimental EConomics (EXEC) laboratory at the University of York (UK) in 2013 and programmed with z-Tree (Fischbacher, 2007). There were 50 subjects who were registered on the ORSEE registration system by Greiner (2004).

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15 Altruism testCoalition game Aim Find individual altruistic attitude Find individual willingness to contribute a public good Game players 25 Rounds (Four sub-treatments in 15 rounds)

Altruistic test 16

List of values of the token and exchange rate Round 1 £ £ 10£ £ 7.5£ £ 5£ £ 2.5£ £ 7.5£ £ 5£ £ 0.5£ £ 5£ £ 2.5£ Round 11 £ 1£ £ 2.5£ £ 2.5£ £ 0.5£ £ 1£ £ 1£ £ 0.5£ £ 1£ £ 0.5£ £ 0.5£

Altruistic test 18 £ 0.5 v.s. £ 1 v.s. £ 1 £ 5 v.s. £ 10.5 £ 2.5 v.s. £ 5.5 £ 1 v.s. £ 2.5 £ 0.5 v.s. £ 2.5 £ 0.5 v.s. £ 5 £ 0.5 v.s. £ 10

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OLS estimation of altruistic preference Variable Altruism level OLS Regression Constant term Age Politic attitude Religion Log Likelihood Total Observation50 20

Summary  The subjects who identified themselves with stronger religious belief behaved less altruistically. Whilst the rest factors have insignificant impacts on the subjects' altruistic attitudes. 21

Part 2. Public good game 22

In each round of this Part, subjects simply to decide, simultaneously and independently, whether or not to join a coalition with the other players. If a profitable coalition is formed, the individual payoffs are shown in the payoff tables. If a profitable coalition is not formed, everyone gets nothing. There follows a sample payoff table, in which ‘IN’ means that the player has chosen to join the coalition and ‘OUT’ means that they have not. 23

PLAYER 1PLAYER 2PLAYER 3PLAYER 4PLAYER 5 IN6.75IN6.75IN6.75IN6.75IN6.75 IN3.75OUT12IN3.75IN3.75IN3.75 OUT9IN4.5IN4.5IN4.5IN4.5 OUT6.75OUT9IN1.5IN1.5IN1.5 In the rest of the combinations, every players has “0” 24

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27 Group 1 Group 2 Group 3 Group 4

28 Group 5 Group 6 Group 7 Group 8 Group 9 Group 10

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Summary  Overall, either the decision made in the past round or the subject's weakly dominant strategy is joining, the subject is more likely to join. The religious believer are less likely to join the IEA.  The lower altruistic attitude a subject has, the more likely the subject is to violate the external constraint and participate in the coalition.  Pro-right-wing supporters are more likely to break the internal constraint by not joining the coalition. However, when the subjects have the chance to free ride, pro- right-wingers are more likely to give up this chance. 30

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 Compared to the actual decisions, the predictions with altruistic attitudes have better performance than the self-interested predictions. When subject's dominant strategy is to join the coalition, the predictions with altruistic attitude perform same to the self-interested predictions. On the other hand, when subject's dominant strategy is not to join the coalition, the predictions with altruistic attitude are slightly superior to the self-interested predictions.  The estimations illustrate the subjects' motivations. The rate of cooperation in a coalition game seems to be negatively correlated with the magnitude of altruistic preferences: the lower the degree of altruistic preference, the more is the cooperation. 34

Further discussion  Strategic behaviours have been observed in our experiments: it may be difficult to infer countries' true preferences for altruism from their observed behaviour.  Social preference might have a learning process in group cooperation. 35

 Full paper is available  36