The pervasive externalities of pro-social behaviour: who knew?

What is this picture doing here? It is one of the images selected by Google when I typed in “now is the time for complacency”. It clearly has a deep connection with that idea. I can’t comment further except to say that Google has a great deal of AI devoted to these kinds of issues, so I comment the graphic to you.

Spillover Effects of Institutions on Cooperative Behavior, Preferences and Beliefs

By: Engl, Florian (University of Cologne) ; Riedl, Arno (Maastricht University) ; Weber, Roberto A. (University of Zurich)


Institutions are an important means for fostering prosocial behaviors, but in many contexts their scope is limited and they govern only a subset of all socially desirable acts. We use a laboratory experiment to study how the presence and nature of an institution that enforces prosocial behavior in one domain affects behavior in another domain and whether it also alters prosocial preferences and beliefs about others’ behavior. Groups play two identical public good games. We vary whether, for only one game, there is an institution enforcing cooperation and vary also whether the institution is imposed exogenously or arises endogenously through voting. Our results show that the presence of an institution in one game generally enhances cooperation in the other game thus documenting a positive spillover effect. These spillover effects are economically substantial amounting up to 30 to 40 percent of the direct effect of institutions. When the institution is determined endogenously spillover effects get stronger over time, whereas they do not show a trend when it is imposed exogenously. Additional treatments indicate that the main driver of this result is not the endogeneity but the temporal trend of the implemented institution. We also find that institutions of either type enhance prosocial preferences and beliefs about others’ prosocial behavior, even toward strangers, suggesting that both factors are drivers of the observed spillover effects.

Lucky the culture of our policy making elite is largely oblivious to this phenomenon, or at the very least incurious about how we might be able to amplify it in our society and economy.

Then again, we haven’t had a recession in 26 years. We’re world record holders.


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