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ICSD2009 Kyoto. The effect of common knowledge – Why do people cooperate more when they face a social dilemma situation where mutual cooperation yields restoration of fairness?. Nobuyuki Takahashi (Hokkaido University) Ryoichi Onoda (Hokkaido University) Hikaru Hamada (Hokkaido University)

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Nobuyuki takahashi hokkaido university ryoichi onoda hokkaido university

ICSD2009Kyoto

The effect of common knowledge– Why do people cooperate more when they face a social dilemma situation where mutual cooperation yields restoration of fairness?

Nobuyuki Takahashi (Hokkaido University)

Ryoichi Onoda (Hokkaido University)

Hikaru Hamada (Hokkaido University)

Rie Mashima (Kumamoto Gakuen University)

E-mail: [email protected]


Introduction

Introduction

There have been many collective behaviors in human history.

Collective behaviors seem to be thrived when the purpose is the restoration of fairness (e.g., civil rights movements, anti-Vietnam War movements).

Why?

Many collective behaviors involve social dilemmas. So, isn’t free-riding still the better option than participating in a social movement?


Takezawa 1999

Takezawa (1999)

1) Experience of unfairness invokes the sense that unfairness is shared among the other people.

2) The goal changes from pursuing self-interest to jointly restoring fairness.

3) Expectation of others’ cooperation in one-shot public goods game (PGG)

<

Provision of PG restores fairness

Ordinary one-shot PGG

Since expectation of others’ cooperation promotes cooperation,

4) Cooperation rate

<

Provision of PG restores fairness

Ordinary one-shot PGG

Why does the experience of unfairness promote expectation of others’ cooperation?


Takezawa 19991

Takezawa (1999)

According to Takezawa (1999)…

  • The sense of fairness activates the common knowledge that everybody was treated unfairly.

  • This common knowledge induces higher level of expectation that leads to higher level of cooperation.

Taken for granted, but…

Why does this process occur?

Why is the expectation of others’ cooperation higher when participants were all treated unfairly?


What affects expectation

Fear of greed

Fear of fear

What is the function of being treated unfairly?

What affects expectation?

Two reasons to defect in SD(e.g., Dawes et al. 1986; Van Lange et al. 1992; Yamagishi & Sato 1986)

(1) Greed – the temptation to free-ride

(2) Fear – the prospect that one's cooperation may be exploited

  • Not greed but fear affects expectation of others’ cooperation.

  • However, there can be at least two sources of fear.


Revisiting takezawa 1999

Revisiting Takezawa (1999)

What is the function of being treated unfairly?

Two possibilities

(1) Reduction of fear of greed – People expect that the experience of unfairness transforms the goal of other people from maximizing self-interest to achieving mutual cooperation in order to restore fairness.

We want to restore fairness!

The other people will cooperate because they are no longer greedy.

In order for the expectation of others’ cooperation to increase, in addition to reduction of fear of greed of the other players, reduction of fear of fear may be necessary.


Revisiting takezawa 19991

However, this may not be sufficient to induce cooperation.

But the other people may still defectbecause of fear.

Fear of fear

Revisiting Takezawa (1999)

What is the function of being treated unfairly?

Two possibilities

(1) Reduction of fear of greed – People expect that the experience of unfairness transforms the goal of other people from maximizing self-interest to achieving mutual cooperation in order to restore fairness.

We want to restore fairness!

In order for the expectation of others’ cooperation to increase, in addition to reduction of fear of greed of the other players, reduction of fear of fear may be necessary.


Revisiting takezawa 19992

Revisiting Takezawa (1999)

(2) Reduction of fear of fear – Perception of unfairness makes people expect that the other people’s fear of greed was reduced.

The others are no longer greedy!

The other people will cooperate because they have no fear.

Reducing fear of fear requires that the fact that everyone was treated unfairly is a common knowledge.


Main purpose of the study

Main purpose of the study

To differentiate these two functions and see if reduction of fear of fear is necessary for inducing higher level of cooperation

  • Reduction of fear of greed: Privately knowing that everybody was treated unfairly is enough

  • Reduction of fear of fear: The fact that everybody was treated unfairly must be a common knowledge

Manipulation: Whether or not the fact that everybody was treated unfairly is a common knowledge


Experiment

Experiment

One factor, between-subjects design

Participants : 125 undergraduate students (M: 68, F: 56, UK: 1)

1) Control condition : Ordinary one-shot PGG without any context

2) Common knowledge condition : One-shot PGG that is identical with Control condition. However, before playing the game, participants were all treated unfairly by a dictator and they could restore fairness by achieving mutual cooperation in PGG.

