Opportunism and the role of financial incentives: An experimental analysis based on game theory
Main Article Content
Abstract
In this study, we measured how people would take advantage of others’ misinformation, when the financial incentive size changes in economic games. We conducted a laboratory experiment based on game theory, using a modified version of the ultimatum game, where proposers had the opportunity to manipulate the responder’s beliefs by the use of ‘hide behind the small cake’ strategy. Our results contradict the selfish rationality model predictions. Intermediary financial incentives led people to adopt extremes strategies of pure fair/selfish allocation. Greater levels of financial incentive reduced the full expropriation strategy and at the same time, reduced the presence of fair offers, which suggests an interesting interaction between opportunism and psychological costs of lying. The results showed that opportunism is hugely context-dependent and people will update their decision regarding opportunism in accordance with the
financial size incentive. Thus, the same person can behave differently depending on the financial value involved and will not necessarily be more selfish when the financial amount increases.
Downloads
Download data is not yet available.
Article Details
How to Cite
Póvoa, A., Sakr, M., & Pech, W. (2023). Opportunism and the role of financial incentives: An experimental analysis based on game theory. Brazilian Administration Review, 20(2), e220014. https://doi.org/10.1590/1807-7692bar2023220014
Section
Research Articles
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
Abeler, J., Becker, A., & Falk, A. (2014). Representative evidence on lying costs. Journal of Public Economics, 113, 96-104. https://doi.org/10.1016/j.jpubeco.2014.01.005
Becker, G. S. (1968). Crime and punishment: An economic approach. Journal of Political Economy, 76(2), 169-217. https://www.jstor.org/stable/1830482
Besancenot, D., Dubart, D., & Vranceanu, R. (2013). The value of lies in an ultimatum game with imperfect information. Journal of Economic Behavior & Organization, 93, 239-247. https://doi.org/10.1016/j.jebo.2013.03.029
Charness, G., & Dufwenberg, M. (2006). Promises and partnership. Econometrica, 74(6), 1579-1601. https://doi.org/10.1111/j.1468-0262.2006.00719.x
Chavanne, D., & Ferreira, M. (2017). When knowledge is not power: Asymmetric information, probabilistic deceit detection and threats in ultimatum bargaining. Journal of Behavioral and Experimental Economics, 69, 4-17. https://doi.org/10.1016/j.socec.2017.05.004
Crawford, V. (2019). Experiments on cognition, communication, coordination, and cooperation in relationships. Annual Review of Economics, 11, 167-191. https://doi.org/10.1146/annurev-economics-080218-025730
Croson, R. (1996). Information in ultimatum games: An experimental study. Journal of Economic Behavior & Organization, 30(2), 197-212. https://doi.org/10.1016/S0167-2681(96)00857-8
Croson, R., Boles, T., & Murnighan, J. K. (2003). Cheap talk in bargaining experiments: Lying and threats in ultimatum games. Journal of Economic Behavior & Organization, 51(2), 143-159. https://doi.org/10.1016/S0167-2681(02)00092-6
Damme, E., Binmore, K. G., Roth, A. E., Samuelson, L., Winter, E., Bolton, G. E., et al. (2014). How Werner Güth's ultimatum game shaped our understanding of social behavior. Journal of Economic Behavior & Organization, 108, 292-318. https://doi.org/10.1016/j.jebo.2014.10.014
Fischbacher, U., & Föllmi-Heusi. F. (2008). Lies in disguise: An experimental study on cheating. Journal of the European Economic Association, 11(3) 525-547. https://doi.org/10.1111/jeea.12014
Gneezy, U. (2005). Deception: The role of consequences. American Economic Review, 95(1), 384-394. https://doi.org/10.1257/0002828053828662
Gneezy, U., Rockenbach, B., & Serra-Garcia, M. (2013). Measuring lying aversion. Journal of Economic Behavior & Organization, 93, 293-300. https://doi.org/10.1016/j.jebo.2013.03.025
Guth, W., Huck, S., & Ockenfels, P. (1996). Two-Level Ultimatum bargaining with incomplete information: An experimental study. Economic Journal, Royal Economic Society, 106(436), 593-604. https://doi.org/10.2307/2235565
