The House Money Effect and Negative Reciprocity

Type of content
Discussion / Working Papers
Publisher's DOI/URI
Thesis discipline
Degree name
Publisher
University of Canterbury. Department of Economics and Finance
Journal Title
Journal ISSN
Volume Title
Language
Date
2014
Authors
Danková, K.
Servátka, M.
Abstract

In the vast majority of experiments documenting the existence of reciprocity subjects are endowed with windfall funds. In some situations such endowments might create a so-called "house money effect". We identify two reasons why the source of endowment might matter for negative reciprocity: (1) Using earned ? as opposed to windfall money ? might increase the costs of negative reciprocity due to this money being in a different mental account and thus lead to less retaliation. (2) Decreasing a decision-maker?s endowment consisting of earned money might be considered a stronger violation of property rights and lead to more retaliation. We test our conjectures in an experiment and find that subjects retaliate more in both cases.

Description
Citation
Danková, K., Servátka, M. (2014) The House Money Effect and Negative Reciprocity. 31pp..
Keywords
Real Effort, Experiment, House money, Reciprocity, Taking Game
Ngā upoko tukutuku/Māori subject headings
ANZSRC fields of research
Field of Research::14 - Economics::1402 - Applied Economics
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