This dissertation studies issues associated with various topics related to a worker’s effort. For example, I explore how different wage incentives affect a worker’s productivity. I explore how exogenous shocks, what we often refer to as “luck,” can affect a worker’s motivation. In addition, I explore how different wage contracts destroy cooperation and can lead to destructive activities such as cheating and sabotage, as well as how these activates, in turn, affect productivity. Finally, in the last chapter, I analyze behavioral issues related to fairness and altruism in tournaments, and how these behaviors affect worker’s effort.

This thesis uses laboratory and field experiments to examine the underlying motivations that drive biased and discriminatory behaviour. Its focus is on the differential treatment of others that stems from individuals’ preferences for particular social and ethnic groups. The unifying theme of this thesis is the exploration of how such discriminatory tastes can manifest themselves within individuals’ social and other–regarding preferences, determining the extent to which they care about the welfare of others. The prevalence and implications of these types of preferences are considered in both market and non–market settings.

Social economic decision-making considers the well-being and emotions of others. Unlike traditional economics which routinely assumes that individuals care only about their own outcomes, behavioral economics and neuroeconomics offer research strategies which help us explore our social motivations. This dissertation consists of three essays studying the underlying behavioral and neural mechanisms of individuals' social economic decision-making. The analyses focus on investigating experimentally how humans make decisions in three distinct social economic environments. Chapter 2 examines how individuals react to hold-up when explicit promises are available. Hold-up happens when two parties can form an incomplete contract to cooperate, but the agreement may fall apart due to concerns about the other party gaining bargaining power. We propose that a belief-dependent frustration anger model can explain behavior about investment, cooperation, and costly punishment in a hold-up environment. We show experimentally that communication improves cooperation and increases efficiency. Promises lead to cooperation, and broken promises lead to costly punishment. Chapter 3 explores threats' deterrence effect and credibility in an ultimatum bargaining environment where two parties can both benefit over trade but have a conflict of interests. We show that a belief-dependent frustration anger model captures the relationship among messages, beliefs, and behavior. Our design permits the observation of communicated threats, credibility, and deterrence. As we hypothesize, messages convey intention to punish the opponents (threats) changes players' expectations, that first movers are largely deterred by the threats and second movers' threats are credible. Threats lead to deterrence and greater propensity for costly punishment. Chapter 4 investigates the neural basis of individuals' charity donation behavior in a modified dictator game. The right temporoparietal junction (rTPJ) has been associated with social decision-making, but the exact neural mechanism of charitable giving remains unknown. In our experiment, participants allocate money between themselves and a charity in a graphical revealed preference task, that measures both parameterized other-regarding preferences and economic rationality (Monotonicity, WARP, and GARP). We find evidence for a causal role of the rTPJ in determining fairness preferences and economic rationality. / Doctor of Philosophy / Social economic decision-making considers the well-being and emotions of others. Individuals engage in social economic decision-making on a daily basis, for example, negotiating over an offer, investing or cooperating on a project, bargaining over a purchase, or interacting with friends or strangers. Each of these decisions involves a variety of motivations including money for oneself, the well-being of others, each participants’ emotions and future relationships. Because of the complex nature of social economic decisions we need to employ an interdisciplinary research strategy. Behavioral economics applies psychological insights to economic problems and allows us to model the behavior of people who care about more than just money. Neuroeconomics integrates neuroscientific techniques and information about how the brain works to further expand our set of research tools. In this dissertation, we use all of these methods to explore how people make economic decisions in three distinct social scenarios. All three scenarios are especially intriguing since they represent different ways in which individuals integrate “others” into their own decision-making process. First, hold-up happens when two parties can form an incomplete agreement to cooperate and achieve higher efficiency together, however, the agreement may fall apart due to concerns about the other party gaining more bargaining power. In a historic example, Fisher Body had an exclusive supply agreement with General Motors. When the demand for cars increased sharply, Fisher Body held up General Motors by increasing prices. Second, negotiation is a situation where two parties can both benefit from trade, but they have conflicting interests. Third, individuals who engage in charity donations often sacrifice themselves monetarily to improve well-being of others. The scientific mission of this dissertation is to advance understanding of how individuals engage in social decision-making. In particular, we examine how communication (promises and threats) influences decision-making involving hold-up and negotiation respectively, and explore the neural mechanism governing altruism and charitable giving. We find evidence that communication enhances cooperation and efficiency in social economic decision-making through by changing expectations about monetary payoffs. In addition, we find evidence that the neural circuits responsible for fair-minded behavior also play a role in regulating economic rationality. This dissertation improves our understanding about how humans engage in social exchanges on both behavioral and neural levels.