Güth, W., & Kocher, M. G. (2014). More than thirty years of ultimatum bargaining experiments: Motives, variations, and a survey of the recent literature. Journal of Economic Behavior & Organization, 108, 396-409. https://doi.org/10.1016/j.jebo.2014.06.006
Güth, W., Schmittberger, R., & Schwarze, B. (1982). An experimental analysis of ultimatum bargaining. Journal of Economic Behavior & Organization, 3(4), 367-388. https://doi.org/10.1016/0167-2681(82)90011-7
Kajackaite, A., & Gneezy, U. (2017). Incentives and cheating. Games and Economic Behavior, 102, 433-444. https://doi.org/10.1016/j.geb.2017.01.015
Kriss, P. H., Nagel, R., & Weber, R. A. (2013). Implicit vs. explicit deception in ultimatum games with incomplete information. Journal of Economic Behavior & Organization, 93, 337-346. https://doi.org/10.1016/j.jebo.2013.03.024
Lambsdorff, J. G. (2012). Behavioral and experimental economics as a guidance to anticorruption. In D. Serra, & L. Wantchekon (Eds.), New advances in experimental research on corruption (Vol. 15, Chap. 10, pp. 279-299). Emerald Group Publishing Limited. https://doi.org/10.1108/S0193-2306(2012)0000015012
Lundquist, T., Ellingsen, T., Gribbe, E., & Johannesson, M. (2009). The aversion to lying. Journal of Economic Behavior & Organization, 70(1-2), 81-92. https://doi.org/10.1016/j.jebo.2009.02.010
Maggian, V., & Villeval, M. C. (2016). Social preferences and lying aversion in children. Experimental Economics, 19, 663-685. https://doi.org/10.1007/s10683-015-9459-7
Mazar, N., Amir, O., & Ariely, D. (2008). The dishonesty of honest people: A theory of self-concept maintenance. Journal of Marketing Research, 45(6), 633-644. https://doi.org/10.1509/jmkr.45.6.633
Mitzkewitz, M., & Nagel, R. (1993). Experimental results on ultimatum games with incomplete information. International Journal of Game Theory, 22, 171-198. https://doi.org/10.1007/BF01243649
Ockenfels, A., & Werner, P. (2012). Hiding behind a small cake’ in a newspaper dictator game. Journal of Economic Behavior and Organization, 82(1), 82-85.
Rosenbaum, S. M., Billinger, S., & Stieglitz, N. (2014). Let’s be honest: A review of experimental evidence of honesty and truth-telling. Journal of Economic Psychology, 45, 181-196. https://doi.org/10.1016/j.joep.2014.10.
Shalvi, S., Dana, J., Handgraaf, M. J. J., & De Dreu, C. K. W. (2011). Justified ethicality: Observing desired counterfactuals modifies ethical perceptions and behavior. Organizational Behavior and Human Decision Processes, 115(2), 181-190. https://doi.org/10.1016/j.obhdp.2011.02.001
Vranceanu, R., & Dubart, D. (2019). Deceitful communication in a sender-receiver experiment: Does everyone have a price? Journal of Behavioral and Experimental Economics, 79, 43-52. https://doi.org/10.1016/j.socec.2019.01.005
Willianson, O. E. (1979). Transaction-cost economics: The governance of contractual relations. The Journal of Law and Economics, 22(2), 233-261. https://doi.org/10.1086/466942
Becker, G. S. (1968). Crime and punishment: An economic approach. Journal of Political Economy, 76(2), 169-217. https://www.jstor.org/stable/1830482
Besancenot, D., Dubart, D., & Vranceanu, R. (2013). The value of lies in an ultimatum game with imperfect information. Journal of Economic Behavior & Organization, 93, 239-247. https://doi.org/10.1016/j.jebo.2013.03.029
Charness, G., & Dufwenberg, M. (2006). Promises and partnership. Econometrica, 74(6), 1579-1601. https://doi.org/10.1111/j.1468-0262.2006.00719.x
Chavanne, D., & Ferreira, M. (2017). When knowledge is not power: Asymmetric information, probabilistic deceit detection and threats in ultimatum bargaining. Journal of Behavioral and Experimental Economics, 69, 4-17. https://doi.org/10.1016/j.socec.2017.05.004
Crawford, V. (2019). Experiments on cognition, communication, coordination, and cooperation in relationships. Annual Review of Economics, 11, 167-191. https://doi.org/10.1146/annurev-economics-080218-025730
Croson, R. (1996). Information in ultimatum games: An experimental study. Journal of Economic Behavior & Organization, 30(2), 197-212. https://doi.org/10.1016/S0167-2681(96)00857-8
