Astrid Dannenberg*, Thomas Riechmann**, Bodo Sturm*, and Carsten Vogt*** *Centre for European Economic Research (ZEW) Mannheim **Otto-von-Guericke-University Magdeburg ***Leipzig University of Applied Sciences Supported by the German Research Foundation ESA 2007 World Meeting, Rome Inequity Aversion and Individual Behavior in Public Good Games: An Experimental Investigation

Utility of subject i in a two-person game: Objective of our study Low explanatory power of standard theory in social dilemmas to investigate the additional explanatory power of the Fehr and Schmidt (1999) inequity aversion model –α i ≥ 0 (aversion against disadvantageous inequality) –β i ≥ 0 (aversion against advantageous inequality) –β i < 1 and α i ≥ β i Assumptions:

Experimental Design I Games A and B (N = 492) Modified ultimatum and dictator games (similar to Blanco et al. ´06) Pure allocation games, i.e. no strategic interaction in order to elicit parameters α i and β i Game D (N = 160) Stage 1: as in Game C Stage 2: punishment option with constant marginal costs Step 1 Step 2 Game C (N = 160) certain α i -β i -types were matched in pairs Standard two-player Public-Good game, Partner design, 10 periods

Treatmentβ i, i = 1,2InformationObs. EGOβ i <.3yes35 MIXβ 1.3yes13 FAIRβ i >.3yes17 FAIR(ni)β i >.3no15 Treatment variables in Game C parameter β i information about co-player‘s type Experimental Design II

Hypotheses for Game C according to Fehr and Schmidt: 1.No contributions in EGO and MIX treatments 2.In FAIR, cooperation should be observed more frequently than in EGO and MIX. 3.In FAIR, cooperation should be observed more frequently than in FAIR(ni). Experimental Design III

Results: Games A&B No dispersion of α i Only 12% fulfill α i ≥ β i. Small negative correlation between β i and studying economics (Spearman‘s ρ = , p = 0.015)

Results: Effect of β i in Game C Last period Contributions: G FAIR > G EGO (MW U, p G MIX (MW U, p < 5%) H 0 that cooperation and defection (G < 3€) have the same probability, has to be rejected for FAIR, but not for EGO and MIX (Chi2, p < 5%).

Results: Effect of Information in Game C Last period: Contributions in FAIR are significantly higher than in FAIR(ni) (MW U, p < 5%). No difference between FAIR(ni) and EGO. No convergence between FAIR and FAIR(ni).

Conclusions Specific composition of groups significantly influences the subjects' performance in the PG games. Only parameter β i matters. As long as subjects are informed about the co-player’s type, “fair” groups contribute more than “egoistic” or “mixed” groups. This information cannot be extracted during the PG game.

Thank you for your attention!