3) Private knowledge condition : The same as Common knowledge condition. The only difference is that only the participants knew that everybody was treated unfairly by a dictator, and that they could restore fairness by achieving mutual cooperation in PGG.


1 control condition

1) Control condition

  • Ordinary one-shot PGG without any context

  • 1st stage: Social inference task (a bogus task)

    • Each player was paid 500 yen ($5) for completing the task.

Social inference task

500 yen

500 yen

500 yen

500 yen

500 yen


1 control condition1

1) Control condition

  • Ordinary one-shot PGG without any context

  • 2nd stage: One-shot step-level PGG

Cooperation : Provide 500 yen to the groupDefection : Keep 500 yen for oneself

500 yen

500 yen

500 yen

500 yen

500 yen

If more than 3 players cooperate,


1 control condition2

1) Control condition

  • Ordinary one-shot PGG without any context

  • 2nd stage: One-shot step-level PGG

Cooperation : Provide 500 yen to the groupDefection : Keep 500 yen for oneself

500 yen

4000 yen

If more than 3 players cooperate, a public good (4000 yen) is provided.


1 control condition3

1) Control condition

  • Ordinary one-shot PGG without any context

  • 2nd stage: One-shot step-level PGG

Cooperation : Provide 500 yen to the groupDefection : Keep 500 yen for oneself

C

C

C

C

D

800 yen

500 yen

800 yen

800 yen

800 yen

800 yen

4000 yen

Total earnings of cooperators : 500-500+(4000/5)=800 yen defectors : 500-0+(4000/5)=1300 yen


1 control condition4

1) Control condition

  • Ordinary one-shot PGG without any context

  • 2nd stage: One-shot step-level PGG

Cooperation : Provide 500 yen to the groupDefection : Keep 500 yen for oneself

500 yen

500 yen

500 yen

500 yen

500 yen

If less than 4 players cooperate,


1 control condition5

1) Control condition

  • Ordinary one-shot PGG without any context

  • 2nd stage: One-shot step-level PGG

Cooperation : Provide 500 yen to the groupDefection : Keep 500 yen for oneself

500 yen

500 yen

500 yen

0 yen

If less than 4 players cooperate, a public good is not provided.


1 control condition6

1) Control condition

  • Ordinary one-shot PGG without any context

  • 2nd stage: One-shot step-level PGG

Cooperation : Provide 500 yen to the groupDefection : Keep 500 yen for oneself

500 yen

500 yen

500 yen

Deception

Although participants were told that there were other participants and that they would interact with them, actually each participant behaved as an individual. In other words, there was no real interaction among the participants.

0 yen

If less than 4 players cooperate, a public good is not provided.


2 common knowledge condition

2) Common knowledge condition

  • Identical incentive structure with the one in the other 2 conditions

  • 1st stage: Social inference task (a bogus task)

    • As a 6-person group, players were paid 7000 yen ($70) for completing the task.

7000 yen

Social inference task


2 common knowledge condition1

2) Common knowledge condition

  • Identical incentive structure with the one in the other 2 conditions

  • After 1st stage (before 2nd stage): Dictator game

    • A dictator was chosen randomly from the group and decided to allocate 7000 yen among group members.

Recipient

Recipient

Recipient

Recipient

Recipient

? yen

? yen

? yen

? yen

? yen

Dictator

Participant

7000 yen


2 common knowledge condition2

2) Common knowledge condition

  • Identical incentive structure with the one in the other 2 conditions

  • After 1st stage (before 2nd stage): Dictator game

    • A dictator was chosen randomly from the group and decided to allocate 7000 yen among group members.

Since we used deception, however, actually a dictator and the other recipients did not exist. Only a participant was a real person. Also, dictator’s decision was predetermined by the experimenter.

