Expressed Preferences and Behavior in Experimental Games

Abstract

Participants in experimental games typically can only choose actions, without making comments about other participants' future actions. In sequential two-person games, we allow first movers to express a preference between responder choices. We find that responder behavior differs substantially according to whether first movers express a hope for favorable or unfavorable treatment. After favorable first-mover play, allowing such preference expression increases both the expected social surplus and lowest payoff received by 20-30%. Responders largely ignore first movers' expressed preferences for favorable responses, however, when the first movers misbehave. As in earlier experiments without preference expression, subjects assign a high positive weight to another person's payoffs when ahead and misbehavior elicits a strong negative response. Logit regressions estimate the weight placed on another (non-misbehaving) person's payoffs to be positive, even when one is behind. There is suggestive evidence that positive reciprocity is enhanced when a preference for favorable treatment is expressed.

Keywords: Beliefs, Experiment, Expressed Preferences, Positive Reciprocity, Social Preferences

JEL Classification: A12, A13, B49, C70, C91, D63