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Identification of Other-Regarding Preferences: Evidence from a Common Pool Resource Game in Colombia

27 Pages Posted: 23 Jul 2015  

Sandra Polania-Reyes

University College London - Department of Economics

David Felipe Echeverry Perez

UC Berkeley - Haas Business School

Date Written: March 27, 2015

Abstract

Social preferences have been important to the explanation of deviations from Nash equilibrium in game outcomes. An enduring challenge in any model of other-regarding preferences is to identify heterogeneity within the population. Using data from a common pool resource (CPR) game in the field with 1,095 individuals (21% students and 79% villagers, users of a CPR) we estimate a structural model including preferences for altruism, reciprocity and equity. We identify behavioral types using a latent class logit model. Exogenous determinants of type are examined such as socio-economic characteristics, perceptions on the CPR, perceived interest in cooperation among the community, whether the participant does volunteer work and whether the CPR is the household main economic activity of the household.

A competing explanation of deviations from Nash equilibrium is the existence of a cognitive factor: the construction of a best reply might make rational expectations about other players’ mistakes (e.g. quantal response equilibrium). Whilst a cognitive aspect would help the model better fit the data, we do not find much evidence for cognitive heterogeneity, and instead a great deal of behavioral heterogeneity. Choice prediction based on types is robust out of sample.

Keywords: Common-pool resources, social preferences, laboratory and field experiments, explicit incentives, inequity aversion, latent heterogeneity, finite mixture models

JEL Classification: Q2, C51, C23, C93, D64, H39, H41

Suggested Citation

Polania-Reyes, Sandra and Echeverry Perez, David Felipe, Identification of Other-Regarding Preferences: Evidence from a Common Pool Resource Game in Colombia (March 27, 2015). Available at SSRN: https://ssrn.com/abstract=2634244 or http://dx.doi.org/10.2139/ssrn.2634244

Sandra Polania-Reyes (Contact Author)

University College London - Department of Economics ( email )

Gower Street
London, WC1E 6BT
United Kingdom

David Felipe Echeverry Perez

UC Berkeley - Haas Business School ( email )

Berkeley, CA 94720-1900
United States

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