Behavioral market design.

When it comes to behavioral change, economic design and behavioral science are complements, not substitutes. Chater & Loewenstein give examples from policy design. In this commentary, I use examples, often from my own research, to show how behavioral insights inform the design of the rules that govern market transactions.

Behavioral Economics Interventions to Improve Medical Decision-Making.

BACKGROUND: In medicine, a wide gap exists between the medical care that ought to be possible in the light of the current state of medical research and the care that is actually provided. Behavioral biases and noise are two major reasons for this. METHODS: We present the findings of a selective literature review and illustrate how interventions based on behavioral economics can help physicians make better decisions and thereby improve treatment outcomes. RESULTS: A number of behavioral economics interventions, making use of, for example, default settings, active decision rules, social norms, and self-commitments, may improve physicians' clinical decision-making. Evidence on long-term effects is, however, mostly lacking. CONCLUSION: Despite their apparent potential, the application of behavioral economic interventions to improve medical decisionmaking is still in its infancy, particularly in Germany.

Large but diminishing effects of climate action nudges under rising costs.

Behavioural public policy has received broad research attention, particularly in the domain of motivating pro-environmental behaviours. We investigate how far the efficacy of arguably one the most popular behavioural policy tools (green 'default change' nudges) depends on the associated cost. On the basis of a field study involving carbon offsets for over 30,000 flights booked by more than 11,000 airline customers, we show that green defaults have a large effect on voluntary climate action, even when several hundreds of Euros are at stake. The effect fully vanishes only as costs approach approximately €800.

Focusing climate negotiations on a uniform common commitment can promote cooperation.

International cooperation on the reduction of greenhouse gas emissions, disarmament, or free trade needs to be negotiated. The success of such negotiations depends on how they are designed. In the context of international climate change policy, it has been proposed [e.g., M. L. Weitzman J. Assoc. Environ. Resour. Econ. 1, 29-49 (2014)] that shifting the negotiation focus to a uniform common commitment (such as a uniform minimum carbon price) would lead to more ambitious cooperation. Yet, a proof-of-concept for this important claim is lacking. Based on game theoretical analyses, we present experimental evidence that strongly supports this conjecture. In our study, human subjects negotiate contributions to a public good. Subjects differ in their benefits and costs of cooperation. Participation in the negotiations and all commitments are voluntary. We consider treatments in which agreements are enforceable, and treatments in which they have to be self-enforcing. In both situations, negotiating a uniform common commitment is more successful in promoting cooperation than negotiating individual commitments (as in the Paris Agreement) and complex common commitments that tailor the commitment to the specific situation of each party (as attempted with the Kyoto Protocol). Furthermore, as suggested by our model, a uniform common commitment benefits most from being enforced.

Trust in everyday life.

Although trust plays a pivotal role in many aspects of life, very little is known about the manifestation of trust and distrust in everyday life. In this work, we integrated several prior approaches to trust and investigated the prevalence and key determinants of trust (vs. distrust) in people's natural environments, using preregistered experience-sampling methodology. Across more than 4,500 social interactions from a heterogeneous sample of 427 participants, results showed high average levels of trust, but also considerable variability in trust across contexts. This variability was attributable to aspects of trustee perception, social distance, as well as 3 key dimensions of situational interdependence: conflict of interests, information (un)certainty, and power imbalance. At the dispositional level, average everyday trust was shaped by general trust, moral identity, and zero-sum beliefs. The social scope of most trust-related traits, however, was moderated by social distance: Whereas moral identity buffered against distrusting distant targets, high general distrust and low social value orientation amplified trust differences between close vs. distant others. Furthermore, a laboratory-based trust game predicted everyday trust only with regard to more distant but not close interaction partners. Finally, everyday trust was linked to self-disclosure and to cooperation, particularly in situations of high conflict between interaction partners' interests. We conclude that trust can be conceptualized as a relational hub that interconnects the social perception of the trustee, the relational closeness between trustor and trustee, key structural features of situational interdependence, and behavioral response options such as self-disclosure. (PsycInfo Database Record (c) 2021 APA, all rights reserved).