Cette thèse se compose de trois chapitres constituant des contributions distinctes mais reliées au même centre d'intérêt, la théorie de la décision dans le risque. Le premier chapitre traite de préférences additivement séparable par rapport aux probabilités. Il en est déduit une axiomatisation simple de préférences variationnelles représentées par une fonctionnelle se décomposant en un terme d'espérance d'utilité et un terme entropique. Le second chapitre consiste en une fondation axiomatique de préférences interdépendantes en présence d'interactions sociales, sur la base du modèle initialement élaboré par Blume, Brock et Durlauf. Le troisième chapitre pose la question de l'apport du modèle probabiliste de la physique quantique à la théorie de la décision et de son application pour prendre en compte la perception subjective des évènements par les individus. / This thesis consists of three separate chapters related to economic decisions under risk. The first chapter presents axioms for an additively separable representation of preferences over probabilities. A simple axiomatization of variational preferences represented by the sum of an expected utility term and an entropic term is deduced. The second chapter consists of an axiomatic foundation of other-regarding preferences under social interactions, based on the model originally developed by Blume, Brock and Durlauf. The third chapter introduces the probabilistic model of quantum physics to decision theory. In this context, individuals have a private representation of the set of events.

This dissertation comprises two essays. The unifying theme is the evaluation of non-pecuniary (information or norm based messages) conservation programs. These types of policies are widely applied in developing and developed countries to promote conservation, however, their empirical evidence and their effectiveness are not well documented. Each chapter examines some methodological facets of the heterogeneity of non-pecuniary conservation programs and the reliability of non-experimental methods (program evaluation and econometric techniques) to evaluate treatment effects in the context of non-pecuniary conservation programs.

This dissertation studies models of belief-dependent motivations in three essays.The first essay studies the Koszegi-Rabin model of reference-dependent preferences in a laboratory experiment. The propose a model where the reference point to which consumption outcomes are compared is endogenously determined as a function of lagged, probabilistic beliefs. This paper presents an experiment designed to test some predictions of the Koszegi-Rabin model. The experimental design controls for potential confounds suggested by their theory. The experimental results support their prediction of an endowment effect but do not show the attachment effect predicted by their model.The second essay, coauthored with Martin Dufwenberg and Matt Van Essen, studies how revenge may mitigate the hold-up problem from contract theory. When contracts are incomplete or unenforceable, inefficient levels of investment may occur due to hold-up. If individuals care for negative reciprocity these problems may be reduced, as revenge becomes a credible threat. However, negative reciprocity has this effect only when the investor holds the rights of control of the investment proceeds. We explore this issue analytically, deriving predictions for hold-up games which differ as regards assignment of rights of control. We also test and support these predictions in an experiment.Revenge may be driven by anger. The third essay proposes two belief-dependent models of anger: frustrated anger and anger from blame, which correspond to differing views of the emotion in the psychology literature. Both models build upon the idea that anger occurs when outcomes differ from players expectations. They differ in that anger from blame also incorporates updated beliefs and a notion of other-responsibility. The models are compared with each other and with existing models of negative reciprocity in several examples.

This dissertation contains three essays on the impact of other-regarding behavior on human decision-making. Chapter II uses experimental methods to analyze the relative performance of a variety of compensation contracts. This study creates an environment in which individuals are paid via common payment mechanisms employed in the dual-principal agent relationships (Piece Rate, Flat Rate, Salary, Bonus and Socialization) and examines the effect that different incentive structures have on agent behavior. In Chapter III I explore the potential outcomes of blended payment structures in a dual-principal agent environment. I draw from the previously conducted experimental study in Chapter II and simulate agent behavior induced by blended payment mechanisms. In Chapter IV, I move away from studying payment mechanisms to investigate the impact of intentionality and responsibility on an individual's decision-making process. I explore the effects of direct and indirect responsibility as well as selfish and kind intentions using experimental methodology. Each of these essays provides further evidence that other-regarding behavior has a significant impact on the outcome of an economic situation; therefore, emphasizing the need to address such behavior in theoretical designs. / Ph. D.