Recipient

Recipient

Recipient

Recipient

Recipient

? yen

? yen

? yen

? yen

? yen

Dictator

Participant

7000 yen


2 common knowledge condition3

2) Common knowledge condition

  • Identical incentive structure with the one in the other 2 conditions

  • After 1st stage (before 2nd stage): Dictator game

    • A dictator was chosen randomly from the group and decided to allocate 7000 yen among group members.

The dictator allocated 4500 yen for himself and 500 yen for each of the other 5 players.

Recipient

Recipient

Recipient

Recipient

Recipient

500 yen

500 yen

500 yen

500 yen

500 yen

Dictator

Participant

4500 yen


2 common knowledge condition4

2) Common knowledge condition

  • Identical incentive structure with the one in the other 2 conditions

  • 2nd stage: One-shot step-level PGG to restore fairness

    • 5 recipients were asked if they want to provide 500 yen.

Cooperation : Provide 500 yen to the groupDefection : Keep 500 yen for oneself

500 yen

500 yen

500 yen

500 yen

500 yen

Dictator

4500 yen


2 common knowledge condition5

2) Common knowledge condition

  • Identical incentive structure with the one in the other 2 conditions

  • 2nd stage: One-shot step-level PGG to restore fairness

500 yen

500 yen

500 yen

500 yen

C

C

C

C

D

500 yen

Dictator

If more than 3 recipients cooperate,

4500 yen


2 common knowledge condition6

2) Common knowledge condition

  • Identical incentive structure with the one in the other 2 conditions

  • 2nd stage: One-shot step-level PGG to restore fairness

C

C

C

C

D

500 yen

Dictator

If more than 3 recipients cooperate, 4000 yen was forfeited from the dictator,

500 yen

4000 yen


2 common knowledge condition7

2) Common knowledge condition

  • Identical incentive structure with the one in the other 2 conditions

  • 2nd stage: One-shot step-level PGG to restore fairness

4000 yen

500 yen

Dictator

If more than 3 recipients cooperate, 4000 yen was forfeited from the dictator, and recipients share 4000 yen equally.

500 yen


2 common knowledge condition8

2) Common knowledge condition

  • Identical incentive structure with the one in the other 2 conditions

  • 2nd stage: One-shot step-level PGG to restore fairness

Total earnings of cooperators : 500-500+(4000/5)=800 yen defectors : 500-0+(4000/5)=1300 yen

C

C

C

C

D

800 yen

800 yen

800 yen

500 yen

800 yen

800 yen

Dictator

If more than 3 recipients cooperate, 4000 yen was forfeited from the dictator, and recipients share 4000 yen equally.

500 yen


2 common knowledge condition9

2) Common knowledge condition

  • Identical incentive structure with the one in the other 2 conditions

  • 2nd stage: One-shot step-level PGG to restore fairness

D

D

C

C

D

500 yen

500 yen

500 yen

If less than 4 recipients cooperate, nothing happens.

Dictator

4500 yen

Total earnings of cooperators : 500-500=0 yen defectors : 500-0=500 yen


3 private knowledge condition

3) Private knowledge condition

  • Identical with Common knowledge condition

  • The only difference is that participants are the only one who knew that everybody was treated unfairly.

  • After the dictator allocated 7000 yen, each player received an allocation sheet that only says how much she was allocated by the dictator.

Recipient

Recipient

Recipient

Recipient

Recipient

500 yen

? yen

? yen

? yen

? yen

Dictator

? yen


3 private knowledge condition1

3) Private knowledge condition

  • Identical with Common knowledge condition

  • The only difference is that participants are the only one who knew that everybody was treated unfairly.

  • After the dictator allocated 7000 yen, each player received an allocation sheet that only says how much she was allocated by the dictator.

Recipient

Recipient

Recipient

Recipient

Recipient

500 yen

? yen

? yen

? yen

? yen

Dictator

? yen

By lottery one player was chosen as a person who could see the complete distribution of 7000 yen.


3 private knowledge condition2

3) Private knowledge condition

  • Identical with Common knowledge condition

  • The only difference is that participants are the only one who knew that everybody was treated unfairly.

  • After the dictator allocated 7000 yen, each player received an allocation sheet that only says how much she was allocated by the dictator.

  • The recipient who was chosen by lottery knew that the other recipients did not have full information.

  • She knew that she was the only person who knew how much each person received from the dictator.

