Optimal Policies and Socially Oriented Behavior: Some Problematic Effects of an Incentive Compatible Device |
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| Authors: | Frohlich Norman Oppenheimer Joe |
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| Affiliation: | 1. I.H. Asper School of Business, University of Manitoba, Winnipeg, MB, R3T 5V4, Canada
2. Department of Government and Politics, University of Maryland, College Park, MD, 20742, USA
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| Abstract: | Mancur Olson was pivotalin identifying the formal structure ofcollective action and the problems ofachieving optimal social outcomes with it. Using experimental methods, an incentivecompatible device is introduced in a5-person prisoner's dilemma. Thearrangements reflect constructs of Harsanyiand Rawls designed to identify optimal andfair outcomes. The device moves groupstowards optimality but its removalnegatively affects subsequent behavior,compared to a control with no ICD. Thisspill-over problem seems to reflect aweakened connection between sociallyoriented values and behavior, suggestingthat ICD's may have unanticipated negativeexternalities. |
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