The research question on problems that involves information asymmetry has been drawing more and more attention since the past decades, and in particular, two of the pioneers Bengt Holmström and Oliver Hart) in this field won the Nobel Prize of Economics in 2016. With the emergence of information economics, accounting researchers started focusing on the information asymmetry problems, with a particular interest and emphasis on moral hazard problems, within the firm. In this essay, we intend to fill the blank in this area by investigating some specific information asymmetry problems in managerial accounting under the presence of both moral hazard and adverse selection, or moral hazard and post-contract information asymmetry, respectively. The first study analyzes the expected value of information about an agent’s type in the presence of moral hazard and adverse selection. The value of the information decreases in the variability of output and the agent’s risk aversion, two factors that are typically associated with the severity of the moral hazard problem. However, the value of the information about agent type first increases but ultimately decreases in the severity of adverse selection. The second study draws attention to the tradeoffs associated with relying on pre-contracting ability measures in the design of executive compensation schemes. We show that the more sensitive of the ability signal to ability the more weight should be placed optimally, and the more precise of the ability signal the more weight should be placed optimally, in accordance with the informativeness principal. We further prove that under a broad class of distributions a linear aggregation of multiple pieces of pre-contracting information is sufficient for contracting purposes without loss of generality. The third study investigates three mechanisms of organizational control: outcome control (contracting on the outcome), effort control (contracting on the signal of action), and clan control (employing an agent whose preferences are partially aligned with the principal’s goal through a socialization process). In doing so, we expand the standard agency framework by introducing the concept of other-regarding preference and clan control to provide new insights into organizational control design. / Business Administration/Accounting

It has been suggested that reward processing and related neural substrates are disrupted in some common mental disorders such as depression, addiction, and anxiety. An increasing number of psychiatric studies have been applying reinforcement learning (RL) models to examine these disruptions in self-regarding learning (learning about rewards delivered to the learners themselves). A review of RL alterations associated with mental disorders in extant studies will be beneficial for uncovering the mechanisms of these health problems. Although impaired social reward processing is common in some mental disorders [e.g., post-traumatic stress disorder (PTSD), social anxiety and autism], RL has not been widely used to detect the potentially disrupted social reward learning, especially for other-regarding learning (learning about rewards delivered to others). Meanwhile, it has not been clear whether some drugs, e.g., oxytocin (OT), can alter other-regarding learning, so they may serve as a therapeutic intervention when related deficits occur. In the present set of studies, we summarized common and distinct features in terms of self-regarding RL disturbances among depression, addiction and anxiety disorders based on previous findings (Paper I), tested whether behavioral and neural self- and other-regarding RL were impaired in PTSD with and without comorbid depression (Paper II), and investigated OT's behavioral and neural effects on self- and other-regarding RL in healthy males (Paper III). The results of our literature review showed that the commonalities in all three mental disorders were inflexibility and inconsistent choices, and the differences included decreased learning rates in depression, a higher weight to rewards versus punishments in addiction, and hypersensitivity to punishments in anxiety. The results of the PTSD study demonstrated impaired behavioral other-regarding learning in PTSD patients with and without depression, supposedly due to their hypervigilance to unexpected outcomes for others, as evidenced by the heightened responses in their inferior parietal lobule. The OT study detected OT's effects of attenuating behavioral other-regarding learning, as well as the neural coding of unexpected outcomes for others in the anterior cingulate cortex. These findings provide new evidence of self- and other-regarding RL alterations in mental disorders, reveal potential targets for their treatments, and bring caution for using OT as a therapeutic intervention. / Doctor of Philosophy / People learn to make choices to gain rewards and to avoid punishments delivered to themselves. As social animals, people also take account of outcomes delivered to others when learning. With the help of computational modeling, previous studies have found abnormal reward learning for oneself in people with mental health problems. To better understand mental illnesses, we summarized the similarities and differences of the learning abnormalities reported in previous studies about depression, addiction, and anxiety. We have found that people with these mental illnesses all tend to be inflexible and make more random choices when learning. As for the differences, people with depression tend to learn slower; people with addiction tend to see gaining rewards as more important than avoiding punishments; and people with anxiety tend to be oversensitive to punishments. Using computational modeling and imaging of brain function, we also tested whether learning for other was abnormal in post-traumatic stress disorder (PTSD), and found that, compared to healthy people, PTSD patients had slower learning for others' rewards, and the inferior parietal lobule, a brain region for processing social information, showed higher responses to unexpected outcomes for others. In another study, we examined whether oxytocin (OT), a neuropeptide that has been reported to change people's social functions, could influence reward learning for others in healthy males. The results showed that OT slowed down people's learning for others, and also decreased the neural learning signals in the anterior cingulate cortex, a region involved in processing other's outcomes. Our findings provide new information about how reward learning for oneself and others are changed in mental illnesses, reveal potential targets for their treatments, and bring caution for using OT as a therapeutic intervention.

