Delineating the Interplay of Social Preferences and Explicit Incentives: An Agent-Based Simulation in a Public Goods Paradigm

• Published in: Computational economics Vol. 66; no. 3; pp. 2077 - 2108
• Main Authors: Colasante, Annarita, Gil-Gallen, Sara, Morone, Andrea
• Format: Journal Article
• Language: English
• Published: New York Springer US 21.11.2024
• Subjects: Behavioral/Experimental Economics; Computer Appl. in Social and Behavioral Sciences; Economic Theory/Quantitative Economics/Mathematical Methods; Economics; Economics and Finance; Math Applications in Computer Science; Operations Research/Decision Theory; Competition; Public good game; H41; E17; C92; Agent-based model; Social preferences
• ISSN: 0927-7099; 1572-9974
• DOI: 10.1007/s10614-024-10751-w

The present research aimed at investigating changes in contributions made within a public goods game (PGG) across varying conditions: a standard PGG, a PGG involving risky returns, and a PGG involving competition for heterogeneous returns. The empirical results, collected through a one-shot laboratory experiment, informed the classification of subject types and facilitated the calibration of an agent-based model (ABM). This model, populated by heterogeneous agents differentiated by social preferences, served two primary purposes: first, to analyze changes in contributions made under the specified conditions; and second, to evaluate the effect of varying proportions of unconditional cooperators. To achieve these aims, we compared contributions made under different incentive schemes and varying compositions of unconditional cooperators and free riders. The analysis enabled us to assess whether cooperation was better sustained by enhancing incentives or fostering prosocial preferences. Notably, the findings suggest that, while the most effective strategy for sustaining contributions is a monetary incentive involving competition for the highest return, a comparable outcome can be achieved by shaping individual preferences. The results point to the multifaceted nature of human cooperation and the potential for non-monetary incentives to shape cooperative behavior.