Periodic Reporting for period 4 - EEC (Economic Engineering of Cooperation in Modern Markets)
Periodo di rendicontazione: 2022-09-01 al 2023-02-28
One work package studies the design of mechanisms to address cooperation problems that are inherent in specific markets. For example, mechanisms to promote cooperation in addressing the climate crisis, traffic congestion, energy scarcity and to avoid a wasteful arms race for speed in financial markets. We develop and study economic designs of markets and choice architectures that mitigate or solve such challenges.
The other work package studies the descriptive nature of ethical and related constraints to market and organizational design as imposed by human decision makers. For instance, people sometimes have a distaste for certain types of transactions, such as organ exchanges and the purchase of pollution rights in climate markets. We build models that capture such behaviors and make use of incentivized laboratory and field experiments to examine the underlying motivational and cognitive mechanisms empirically. Furthermore, we investigate the design features in markets and organizations that alleviate such constraints.
We also provide new and exciting descriptive evidence on the nature of ethical and related constraints on market and organizational design. Among several other phenomena, we show that a distaste for certain types of economic transactions can be best explained by a “projective paternalism” motive; we find robustly in theory and in controlled experiments that higher monetary incentives induce less informed subjects to engage in risky transactions and thus leads to more ex post regret (which highlights a conflict between incentive payments and the principles of informed consent); our experiments suggest that monetary incentives can be perceived as a threat to autonomy; and individual climate action and cooperation can be promoted if the underlying mechanisms are well-designed, even if they impose substantial costs on decision makers.
Building on our successes related to the study of ethical and related constraints on market design, which seems in part already driving a new wave of studies in the literature on paternalism and repugnance, we have expanded this line of research in accordance with our agenda. In particular, we have broadened our work on paternalism, data sharing, as well as developed a deeper understanding of the factors underlying cooperation.