Exposure to Hedione Increases Reciprocity in Humans.

Cooperation among unrelated humans is frequently regarded as a defining feature in the evolutionary success of our species. Whereas, much research has addressed the strategic and cognitive mechanisms that underlie cooperation, investigations into chemosensory processes have received very limited research attention. To bridge that gap, we build on recent research that has identified the chemically synthesized odorant Hedione (HED) as a ligand for the putative human pheromone receptor (VN1R1) expressed in the olfactory mucosa, and hypothesize that exposure to HED may increase reciprocity. Applying behavioral economics paradigms, the present research shows that exposure to the ligand causes differentiated behavioral effects in reciprocal punishments (Study 1) as well as rewards (Study 2), two types of behaviors that are frequently regarded as essential for the development and maintenance of cooperation.

Similarity increases altruistic punishment in humans.

Humans are attracted to similar others. As a consequence, social networks are homogeneous in sociodemographic, intrapersonal, and other characteristics--a principle called homophily. Despite abundant evidence showing the importance of interpersonal similarity and homophily for human relationships, their behavioral correlates and cognitive foundations are poorly understood. Here, we show that perceived similarity substantially increases altruistic punishment, a key mechanism underlying human cooperation. We induced (dis)similarity perception by manipulating basic cognitive mechanisms in an economic cooperation game that included a punishment phase. We found that similarity-focused participants were more willing to punish others' uncooperative behavior. This influence of similarity is not explained by group identity, which has the opposite effect on altruistic punishment. Our findings demonstrate that pure similarity promotes reciprocity in ways known to encourage cooperation. At the same time, the increased willingness to punish norm violations among similarity-focused participants provides a rationale for why similar people are more likely to build stable social relationships. Finally, our findings show that altruistic punishment is differentially involved in encouraging cooperation under pure similarity vs. in-group conditions.

Is it all about the self? The effect of self-control depletion on ultimatum game proposers.

In the ultimatum-game, as in many real-life social exchange situations, the selfish motive to maximize own gains conflicts with fairness preferences. In the present study we manipulated the availability of cognitive-control resources for ultimatum-game proposers to test whether preference for fairness is a deliberative cognitive-controlled act or an automatic act. In two experiments we found that a shortage of cognitive control (ego depletion) led proposers in the ultimatum game (UG) to propose significantly more equal split offers than non-depleted proposers. These results can be interpreted as resulting from an automatic concern for fairness, or from a greater fear of rejection, which would be in line with a purely self-interested response. To separate these competing explanations, in Experiment 2 we conducted a dictator-game in which the responder cannot reject the offer. In contrast to the increased fairness behavior demonstrated by depleted ultimatum-game proposers, we found that depleted dictator-game allocators chose the equal split significantly less often than non-depleted allocators. These results indicate that fairness preferences are automatically driven among UG proposers. The automatic fair behavior, however, at least partially reflects concern about self-interest gain. We discuss different explanations for these results.

The agencies method for coalition formation in experimental games.

In society, power is often transferred to another person or group. A previous work studied the evolution of cooperation among robot players through a coalition formation game with a non-cooperative procedure of acceptance of an agency of another player. Motivated by this previous work, we conduct a laboratory experiment on finitely repeated three-person coalition formation games. Human players with different strength according to the coalition payoffs can accept a transfer of power to another player, the agent, who then distributes the coalition payoffs. We find that the agencies method for coalition formation is quite successful in promoting efficiency. However, the agent faces a tension between short-term incentives of not equally distributing the coalition payoff and the long-term concern to keep cooperation going. In a given round, the strong player in our experiment often resolves this tension approximately in line with the Shapley value and the nucleolus. Yet aggregated over all rounds, the payoff differences between players are rather small, and the equal division of payoffs predicts about 80% of all groups best. One reason is that the voting procedure appears to induce a balance of power, independent of the individual player's strength: Selfish subjects tend to be voted out of their agency and are further disciplined by reciprocal behaviors.