Alexander Smith - Research

Published Papers

Working Papers

Work in Progress

Published Papers

Smith, Alexander (2015). "Contribution Heterogeneity and the Dynamics of Contributions in Repeated Public Good Games." Journal of Behavioral and Experimental Economics, forthcoming.

Using data from four previous experiments, I examine the relationship between contribution heterogeneity and the changes in average contributions that occur from round to round. Specifically, I develop and test the hypothesis that when there is greater contribution heterogeneity in a particular round, average contributions will decrease more between the current round and the next round, all else being equal. I find strong support for my hypothesis with partner and stranger matching, and with and without belief elicitation about the average contributions of others. When beliefs are elicited, changes in average contributions tend to be positively associated with changes in average beliefs, but the relationship is not as strong as the one between changes in average contributions and contribution heterogeneity. In order to determine the driving force underlying the empirical relationship between contribution heterogeneity and changes in average contributions, I simulate contributions under different counterfactual assumptions about belief heterogeneity and contribution preference heterogeneity using one of the data sets. I compare the simulation models in terms of how well each matches the data. The simulations indicate that contribution preference heterogeneity is a stronger factor underlying the dynamics of contributions than belief heterogeneity.

Smith, Aleander (2015). "Modeling the Dynamics of Contributions and Beliefs in Repeated Public Good Games." Economics Bulletin, 35(3), 1501-1509.

I estimate a simultaneous equations model of contributions and beliefs in a repeated public good game, providing causal estimates of the effect of beliefs on contributions and the effect of contributions on beliefs, also known as the projection bias.

Smith, Alexander (2015). "On the Nature of Pessimism in Taking and Giving Games." Journal of Behavioral and Experimental Economics, 54(1), 50-57.

I study allocations and beliefs about allocations in taking and giving games. The allocations are not significantly different between the two games, providing evidence on the isomorphism (equivalence) of taking and giving. In both games, the passive players are pessimistic about (underestimate) their allocations. However, the nature of the pessimism varies. In the taking game, takees underestimate the average allocation of takees and expect that their allocations will be lower than the average. In the giving game, recipients underestimate the average amount received, but do not expect allocations different from the average. The results therefore indicate that framing (taking versus giving) affects the reasons for which beliefs are biased. Third parties also underestimate the average allocations of takees and recipients, suggesting that takees' and recipients' biased expectations about average allocations are not attributable to having monetary stakes in the game. I also find that the effect of the decision-maker's gender on allocations varies by game, takees' beliefs are related to trust, and recipients' beliefs relate to knowing more people.

Saeed, Khalid, Oleg Pavlov, Jeanine Skorinko and Alexander Smith (2013). "Farmers, Bandits and Soldiers: A Generic System for Addressing Peace Agendas." System Dynamics Review, 29(4), 237-252.

We propose a generic model that explains why political systems tend toward certain outcomes. The model identifies possible economic and psychological paths toward change in a metaphorical political economy consisting of farmers, bandits and soldiers. In addition to economic factors, we also consider how two psychological factors, broadly categorized as group identity and exposure to violence, affect the behavior of metaphorical agents. We find that though outcomes tend to be similar with and without the psychological influences, the psychological influences accelerate the adjustment process and create additional policy space for interventions. A methodological contribution of the paper is the use of summary performance measures represented as phase plots that have the potential to be used with advantage in system dynamics analyses.

Smith, Alexander (2013). "Estimating the Causal Effect of Beliefs on Contributions in Repeated Public Good Games." Experimental Economics, 16(3), 414-425.

I use instrumental variables for estimating the causal effect of beliefs on contributions in repeated public good games. The effect is about half as large as suggested by ordinary least squares. Thus, I present evidence that beliefs have a causal effect on contributions, but also that beliefs are endogenous. I compare the causal, belief-based model of contributions to alternative models based on matching the previous contributions of others and responding to one's deviation from the average in the previous round. The causal, belief-based model performs well, indicating that beliefs have a central role in determining contributions.

Smith, Alexander (2013). "Reciprocity Effects in the Trust Game." Games, 4(3), 367-374.

I use data from a previous experiment for classifying subjects based on their behavior in the trust game. Prior literature defines a reciprocity effect as the tendency for Second Movers to return proportions increasing in the amounts that they receive. In the data that I use, 31% of Second Movers show reciprocity effects, 31% are neutral, and 25% consistently free-ride, indicating that the aggregate reciprocity effect for the sample as a whole is attributable to a minority of the subjects.

Smith, Alexander (2012). "The Changing Effects of Community Characteristics on Volunteering in Canada." Canadian Public Policy, 38(3), 361-373.

