In this experimental study of a two player power-to-take game, players earn an income in an individual effort task preceding the game. The game has two stages. First, one player can claim any part of the other's income (take rate). Then, the latter player can respond by destroying own income. We focus on how emotions in¯uence responses and show: (1) a higher take rate increases (decreases) intensity of negative (positive) emotions; (2) negative emotions drive destruction; (3) at high emotional intensity, responders destroy everything; (4) expectations affect the probability of punishment. Emotional hazard is identi®ed as a new source of ef®ciency costs.Many people would agree that emotions play a very important role in the decisions they make. Extensive research by psychologists over the last two decades has provided a lot of supportive evidence. It appears that emotions play a signi®cant role in matters like attention, learning, and memory (Izard et al., 1984). Recent neuroscienti®c research even suggests that emotions are essential for rational decision making (Damasio, 1994; Picard, 1997). If emotions play such an important role in psychological processes, they are also likely to be relevant for understanding economic decision making. Frank (1988) argues that emotions are relevant for economics because they can help us solve important commitment problems. He shows, for example, that players endowed with the emotion guilt can sustain the co-operative outcome of a prisoner's dilemma game. 1 Other recent economic studies focus on the effects of emotions on preferences (Hirshleifer, 1987;Loewenstein, 1996) or on the implications for rationality (Elster, 1996(Elster, , 1998. However, as yet little work has been done to integrate emotion theory in economic research. Elster (1998) addresses this neglect and hypothesises that it may have to do with the different explananda of psychology and economics:`Whereas economists mainly try to explain behaviour, emotion theorists try to explain emotions. By and large, psychological studies of the emotions have not focused on how emotions generate behaviour' (p. 47).The object of this study is to investigate how emotions generate behaviour in a laboratory experiment. As our vehicle of research we use a simple * This paper is part of the EU-TMR Research Network Endear (FMRX-CT98-0238). We are grateful to Joep Sonnemans, Theo Offerman, and Arno Riedl for discussions and comments, Jos Theelen for developing the laboratory software, and Jens Grosser for his assistance in the experiment. We are also grateful for the remarks made by participants of the ESA conference in Mannheim (1998), the IAAP conference in San Francisco (1998), and the ENDEAR Workshop in Bari (1999). Finally, we thank the editor David De Meza and three anonymous referees for their helpful comments.1 Frank (1988) assumes that people give signals about their emotional commitments or dispositions (for example, via facial expression or the pitch of the voice) that are dif®cult to simulate. In his prisoner's dilemma mo...

In the reported experiment different payment schemes are examined on their incentive effects. Payment based on individual, team and relative performance are compared. Subjects conducted computerized tasks that required substantial effort. The results show that individual and team payment induced the same effort levels. In team production free-riding occurred, but it was compensated by many subjects providing more effort than in case of individual pay. Effort was higher, but more variable in tournaments, while in case of varying abilities workers with relatively low ability worked very hard and drove up effort of the others. Finally, attitudes towards work and other workers differed strongly between conditions.

Informational lobbying -the use by interest groups of their (alleged) expertise or private information on matters of importance for policymakers in an attempt to persuade them to implement particular policies -is often regarded as an important means of influence. This paper analyzes this phenomenon in a game setting. On the one hand, the interest group is assumed to have private information which is relevant to the policymaker, whilst, on the other hand, the policymaker is assumed to be fully aware of the strategic incentives of the interest group to (mis)report or conceal its private information.It is shown that in a setting of partially conflicting interests a rationale for informational lobbying can only exist if messages bear a cost to the interest group and if the group's preferences carry information in the 'right direction'. Furthermore, it is shown that it is not the content of the message as such, but rather the characteristics of the interest group that induces potential changes in the policymaker's behavior. In addition, the model reveals some interesting results on the relation between, on the one hand, the occurrence and impact of lobbying and, on the other hand, the cost of lobbying, the stake which an interest group has in persuading the policymaker, the similarity between the policymaker's and the group's preferences, and the initial beliefs of the policymaker. Moreover, we relate the results to some empirical findings on lobbying.Much o f the pressure placed upon government and its agencies takes the form o f freely provided "'objective" studies showing the important outcomes to be expected from the enactment of particular policies (Bartlett, 1973: 133, his quotation marks).The analysis here is vague. What is needed is an equilibrium model in which lobbying activities have influence. Incomplete information ought to be the key to building such a model that wouM explain why lobbying occurs (information, collusion with decision makers, and so on) and whether lobbying expenses are socially wasteful. (Tirole, 1989: Ch.

An experimental examination of rational rentseekingPotters, J.J.M.; de Vries, C.G.; van Winden, F.A.A.M. Published in: European Journal of Political EconomyPublication date: 1998 Link to publication Citation for published version (APA):Potters, J. J. M., de Vries, C. G., & van Winden, F. A. A. M. (1998). An experimental examination of rational rentseeking. European Journal of Political Economy, 14(4), 783-800. General rightsCopyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights.-Users may download and print one copy of any publication from the public portal for the purpose of private study or research -You may not further distribute the material or use it for any profit-making activity or commercial gain -You may freely distribute the URL identifying the publication in the public portal Take down policy If you believe that this document breaches copyright, please contact us providing details, and we will remove access to the work immediately and investigate your claim. AbstractThe theoretical literature exploring various ramifications and applications of Tullock's Ž . 1980 rent-seeking model is extensive and rapidly growing. In contrast, there exist as yet only a few experimental evaluations of this model, with ambiguous results. Moreover, these Ž . studies focus on one particular case proportional probabilities and use a problematic experimental design. With an appropriate design we investigate the extreme cases of proportional probabilities and perfect discrimination, which offer the starkest contrast in theoretical predictions. We find substantial evidence for the predictive power of the rent-seeking model, particularly if one allows for the fact that people sometimes make mistakes or are confused about what to do. q 1998 Elsevier Science B.V. All rights reserved. JEL classification: D72; C91Keywords: Rent-seeking model; Experimental tests ) Corresponding author. Tel.: q31-020-5254251; Fax: q31-020-5255283; E-mail: fvwinden@fee.uva.nl 0176-2680r98r$ -see front matter q 1998 Elsevier Science B.V. All rights reserved.Ž . PII: S 0 1 7 6 -2 6 8 0 9 8 0 0 0 3 7 -8