Cette thèse contient trois essais sur la coopération, mesurée à travers les contributions dans le jeu du bien public.Dans le premier chapitre, je propose une revue de la littérature sur l’hétérogénéité dans les jeux de bienpublic linéaires. Je distingue deux types d’hétérogénéité : l’hétérogénéité en dotation et l’hétérogénéité en rendement du bien public (c’est-à-dire en MPCR). Malgré un conflit normatif exacerbé, les agents hétérogènes contribuent autant au bien public que des agents homogènes. Sont-ils en mesure d’utiliser des mécanismes pour atteindre l’efficience (une provision complète du bien public) ? Mes résultats sont nuancés. Les agents hétérogènes en dotation sont capables de "s’autogouverner" et d’atteindre l’efficiencetandis que les agents hétérogènes en MPCR ne parviennent pas parfaitement à surmonter le problème de la sous-provision du bien public.Dans le deuxième chapitre, co-écrit avec Adam Zylbersztejn, nous étudions les effets d’un risque environnemental sur la coopération. Nous appelons risque environnemental une situation dans laquelle le rendement du bien public est risqué au moment de la décision. Nous considérons, dans notre expérience, deux types de risque : un risque individuel (le MPCR est déterminé indépendamment pour chaque membre du groupe) et un risque collectif (le MPCR est le même pour chaque membre du groupe). Nous constatons que le risque n’affecte pas la coopération : les sujets ne contribuent pas différemment au bien public lorsque le MPCR est certain ou lorsqu’il est risqué.Dans le troisième chapitre, j’examine les effets d’un mécanisme fondé sur la compétition intragroupe pour financer des biens publics. Dans mon expérience, les agents sont en compétition pour obtenir un MPCR plus élevé. Le rang dans la compétition - et donc le MPCR - dépend de la façon dont la contribution d’une personne se classe au sein de son groupe. Je trouve que la compétition n’améliore la provision des biens publics que lorsqu’elle ne génère pas d’inégalités trop importantes. / This thesis contains three essays on cooperation, observed through the contributions in the Public Good Game. In the first chapter, I survey the literature on heterogeneity in linear Public Good Games. I distinguish two kinds of heterogeneity: heterogeneity in endowment and heterogeneity in return from the public good (i.e. MPCR). Despite a normative conflict exacerbated, heterogeneous agents contribute as much as homogeneous agents to the public good. Are they able to use mechanisms to reach efficiency (i.e. a full provision of the public good)? I find mixed evidence. Agents heterogeneous in endowment are able to govern themselves and to reach efficiency while agents heterogeneous in MPCR do not perfectly overcome the underprovision problem.In the second chapter, co-written with Adam Zylbersztejn, we investigate the effects of environmental risk on cooperation. We call an environmental risk a situation in which the return of the public good is risky at the time of the decision. We consider, in our experiment, two kinds of risk: an individual one (i.e. the MPCR is determined independently for each group member) and a collective one (i.e. the MPCR is the same for each group member). We find that risk does not affect cooperation: subjects do not contribute to the public good differently when the MPCR is certain or when it is risky.In the third chapter, I investigate the effects of a mechanism based on within-group competition to provide public goods. In my experimental treatments, agents compete for a higher MPCR from the public good. The rank in the competition - and therefore the MPCR - depends on how one’s contribution ranks within the group. I find that competition improves public goods provision only when it does not generate too large inequalities.