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Spillover effects of institutions on cooperative behavior, preferences, and beliefs


Engl, Florian; Riedl, Arno; Weber, Roberto A (2017). Spillover effects of institutions on cooperative behavior, preferences, and beliefs. CESifo Working Paper 6504, CESifo Group.

Abstract

Institutions are an important means for fostering prosocial behaviors, but in many contexts their scope is limited and they govern only a subset of all socially desirable acts. We study experimentally how the presence and nature of an institution that enforces prosocial behavior in one domain affects behavior in a similar but unregulated domain. Groups play two identical public good games, with cooperation institutionally enforced in one game. The presence of an institution in one game generally enhances cooperation in the other game, thus documenting a positive spillover effect. These indirect spillover effects are economically substantial, amounting up to 30 to 40 percent of the direct effect of institutions. In addition, we find evidence for sequential spillover effects, meaning that behavior is affected by the institution even after it is removed. We also observe that institutions enhance prosocial preferences and beliefs about others’ prosocial behavior, even toward strangers, suggesting that both factors are drivers of the observed spillover effects. We further explore other aspects influencing spillover effects, including characteristics of an institution, such as whether it is exogenously imposed or endogenously determined.

Abstract

Institutions are an important means for fostering prosocial behaviors, but in many contexts their scope is limited and they govern only a subset of all socially desirable acts. We study experimentally how the presence and nature of an institution that enforces prosocial behavior in one domain affects behavior in a similar but unregulated domain. Groups play two identical public good games, with cooperation institutionally enforced in one game. The presence of an institution in one game generally enhances cooperation in the other game, thus documenting a positive spillover effect. These indirect spillover effects are economically substantial, amounting up to 30 to 40 percent of the direct effect of institutions. In addition, we find evidence for sequential spillover effects, meaning that behavior is affected by the institution even after it is removed. We also observe that institutions enhance prosocial preferences and beliefs about others’ prosocial behavior, even toward strangers, suggesting that both factors are drivers of the observed spillover effects. We further explore other aspects influencing spillover effects, including characteristics of an institution, such as whether it is exogenously imposed or endogenously determined.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:C920, D020, D720, H410
Uncontrolled Keywords:Public goods, institutions, spillover effect, social preferences, beliefs
Language:English
Date:May 2017
Deposited On:29 Jan 2018 10:49
Last Modified:30 Jul 2018 06:41
Series Name:CESifo Working Paper
Number of Pages:72
ISSN:2364‐1428
Additional Information:Also published as IZA Discussion Paper No. 10781.
OA Status:Green
Official URL:http://www.cesifo-group.de/ifoHome/publications/docbase/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2017/wp-cesifo-2017-05/12012017006504

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