When deviating from best responses, do people have a stronger propensity to increase or decrease other people's payoffs? Offerman (2002) finds that negative intentions are more likely to induce payoff decreases than positive intentions are to induce payoff increases. Using the Falk and Fischbacher (2006) model,the authors approach the same question as Offerman, but from a structural angle. This requires measuring what a subject predicts that other subjects predict that he will do (known as a subject's second-order expectations). This permits the authors to interpret any asymmetry in the propensities to increase and decrease payoffs in terms of the determinants of payoff increases and decreases. The results are largely consonant with Offerman (2002). The authors also find that in situations with exogenously created inequity (rather than inequity that is the result of an intentional action by an actor), payoff increase is more likely to be used to diminish the inequity than is payoff decrease. Our results exhibit some sensitivity to whether the authors obtain second-order expectations by eliciting them directly from the subject making the payoff increase/decrease decision or by inducing them by reporting to the decider the expectations of the target of the payoff increase/decrease.
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Citation (Chicago Style)
Al-Ubadyli, Omar and Min Sok Lee. "An Experimental Study of Asymmetric Reciprocity." Journal of Economic Behavior and Organization, Vol 72, No. 2, 2009.