Experimental economics summary paper - Essay Example

Experimental Economics: Summary Paper Brief Introduction to the Topic The article en d An Experimental Examination of the Volunteer’s Dilemma written by Goeree, Holt, and Smith (2005) proffers issues relative to a volunteer’s dilemma tested in a binary-choice game. The authors indicated that the game would require a “volunteer” in order to enjoy a stipulated benefit by all participants of the game. Equilibrium properties were used to predict the outcomes of the probabilities of volunteering depending on the size of the group: the Nash predictions that contend that the probability of volunteering decreases as the number of members in a group increases, attributed to a “diffusion of responsibility” (Goeree, et.al, 3); the quantal response equilibrium (QRE) which incorporates the effects of noice factors requiring “choice probabilities to be consistent with beliefs” (ibid, 4); and the inequity aversion that indicates that “a person who volunteers earns less than those who do not, and an aversion to this earnings inequity might reduce volunteer rates” (ibid, 12).

The participants were undergraduate students from the University of Virginia and UCLA, grouped strategically in increasing numbers with the research conducted in three sessions. Main Findings The findings reveal that as group sizes increase, the rate of volunteering decreases, “but that this decline is not as sharp as predicted in the Nash equilibrium, and hence, that the probability of getting no volunteers at all is generally decreasing, not increasing, in group size” (ibid, 16). It simply means that there are some factors, the beliefs and inequity aversion, using the QRE and the infusion of the inequity aversion factor, which somewhat increase the probability of volunteering at some point when group sizes increase.

Description of an Interesting Result The interesting result was that the outcome number of no volunteers showed a contradictory pattern as indicated in the Nash predictions. One could generally assume that the theory of diffusion of responsibility under a large group scenario would necessarily give credence to an increasing probability that no volunteers would emerge for particularly large groups. It could be presumed that at some point, one of the members of a large group would assume responsibility for volunteering depending on the value of the earnings to him/her as compared to the value of not volunteering at all.

As indicated by the authors, there might be other factors that still needs to be assessed and identified (ibid, 13). Discussion Question There is somewhat some confusion in the discussion about noisy behavior using the quantal response equilibrium (QRE); and more clarification and explanation is needed especially with the inclusion of the inequity aversion factor. Identification and detailed explanation of the envy parameter needs to be expounded using concrete and actual examples for greater clarity.

Although the results validate that the use of these parameters indicate that the probabilities for no volunteer in members of large group sizes actually decreases (rather than increases, as predicted in the Nash formula), a more concrete example could clarify the example and give the readers a validating argument to support the findings. Work Cited Goeree, Jacob K., Holt, Charles A., & Smith, Angela M. An Experimental Examination of the Volunteer’s Dilemma. Funded by the National Science Foundation (SBR 0094800) and the University of Virginia Bankard Fund. 2005. Print.