Economic Inquiries into Pro-Social and Anti-Social Behavior Dissertation Zur Erlangung der Würde des Doktors der Wirtschafts- und Sozialwissenschaften (Doctor rerum politicarum) des Fachbereichs Volkswirtschaftslehre der Universität Hamburg vorgelegt von Menusch Khadjavi geboren am 14. Januar 1985 in Braunschweig Hamburg, den 30. September 2013 Vorsitzende: Prof. Dr. Anke Gerber Erstgutachter: Prof. Dr. Andreas Lange Zweitgutachter: Prof. Dr. Gerd Mühlheußer Datum der Disputation: 20. Dezember 2013 Acknowledgements I am indebted to Andreas Lange for his dedicated supervision, continuous encouragement and co-authorship of some of the work presented in this dissertation. Working at Andreas’ chair and doing research with him has been inspiring and a great privilege – making me feel like a child in a candy store. It is seldom that one may enjoy great freedom and caring support simultaneously. I am grateful to Anke Gerber and Gerd Mühlheußer for their commitment to my dissertation. Discussions on academic and private topics with Anke, Gerd and other colleagues at the University of Hamburg sweetened my everyday life. Amongst others, I would like to thank Leonie Baumann, Berno Büchel, Angelika Höllendörfer, Ute Lampalzer, Martin Leroch, Jannis Liedtke, Jakob Neitzel, Andreas Nicklisch and Philipp Schliffke for many good times. For their generous invitations and dedicated hosting I would like to thank Uri Gneezy at the University of California San Diego and Max Auffhammer at the University of California Berkeley. At conferences, courses and stays abroad, I have received valuable comments and encouragement for my research from and spent fun times with Anastasia Danilov, Susann Fiedler, Orsola Garofalo, Diogo Geraldes, Martin Kesternich, Marco Kleine, Johannes Müller- Trede, Silvia Saccardo, Paul Smeets, Jan Stoop, Janna Ter Meer, Daan van Soest, Roel van Veldhuizen and Lilia Zhurakhovska. The laboratory team led by Olaf Bock, including Sarah Mörtenhuber and Jan Papmeier, has been elementary for conducting experiments in the laboratory in Hamburg and in the field in Vechta. Thank you all for your help. Financial support by the Department of Economics and by Faculty of Economic and Social Sciences is gratefully acknowledged. On a personal note, I thank my fantastic friends in and around Braunschweig, friends from my times in Bayreuth and Delaware, my friends in Amsterdam, and my friends in the great city of Hamburg for their support and love during the last years. Finally, I am indebted to my caring family. You are the fundament of my motivation, courage and happiness. Thank you all, especially my parents, my grandmother and Kacana, for making my life beautiful. Hamburg, September 2013 “The maxims are, first, that the individual is not accountable to society for his actions, in so far as these concern the interests of no person but himself. Advice, instruction, persuasion, and avoidance by other people, if thought necessary by them for their own good, are the only measures by which society can justifiably express its dislike or disapprobation of his conduct. Secondly, that for such actions as are prejudicial to the interests of others, the individual is accountable, and may be subjected either to social or to legal punishments, if society is of opinion that the one or the other is requisite for its protection.” John Stuart Mill (1859, On Liberty, p. 104) Contents 1 Introduction ............................................................................................ 7 2 Doing Good or Doing Harm – Experimental Evidence on Giving and Taking in Public Good Games .................................................................... 13 2.1 Introduction ............................................................................................................................ 13 2.2 Experimental Design ............................................................................................................. 15 2.3 Results ...................................................................................................................................... 18 2.4 Implications for Theory and Policy .................................................................................... 23 2.5 Conclusion............................................................................................................................... 25 2.6 Appendix A: English Translation of the Experimental Instructions ............................ 27 3 Transparency and Accountability – Evidence from an Asymmetric Public Good Game ...................................................................................... 32 3.1 Introduction ............................................................................................................................ 32 3.2 Experimental Design ............................................................................................................. 37 3.3 Predictions ............................................................................................................................... 41 3.4 Results ...................................................................................................................................... 44 3.4.1 Public Good Provision ................................................................................................. 44 3.4.2 Disentangling Standard and Special Agents .............................................................. 48 3.4.3 The Use of Punishment ................................................................................................ 55 3.5 Conclusion............................................................................................................................... 59 3.6 Appendix A: English Translation of the Experimental Instructions ............................ 61 4 Setting the Bar – An Experimental Investigation of Immigration Requirements ............................................................................................... 67 4.1 Introduction ............................................................................................................................ 67 4.2 Experimental Design ............................................................................................................. 72 4.2.1 Two Dimensions of Immigration Policy ................................................................... 72 4.2.2 Formalization ................................................................................................................. 75 4.2.3 Predictions for Payoff Maximization ......................................................................... 76 4.2.4 Behavioral Economic Predictions .............................................................................. 78 4.2.5 Course of Events & Procedures ................................................................................. 79 4.3 Results ...................................................................................................................................... 80 4.4 Discussion ............................................................................................................................... 95 4.5 Conclusion............................................................................................................................... 96 4.6 Appendix A: Supplementary Figures and Tables ............................................................. 99 4.7 Appendix B: English Translation of the Experimental Instructions .......................... 102 5 Deterrence Works for Criminals ......................................................... 110 5.1 Introduction .......................................................................................................................... 110 5.2 Experimental Design ........................................................................................................... 113 5.2.1 The Stealing Game ...................................................................................................... 114 5.2.2 The Dictator Game ..................................................................................................... 117 5.2.3 Procedures .................................................................................................................... 118 5.3 Results .................................................................................................................................... 120 5.4 Conclusion............................................................................................................................. 124 5.5 Appendix A: English Translation of the Experimental Instructions .......................... 126 6 On the Interaction of Deterrence and Emotions ................................ 130 6.1 Introduction .......................................................................................................................... 130 6.2 Experimental Design ........................................................................................................... 133 6.2.1 The Stealing Game and our Treatments .................................................................. 133 6.2.2 Procedures .................................................................................................................... 137 6.2.3 Hypotheses ................................................................................................................... 140 6.3 Results ...................................................................................................................................