Croson, R., Boles, T., & Murnighan, J. K. (2003). Cheap talk in bargaining experiments: Lying and threats in ultimatum games. Journal of Economic Behavior & Organization, 51(2), 143-159. https://doi.org/10.1016/S0167-2681(02)00092-6
Damme, E., Binmore, K. G., Roth, A. E., Samuelson, L., Winter, E., Bolton, G. E., et al. (2014). How Werner Güth's ultimatum game shaped our understanding of social behavior. Journal of Economic Behavior & Organization, 108, 292-318. https://doi.org/10.1016/j.jebo.2014.10.014
Fischbacher, U., & Föllmi-Heusi. F. (2008). Lies in disguise: An experimental study on cheating. Journal of the European Economic Association, 11(3) 525-547. https://doi.org/10.1111/jeea.12014
Gneezy, U. (2005). Deception: The role of consequences. American Economic Review, 95(1), 384-394. https://doi.org/10.1257/0002828053828662
Gneezy, U., Rockenbach, B., & Serra-Garcia, M. (2013). Measuring lying aversion. Journal of Economic Behavior & Organization, 93, 293-300. https://doi.org/10.1016/j.jebo.2013.03.025
Guth, W., Huck, S., & Ockenfels, P. (1996). Two-Level Ultimatum bargaining with incomplete information: An experimental study. Economic Journal, Royal Economic Society, 106(436), 593-604. https://doi.org/10.2307/2235565
Güth, W., & Kocher, M. G. (2014). More than thirty years of ultimatum bargaining experiments: Motives, variations, and a survey of the recent literature. Journal of Economic Behavior & Organization, 108, 396-409. https://doi.org/10.1016/j.jebo.2014.06.006
Güth, W., Schmittberger, R., & Schwarze, B. (1982). An experimental analysis of ultimatum bargaining. Journal of Economic Behavior & Organization, 3(4), 367-388. https://doi.org/10.1016/0167-2681(82)90011-7
Kajackaite, A., & Gneezy, U. (2017). Incentives and cheating. Games and Economic Behavior, 102, 433-444. https://doi.org/10.1016/j.geb.2017.01.015
Kriss, P. H., Nagel, R., & Weber, R. A. (2013). Implicit vs. explicit deception in ultimatum games with incomplete information. Journal of Economic Behavior & Organization, 93, 337-346. https://doi.org/10.1016/j.jebo.2013.03.024
Lambsdorff, J. G. (2012). Behavioral and experimental economics as a guidance to anticorruption. In D. Serra, & L. Wantchekon (Eds.), New advances in experimental research on corruption (Vol. 15, Chap. 10, pp. 279-299). Emerald Group Publishing Limited. https://doi.org/10.1108/S0193-2306(2012)0000015012
Lundquist, T., Ellingsen, T., Gribbe, E., & Johannesson, M. (2009). The aversion to lying. Journal of Economic Behavior & Organization, 70(1-2), 81-92. https://doi.org/10.1016/j.jebo.2009.02.010
Maggian, V., & Villeval, M. C. (2016). Social preferences and lying aversion in children. Experimental Economics, 19, 663-685. https://doi.org/10.1007/s10683-015-9459-7
Mazar, N., Amir, O., & Ariely, D. (2008). The dishonesty of honest people: A theory of self-concept maintenance. Journal of Marketing Research, 45(6), 633-644. https://doi.org/10.1509/jmkr.45.6.633
Mitzkewitz, M., & Nagel, R. (1993). Experimental results on ultimatum games with incomplete information. International Journal of Game Theory, 22, 171-198. https://doi.org/10.1007/BF01243649
Ockenfels, A., & Werner, P. (2012). Hiding behind a small cake’ in a newspaper dictator game. Journal of Economic Behavior and Organization, 82(1), 82-85.
Rosenbaum, S. M., Billinger, S., & Stieglitz, N. (2014). Let’s be honest: A review of experimental evidence of honesty and truth-telling. Journal of Economic Psychology, 45, 181-196. https://doi.org/10.1016/j.joep.2014.10.
Shalvi, S., Dana, J., Handgraaf, M. J. J., & De Dreu, C. K. W. (2011). Justified ethicality: Observing desired counterfactuals modifies ethical perceptions and behavior. Organizational Behavior and Human Decision Processes, 115(2), 181-190. https://doi.org/10.1016/j.obhdp.2011.02.001
Vranceanu, R., & Dubart, D. (2019). Deceitful communication in a sender-receiver experiment: Does everyone have a price? Journal of Behavioral and Experimental Economics, 79, 43-52. https://doi.org/10.1016/j.socec.2019.01.005
Willianson, O. E. (1979). Transaction-cost economics: The governance of contractual relations. The Journal of Law and Economics, 22(2), 233-261. https://doi.org/10.1086/466942