Experimental economists have a long tradition of running experiments with monetary incentives, with a number of underlying assumptions and methodological concerns that have yet to be tested and answered. One of these questions is if participants in those experiments care about efficiency. Or more precisely, do participants exhibit efficiency preferences (Engelmann & Strobel, 2004)? One of the main critiques in assessing such questions is that economic experiments usually are incentivized with money. For the question of efficiency, this means that even if not all maximum payoffs are generated during an experiment, there is no real “loss” in money: all earnings that were not generated in an experiment stay usually with the experimenter, who can use that money to run additional experiments. In other words, the “pie” does not really shrink. It is thus hard to estimate a potential loss in utility if participants might exhibit other regarding preferences towards the experimenter. Until today, there is only one remarkable exception in the literature that tried to catch this effect: Frank (1998), in order to generate a loss in monetary value if maximum payoffs were not generated, exchanged the remaining money of an experiment for stamps which he burned in presence of the participants of the experiment. Although Frank showed in his study that participants appear not to care about the experimenters’ welfare, it is to this day the only experiment that has tried to create real inefficiencies in the laboratory. This project, which was joint work with Tobias Cagala, Ulrich Glogowski and Veronika Grimm, considers a real inefficiency that is not artificial.
More precisely, we investigated one of the largest inefficiency problems of humanity: hunger. According to the World Food Programme (http://www.wfp.org/hunger/stats), 842 million people worldwide suffer from hunger and an estimated USD 3.2 billion is needed each year to only reach all school-aged children suffering from hunger. At the same time, in the US alone, 1,249 calories of food per capita per day are thrown away (USDA; http://www.ers.usda.gov/publications/eib-economic-information-bulletin/eib121.aspx). In an efficient world, this wasted food would be redistributed to people in need of food, increasing the utility of these people while not providing any disutility to people that already consumed their personal optimum. Although we do not intend to solve the world hunger problems, this project will provide important insights into the behavioural motives underlying inefficient distributions of food. There is a universal social norm not to let anybody suffer from hunger (Herman & Polivy, 2005), yet world hunger persists. We investigated in one-to-one interpersonal decisions how social motives (Fehr & Schmidt, 1999), efficiency motives and selfish motives (Engelmann & Strobel, 2004) influence distributional preferences over food. Although we do not address societal problems of hunger, we recurred on Maslow’s concept of the pyramid of needs (Maslow, 1943) and induce hunger in experimental participants in order to create an inefficiency in a controlled laboratory environment.
(A further goal of the current project was to combine methods from experimental economics, psychology and physiology to learn more about the correlates of human decision making. We lended from a psychological theory of motivation to derive our starting hypotheses (Maslow, 1943) and used the toolbox of experimental economics to test them. We also will relied on measures of personality and on physiological markers (collected from blood- and saliva samples) to fortify our assumptions on mechanisms underlying behaviour.)
Results are not written down yet, thus you may expect a thorough update of this post in the future.