This paper examines the effects of community characteristics on volunteering using data from two cycles of the Canadian Survey of Giving, Volunteering and Participating (2004 and 2007). Controlling for many individual factors, I find evidence that in 2004, volunteering was decreasing in population, income inequality and shares of foreign-born residents. For 2007, there is no evidence that any of the community characteristics had significant effects, suggesting that Canada's large communities were coping increasingly well with rising income inequality and birthplace diversity.

Smith, Alexander (2012). "Comment on Social Preferences, Beliefs, and the Dynamics of Free Riding in Public Good Experiments." Economics Bulletin, 32(1), 923-931.

Fischbacher and Gaechter (AER, 2010) find that contributions decline in repeatedly played public good games because people are imperfect conditional cooperators who match others' contributions only partly. I re-examine the data using dynamic panel data methods and find that contributions also decline because people only partially match their own contributions from previous periods. I discuss possible interpretations.

Smith, Alexander (2011). "Group Composition and Conditional Cooperation." Journal of Socio-Economics, 40(5), 616-622.

This paper examines how group composition affects conditional cooperation in public good games. Identity was created using a team-building activity and subjects were assigned to groups of six with varying proportions of subjects from two teams. Majority members contributed more to the public good than minority members. However, contributions were mainly related to beliefs about the contributions of others, especially others from the same teams, rather than minority/majority status.

Smith, Alexander (2011). "Identifying In-Group and Out-Group Effects in the Trust Game." B.E. Journal of Economic Analysis & Policy, 11(1)-Topics, Article 38.

This paper presents an experiment measuring how lab-induced group identity affects trust and trustworthiness in a repeated trust game with random matching. Identity had positive in-group and negative out-group effects on trust. However, the in-group effect was small and statistically insignificant, while the out-group effect was large. Trustworthiness was determined mainly by reciprocity effects.

Smith, Alexander (2011). "Income Inequality in the Trust Game." Economics Letters, 111(1), 54-56.

This paper presents an experiment measuring how lab-induced income inequality affects trust and trustworthiness. Low endowment subjects paired with high endowment subjects showed more trust than subjects in other pairs; this trust was reciprocated with high trustworthiness.

Working Papers

"Investing in Institutions for Cooperation." With Xi Wen (WPI Student). Under review. (pdf)

We present a voluntary contribution mechanism public good game experiment on investing in contribution productivity and contributing to provision. Subjects collectively decide (by voting) how much to invest in augmenting the technology for producing the public good and subsequently make individual voluntary contributions to provision, as in conventional public good games. Investment increases the incentive to contribute by raising the return on contributions to the public good (the incentive effect), but also leaves subjects with less money from which to make their contributions (the budget effect), making the relationship between investment and contributions an empirical question. Compared to the game's social optimum, the subjects do well with investment; the primary source of loss is their contribution behavior. Regarding the relationship between investment and contributions, absolute contribution amounts are not significantly related to investment, suggesting that the incentive and budget effects approximately offset each other.

"On the Equivalence of Giving Using the Sequential and Strategy Methods." Under review. (pdf)

I compare giving decisions elicited using the sequential and strategy methods. With both methods, subjects choose gift amounts for four wealth conditions. In the wealth condition with the lowest giving, the difference in giving between methods is not significant. In the other three conditions, giving is higher with the strategy method than with the sequential method. Regarding the effects of the wealth conditions, relative wealth has larger effects on giving with the strategy method than with the sequential method.

"Reward the Lucky - The Effect of Delegated Risk-taking on Altruism." With Angela C. M. de Oliveira and John Spraggon.

We examine the impact of agency and luck on bonuses in a two player, two stage lab experiment. In the first stage, Player A makes an investment decision on behalf of Player B. In the second stage, Player B makes a dictator allocation for each possible outcome from the investment. We compare the dictator gifts (bonuses) across outcomes and with a control treatment in which the stage 1 outcomes are determined randomly. We find a marginal tendency to punish agency in general and a significant tendency to punish agents who were unlucky.

"Using Cognitive Dissonance to Manipulate Social Preferences." With Robert J. Oxoby.

We explore the role of cognitive dissonance in dictator and public goods games. Specifically, we motivate cognitive dissonance between one's perception of "fair treatment" and self-interested behaviour by having participants answer a question about fairness. Utilizing two manipulations (reminding participants about their answer to the fairness question and publicly reporting aggregate answers to the question), we find that there is greater cognitive dissonance and behavioural change when there is a social component (i.e., reporting of aggregate answers). When a participant's answer to the fairness question is private, there is less dissonance and hence no behavioural change.

Work in Progress

"Heterogeneous Beliefs, Conditional Cooperation and Contributions Decay in a Laboratory Public Goods Game." With Ananish Chaudhuri and Tirnud Paichayontvijit.

"Investing in Durable Technologies for Producing Public Goods." With Jacqueline Ngo (WPI Student).

"Shock Value: On the Precursors and Consequences of Changes in Contributions in Repeated Public Good Games."

"Dynamic Common Pool Resource Experiments."