The Economic Impact of Anti-Social Preferences in a Multi-Period Game with Attacks and Insurance

Philip Grossman and Mana Komai

No 21-12, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: We report results from a multi-period game designed to stimulate anti-social preferences and to measure the cost of to a society with members who act on these preferences. There are a number of important features of our game that, while individually not unique, in total distinguish it from previous games used to examine anti-social preferences. The unique feature of our design is that it addresses the two negative effects of anti-social preferences: the wasteful expenditure of resources in an attempt to harm others and the wasteful use of resources by the targets of antisocial actions in an attempt to protect themselves. We report evidence of anti-social preferences; those who were less well-off attack those who were better off, but the pattern of attacks is more complicated than suggested by available theory. We find within class attacks to be the most common type of attack observed. Relative standing within a type seems to be the motivation. Rich players are motivated in their attacks by a desire to move up in ranking within their type, while the poor players are motivated in their attacks by a desire to avoid moving down in ranking within their type. Finally, as wasteful as attacks are, spending on protection against attacks, while individually rational, results in even more waste. Subjects purchased insurance at twice the rate of attacks. Within our laboratory society, players acting on their anti-social preferences reduce total economic welfare by approximately 20 per cent.

Keywords: anti-social preferences; insurance; envy (search for similar items in EconPapers)
JEL-codes: C91 D03 D6 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2012-09
New Economics Papers: this item is included in nep-evo, nep-exp and nep-ias
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