Recipient

Recipient

Recipient

Recipient

Recipient

500 yen

500 yen

500 yen

500 yen

500 yen

Dictator

4500 yen

By lottery one player was chosen as a person who could see the complete distribution of 7000 yen.


3 private knowledge condition3

3) Private knowledge condition

  • Identical with Common knowledge condition

  • The only difference is that participants are the only one who knew that everybody was treated unfairly.

  • After the dictator allocated 7000 yen, each player received an allocation sheet that only says how much she was allocated by the dictator.

  • The recipient who was chosen by lottery knew that the other recipients did not have full information.

  • She knew that she was the only person who knew how much each person received from the dictator.

Participant

Recipient

Recipient

Recipient

Recipient

Recipient

500 yen

500 yen

500 yen

500 yen

500 yen

Dictator

Since we used deception, actually all participants were chosen by lottery.

4500 yen

By lottery one player was chosen as a person who could see the complete distribution of 7000 yen.


Hypotheses

Privately knowing that everybody was treated unfairly is enough , and common knowledge is unnecessary

Hypotheses

There are 3 competing hypotheses regarding cooperation rate.

H1: Only reduction of fear of greed occurs

Participants would cooperate more in both Private and Common knowledge conditions than in Control condition.

Hypothetical result

Cooperation rate

Control

Private

Common


Hypotheses1

Privately knowing that everybody was treated unfairly is not enough, and common knowledge is necessary

Hypotheses

There are 3 competing hypotheses regarding cooperation rate.

H2: Only reduction of fear of fear occurs

Participants would cooperate more in Common knowledge condition than in Control and Private knowledge conditions.

Hypothetical result

Cooperation rate

Control

Private

Common


Hypotheses2

Both privately knowing that everybody was treated unfairly and common knowledge promote cooperation.

Hypotheses

There are 3 competing hypotheses regarding cooperation rate.

H3: Both reduction of fear of greed and reduction of fear of fear occur.

Cooperation rate would be lowest in Control condition and highest in Common knowledge condition.

Hypothetical result

Cooperation rate

Control

Private

Common


Nobuyuki takahashi hokkaido university ryoichi onoda hokkaido university

Result (1) Cooperation rate

Figure 1: Cooperation rate in each condition

Dummy for Private knowledge condition: β = -0.11, n.s.Dummy for Common knowledge condition: β = 0.98, p<.05

Control

Private

Common

Logistic regression

DV: Cooperation=1, Defection =0

IV: Dummy for Private knowledge cond, Dummy for Common knowledge cond *Reference category – Control condition

Participants cooperated more in Common knowledge condition than in the other two conditions.

Hypothesis 2 was supported.


Nobuyuki takahashi hokkaido university ryoichi onoda hokkaido university

Participants cooperated more in Common knowledge condition because they expected more cooperation by the others. This result suggests that reduction of fear promoted cooperation

Result (2) Effect of expectation

The effect of common knowledge disappeared when we controlled expectation.


Summary and conclusion

Conclusion

Unfair treatment must be a common knowledge in order to induce a higher level of cooperation.

This is because such a common knowledge reduces fear of fear rather than fear of greed.

Summary and Conclusion

Summary

  • Participants cooperated more in Common knowledge condition than in the other conditions.

Participants cooperated more only when they knew that the other participants knew that everybody was treated unfairly.


Nobuyuki takahashi hokkaido university ryoichi onoda hokkaido university

Future directions

Are there any factors other than the sense of unfairness that promote cooperation by reducing fear of fear through automatically activating the perception of common knowledge?


Nobuyuki takahashi hokkaido university ryoichi onoda hokkaido university

Thank you for your attention.


Hypotheses3

Hypotheses

Cooperation rate

(1) Participants would cooperate more in the unfair treatment conditions (private and common knowledge conditions) than in the control condition.

The effect of unfair treatment by the dictator

>

Private knowledge condition

Control condition

Common knowledge condition

(2) Participants would cooperate more in the common knowledge condition than in the private knowledge condition.

