Myself, or the group, what will I choose?

The instructions are simple: Do not speak with your fellows, sit in front of your assigned computer, and follow the instructions shown on your screen.

I am with a bunch of randomly selected students from different backgrounds in the Laboratory of Experimental Economics at CSS. It seems we are mainly international students attracted by the economic reward.

The staff responsible for the experiment welcome us: »Rules have to be strictly followed in order to ensure a controlled environment for the experiment. Eating, chatting, mobile phones or any communication is not allowed as long as you are in the lab.«

Credits are real kroner

So let the games begin!

The experiment consists of several rounds where you are put in randomly-selected groups of 4 persons.

The participants do not know who the other group members are. Each turn, participants are given credits exchangeable with real Danish kroner, to keep or to put into a group account.

Real dilemma

Now, out of the total amount of credits in the group account, which have been given by all group participants, you receive back an amount that equals half. So the more people put in to the group account, the more everyone can win.

So it is up to you. Do you choose the strategy to put in a lot to the benefit of everyone, or do you keep credits for yourself.

»The strategy that pays off best for each individual is to always keep the credits for yourself. But giving all your credits to the group account maximizes the group payoff. So this is why it is a dilemma«, explained assistant professor Toke Fosgaard from FOI to me subsequently.

Don’t worry, it’s normal

»The choice situation is a so-called public good game, which tests in controlled conditions the social dilemma of being egoistic or social in cooperation situations,« he says.

Read more about the economics behind the experiments here.

So what actually happened? People start out by giving, on average, about half of their assigned credits to the group. But as the rounds go by, egoism rears its ugly head. Most participants put fewer and fewer credits into the common group account, and this begins to slowly have an adverse effect on the common gain.

Curious, I subsequently ask Toke about it: »It is normal that people behaves this way,« he assures me with a grin.

DKK 170 = nice day’s work

The outcomes of these types of experiments is better economic theories. Economic theories that in the end can make more precise recommendations for policy makers.

For this specific experiment, the outcome will be a series of journal articles analysing the data obtained in this study.

As for myself – and unlike the others, apparently – I put the same amount of credits, 7, into the common pool throughout the games, keeping 3 for myself. This way I would give some benefits to the common pot, but mostly to yours truly. I got DKK 170 in the end.

Got me thinking

I did relatively well, I think, but I didn’t get the chance to compare, because we were led out of the room one by one.

The main outcome for this reporter of course was the fun of taking part on it: The joy of a nice lunch that day paid with the booty made it extra sweet.

It certainly got me thinking. Should we all become mean and care only for our own interests? Or should we be more generous for a common, social, goal in spite of the fact that this may diminish our personal economic profits?

universitypost@adm.ku.dk

Stay in the know about news and events happening in Copenhagen by signing up for the University Post’s weekly newsletter here.