In the Light of Evolution Volume VII: The Human Mental Machinery (2014) / Chapter Skim
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12 Powering Up with Indirect Reciprocity in a Large-Scale Field Experiment--Erez Yoeli, Moshe Hoffman, David G. Rand, and Martin A. Nowak
12 Powering Up with Indirect Reciprocity in a Large-Scale Field Experiment--Erez Yoeli, Moshe Hoffman, David G. Rand, and Martin A. Nowak
Pages 211-224
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From page 211... ...
The effect is nearly seven times larger than offering a $25 monetary incentive, the com * Federal Trade Commission, Washington, DC 20580; †Department of Computer Science and Engineering, University of California at San Diego, La Jolla, CA 92093; ‡Program for Evolutionary Dynamics, Harvard University, Cambridge, MA 02138; §Department of Psychology, Yale University, New Haven, CT 06520; and Departments of ║Mathematics and #Organismic and Evolutionary Biology, Harvard University, Cambridge, MA 02138.
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From page 212... ...
Furthermore, as predicted by indirect reciprocity, we provide evidence that reputational concerns are driving our observ ability effect. In sum, we show how indirect reciprocity can be harnessed to increase cooperation in a relevant, real-world public goods game.
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From page 213... ...
Supported by human language, reputation systems allow us to track the good and bad behavior of others and to use this information to incentivize cooperation. Whatever is specifically human about our mental machinery is derivative of human language, social intelligence, and thus indirect reciprocity (Cela-Conde and Ayala, 2007; Nowak and Highfield, 2011)
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Third, as a result, public goods cooperators will receive cooperation in future interactions whereas defectors will be denied cooperation, defected upon, or punished. Thus, indirect reciprocity creates an incentive to contribute to public goods and can promote the evolution of cooperation.
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. Moreover, experimental evidence indicates that indirect reciprocity is deeply entrenched in human psychology: subtle cues of observability have large effects on cooperation levels (Haley and Fessler, 2005; Burnham and Hare, 2007; Ernest-Jones et al., 2011; Powell et al., 2012)
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From page 216... ...
to participate in a demand response program. Residents who volunteered for this program allowed the utility to install a device that remotely curbs their central air conditioners when necessary: on days with unusually high demand or in the case of an unexpected plant or transmission failure.
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From page 217... ...
. All statistics presented are from probit regressions including various controls, with SEs clustered at the HOA level The effect of the observable treatment was nearly seven times that of offering a $25 incentive (the estimated effect of the incentive is 0.009; a Wald test rejects that the coefficients on observability and the $25 incentive are identical, P = 0.024)
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From page 218... ...
First, we tested whether the effect of the observable treatment was greater in apartment buildings compared with row houses and individual homes. In apartment buildings, residents are more likely to interact with their neighbors in public spaces, and signup sheets were typically posted in especially conspicuous locations.
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From page 219... ...
(A) Observability increased participation more in apartment buildings where residents are more likely to interact with their neighbors in public spaces and sign-up sheets were typically posted in especially conspicuous locations, compared with row houses or individual homes, where neighbors are less likely to interact and sign-up sheets were less easily visible by others.
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From page 220... ...
These results provide evidence that reputational concerns were the driving force behind the effect of observability in our study. Our study is part of a nascent literature exploring reputation and prosociality using field experiments.
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From page 221... ...
In our experiment, the observability mechanism was designed so that participation was automatically displayed to all: because sign-up sheets were posted in public areas, no special effort was required by individuals to spread reputational information. Most indirect reciprocity models, however, rely on individuals communicating information about the observed actions of others (Nowak and Sigmund, 2005)
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From page 222... ...
Reputational concerns might discourage financial institutions from taking excessive risk because of changes in the price at which they have to borrow. Or government agencies might reduce waste if the relevant statistics were readily accessible to the public.
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From page 223... ...
The experiment was incorporated into a routine marketing effort for a demand response program called SmartAC, which is designed to help prevent or shorten power interruptions by curbing demand from central air conditioners on days with unusually high demand, or in the case of an unexpected plant or transmission failure. The program is voluntary; subjects who participate contribute to a public good by contributing to the stability of the electrical grid in all of California, at the cost of some personal inconvenience and possibly some discomfort.
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From page 224... ...
Second, we varied whether subjects were offered a $25 incentive for signing up for the program. ACKNOWLEDGMENTS This research was partially funded by National Science Foundation Proposal 0752818, Russell Sage Foundation Award 980803, the Stigler Center for the Study of the Economy and the State's Energy Initiative, the University of Chicago Graduate School of Business, and the John Templeton Foundation.
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