The effect of common knowledge

>

Private knowledge condition

Common knowledge condition


Nobuyuki takahashi hokkaido university ryoichi onoda hokkaido university

Result (1) Cooperation rate

Figure 1: Cooperation rate in each condition

Dummy for Private knowledge condition: β = -1.09, p<.05Dummy for Control condition: β = 0.98, p<.05

Logistic regression

Dependent variable: Cooperation=0, Defection =1

Independent variable: Dummy for Private knowledge condition Dummy for Control condition Common knowledge condition – Reference category

Participants cooperated more in Common knowledge condition than in the other two conditions.

Hypothesis 2 was supported.


Experiment1

Experiment

Control condition : Ordinary one-shot SD without any context

  • 5 players per group

  • Players first engaged in a social inference task (bogus task), and were paid 500 yen ($5) for completing the task.

  • Players were then asked if they want to provide 500 yen to the group.

  • If more than 3 players provided 500 yen to the group, everybody received 800 yen as a bonus. Cooperators receive 800 yen and defectors receive 1300 yen.

  • If less then 4 players provided 500 yen, then nobody received a bonus. Cooperators receive 0 yen and defectors receive 500 yen.

We used deception: Although participants were told that there were other participants and that they would interact with them, actually each participant behaves as an individual. In other words, there was no real interaction with the other participants.


Experiment2

Experiment

Control condition : Ordinary one-shot SD without any context

  • 2nd stage: One-shot step level SD

Cooperation : Provide 500 yen to the groupDefection : Keep 500 yen for oneself

500 yen

500 yen

500 yen

500 yen

500 yen

If more than 3 players cooperate, a public good (4000 yen) is provided.

Total earnings of cooperators : 500-500+(4000/5)=800 yen defectors : 500-0+(4000/5)=1300 yen

If less then 4 players cooperate, a public good is not provided.Total earnings of cooperators : 500-500=0 yen defectors : 500-0=500 yen


Experiment3

Experiment

Common knowledge condition

  • 6 players per group

  • Players first engaged in a social inference task (bogus task), and were paid 7000 yen as a group.

  • A dictator was chosen randomly from the group and decided to allocate 7000 yen among group members.

  • The dictator allocated 4500 yen for himself and 500 yen for each of the other 5 players.

  • 5 players were then asked if they want to provide 500 yen.

  • If more than 3 players provided 500 yen to the group, 4000 yen was forfeited from the dictator and the other 5 players shared 4000 yen equally. In other words, each player received 800 yen.

  • If less then 4 players provided 500 yen, then nothing happens.

Incentive structure is identical with the one in the other conditions.

Successful restoration of fairness

Unsuccessful restoration of fairness


Experiment4

Experiment

Private knowledge condition

  • Identical with Common knowledge condition

  • The only difference is that participants are the only one who knew that everybody was treated unfairly by the dictator.

After the dictator allocated 7000 yen, each player received an allocation sheet that says how much she was allocated by the dictator.

Incentive structure is identical with the one in the other conditions.

However, how much the other players’ received was not written on the allocation sheet.

Then, by lottery one player was chosen as a person who could see the complete distribution of 7000 yen.

Since we used deception, actually all participants were chosen by lottery.


Nobuyuki takahashi hokkaido university ryoichi onoda hokkaido university

Result (2) Effect of 2nd-order expectation

What is your estimate of the other participants’ estimate of the probability that more than 3 participants provided the money?

F(2,124)=6.66, p<.01

2nd-order expectation (expectation on expectation) was lower in Control condition than in the other 2 conditions.


Nobuyuki takahashi hokkaido university ryoichi onoda hokkaido university

Result (2) Effect of 2nd-order expectation

The effect of common knowledge disappeared when we controlled 2nd-order expectation.

Participants cooperated more in Common knowledge condition because they expected the other participants’ expectation of cooperation higher.

Reduction of fear of fear plays a critical role.


Nobuyuki takahashi hokkaido university ryoichi onoda hokkaido university

Result (2) Effect of expectation

What is your estimation of the probability that more than 3 participants provided the money?

How many participants do you think have provided the money?

F(2,124)=5.11, p<.01

F(2,123)=3.43, p<.05

Participants’ expectation was higher in Common knowledge condition than in Control condition.


Discussion

Discussion

  • Participants cooperated more in Common knowledge condition than in the other conditions.

Participants cooperated more only when they knew that the other participants knew that everybody was treated unfairly.

Being treated unfairly makes people believe that it is a common knowledge.

2nd-order expectation plays a critical role


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