Abstract
We present a simple mechanism that can be implemented in a simple experiment. In a modified trust game, the allocator can offer to pay the investor to cooperate. The mechanism is successful at implementing efficient outcomes: participants manage to achieve an efficient outcome, when this is possible, two-thirds of the time. While these results are encouraging, we find evidence that both concerns for fairness and motivation crowding out distort the incentives presented in the mechanism.
| Original language | English |
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| Journal | SSRN |
| DOIs | |
| Publication status | Published - 24 Jul 2010 |
Keywords
- compensation mechanism, side payment, trust game, signaling, crowding out, concerns for equity taste for cooperation