Department of Economics

It is traditional in experimental games to allow participants to choose only actions or possibly communicate intended play. In sequential two-person games, we require first movers to express a preference between responder choices. We find that responder behavior differs substantially according to whether first movers express a hope for favorable or unfavorable treatment. We find that such preference expression after favorable first-mover play on average increases both the social surplus and the lowest payoff received by 15-20%. Expressed preferences for favorable responder behavior by first movers who have not behaved favorably are largely ignored, however, and may even be counter-productive. Our results replicate earlier findings, in that subjects assign a high positive weight to another person’s payoffs when ahead and misbehavior elicits a strong negative response. Logit regressions estimate the weight placed on another (nonmisbehaving) person’s payoffs to be positive, even when one is behind. While the degree of positive reciprocity is not significant either with or without expressed preferences, there is evidence that positive reciprocity is enhanced when a preference for favorable treatment is expressed.