Institutions Fostering Public Goods Provision
“Never do an experiment on public good provision or the ultimatum game!” This advice was given by a senior colleague to a young mathematician (BR) joining the Selten group at the Bonn Laboratory in the late 1980s. A well-meant advice to someone entering t
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Institutions Fostering Public Goods Provision Ernst Fehr, Simon G€ achter, Manfred Milinski, and Bettina Rockenbach
“Never do an experiment on public good provision or the ultimatum game!” This advice was given by a senior colleague to a young mathematician (BR) joining the Selten group at the Bonn Laboratory in the late 1980s. A well-meant advice to someone entering the field of experimental economics, grounded in the colleague’s observation that simple games, like ultimatum, dictator or prisoners’ dilemma games have already been subject to numerous experimental studies and that more complicated settings are non-tractable. For hand-run experiments the degree of complexity seemed very restricted and computerized experiments faced serious technical limitations at that time. Today, more than 20 years later, we can look back to numerous intriguing new insights that have been gained through additional public-goods and ultimatum experiments. Some of them will be reviewed in this paper and some of them are co-authored by the formerly young mathematician who did not follow the advice of the senior colleague. Undisputable, technical progress has enriched our possibilities for handling richer and more complex games and experimental settings. This, however, is at best a necessary requirement. To conduct a good experiment, it needs a clever design which allows discriminating between conflicting explanations and guides to a positive behavioral theory of human behavior. Reinhard Selten is one of the most brilliant researchers and each of the authors experienced his razor-sharp arguments, especially when it comes to the design of an experiment. More than the technical progress behavioral
E. Fehr Institute for Empirical Research in Economics, University of Zurich, Bl€ umlisalpstrasse 10, CH-8006 Z€urich, Switzerland S. G€achter University of Nottingham, Sir Clive Granger Building, University Park, Nottingham NG7 2RD, UK M. Milinski Max Planck Institute for Evolutionary Biology, August-Thienemann-Str. 2, 24306 Pl€ on, Germany B. Rockenbach (*) Universit€at Erfurt, Postfach 900 221, 99105 Erfurt, Germany e-mail: [email protected]
A. Ockenfels and A. Sadrieh (eds.), The Selten School of Behavioral Economics, DOI 10.1007/978-3-642-13983-3_11, # Springer-Verlag Berlin Heidelberg 2010
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economics needed personalities like Reinhard Selten to advance to an indispensable field of economics. Reinhard Selten did not shy away from complexity. Think of his hand-run SINTO experiments (Becker and Selten 1970). He was most enthusiastic when thinking about completely new approaches of understanding human behavior. When students asked for his advice on a game or an experimental design that was “incremental” in his terms, i.e. a marginal variation either in the parameters or the game structure, they often received mild answers like “Tja, das ist auch nicht verboten, nich!”1 or even harsher ones like “Sie sind viel zu jung, um solch einen Unsinn zu machen”.2 His advice to conduct experiments which are pure
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