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How does social distance influence behavior at the individual level and the group level? A story through experimental economics

Vu, Dung

The question of which personal factor(s) interfere with people’s behavior in real life that results in the outcomes differing greatly from predicted theories has been partly answered by social science. Yet people are analyzing decisions and the decision making process to go deeper than the surface, human beings are more complicated than self-interested creatures. Game-theorists have found a number of experimental evidence that does not end up in the equilibria and built up different theories to reason their observations. Prisoners in the Prisoners’ Dilemma do not always defect (Dal Bo P 2005); Dictators do not take all the money in a Dictator’s Game (Charness and Gneezy 2008) – this fact started to give researchers the benefit of the doubt. The purpose of this book is to propose factors tested by theory and experimental evidence to introduce the readers to what potentially change their behavior and observe its implication on others’ behavior. It also cites a number of definitions and ideas of other researchers so as to provide the audience with a different scientific point of view in the most comprehensible way. There are real life examples in addition to theories to connect dots and help the audience to associate themselves when they read through, thus makes it more approachable to less technical readers. The logic goes as follows: through observation of different individuals and cultures, a series of thoughts are discussed with colleagues and other scientists, a small group of factors are believed to cause shocks in behavior and have an impact on the decision making process. When conjectures are formed, experimental methods are designed to accommodate the theory and test the expected variables (now that the invisible factors have been formalized in certain conditions known as treatments). The book covers from an individual concept like “social distance” (the degree of reciprocity that subjects believe exist within a social interaction – Hoffman et al. 1999) to a broader one like the problem of corruption with evidence and comparison of diverse samples. Some may argue that the design of the first experiment somehow interferes with the impact of reputation rather than social distance. Due to L Cabral (2005), names carry the signature of our past behavior, thus are connected to reputation. However, reputation is built through updating a Baysian belief. Within the scope of a one-shot game, the use of full name may very well reasoned to be associated with social distance because there are no more than one period. Thus, subjects can not build their reputation and benefit from it in an economic sense. Readers can enjoy a gentle walk through the hypothesis with detailed information of the design, 8 the setup, data analysis and discussion of three main factors that is believe to interfere with behavior: social distance, corruption as a maximization problem and grouping effect. The book is structured as follows: the first chapter discusses the general framework and the reasons for which the hypotheses are formed and tested. The second chapter introduces how social distance affects behavior in a public good game and if culture plays an important role. The third chapter debates corruption when people’s social distance varies. The fourth chapter finds impacts of social distance on a group of people, known as grouping effect when people belong to different natural or social groups. They are linked together to serve as a big picture of how social distance interacts with other situations and results in different outcomes. However, these chapters can be read individually without any loss of generality. Chapter five includes the overall discussion of the findings and how to apply them into real life for better social outcomes

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Vu, Dung: How does social distance influence behavior at the individual level and the group level? A story through experimental economics. 2017.

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