Xueheng Li

Strategic complementarities influence various social and economic activities. This study introduces a model to design a weighted and directed complementarity network to achieve a planner’s objectives. The network represents the direction and intensity of complementarities between agents, influencing their best-responses to one another and determining equilibrium efforts. The planner’s objective function can be convex, as commonly assumed in prior research, or arbitrarily concave to represent scenarios with diminishing marginal returns to each agent’s effort. In all scenarios, optimal networks are generalized nested split graphs (GNSGs) which exhibit a link-dominance hierarchy among agents. These optimal networks are often strictly hierarchical, leading to inequality between ex ante identical agents. Additional analysis of a non-cooperative network formation game reveals that all decentralized equilibrium networks are inefficient GNSGs.

Peer punishment is widely considered a key mechanism supporting cooperation in human groups. Although much research shows that human behavior is shaped by the prevailing social norms, little is known about how punishment decisions are impacted by the social context. We present a set of large-scale incentivized experiments in which participants (999 American participants recruited via Amazon Mechanical Turk) could punish their partner conditional on either the level of cooperation or the level of punishment displayed by others who previously interacted in the same setting. While many participants punish independently of levels of cooperation or punishment, a substantial portion punishes free riding more severely when cooperation is more common (‘norm enforcement’), or when free riding is more severely punished by others (‘conformist punishment’). With a dynamic model we demonstrate that conditional punishment strategies can substantially promote cooperation. In particular, conformist punishment helps cooperation to gain a foothold in a population, and norm enforcement helps to maintain cooperation at high levels. Our results provide solid empirical evidence of conditional punishment strategies and illustrate their possible implications for the dynamics of human cooperation.

Despite the prevalent stereotype that former entrepreneurs are undesirable employees due to a high likelihood of quitting, little research has empirically verified its accuracy. With a growing population of former entrepreneurs in the workforce, it has become more important than ever to understand whether, when, and which former entrepreneurs may or may not be likely to quit their post-entrepreneurship employment. We used a sample of nationally representative 20-year data from Australia to examine how timing of prior entrepreneurial experience relative to a focal wage job relates to voluntary turnover via a serial mediation by entrepreneurial intention and turnover intention. Results showed that employees with entrepreneurial experience in their second most recent job spell were more likely to develop entrepreneurial intention and turnover intention in sequence, which, in turn, increased quitting risk relative to employees without entrepreneurial experience in the same job spell. However, we did not find evidence for such differences between employees with and without entrepreneurial experience in their most recent job spell. Moreover, the serial mediation effect holds among men but not women. These findings highlight the important role of timing in the relationship between of entrepreneurial experience and post-entrepreneurship employment attitude and behavior. Theoretical contributions and practical implications are discussed.

Sociologists and psychologists have long argued that emotions are essential to sustain social norms. This study examines the role of indignation in upholding cooperation norms within society. I model indignation in a population psychological game and characterize the stochastically stable equilibrium in a noisy best-reply dynamic. The analysis yields two findings. First, indignation sustains cooperation in the long run, irrespective of whether interactions are global or occur within a fixed local interaction structure. Second, mobility between communities fosters the emergence, expansion, and persistence of cooperative communities, leading to positive correlations among mobility, community size, cooperation, and the punishment of defectors. This study demonstrates the application of stochastic stability analysis to address multiple equilibria in psychological games.

When players evaluate their payoffs relative to a social reference point, they exhibit social comparison preferences, of which competitive preferences and imperfect inequality aversion are special cases. A social comparison equilibrium is a Nash equilibrium under social comparison preferences. We identify a novel property called decomposability and show that players are strategically independent in decomposable games under social comparison preferences. Consequently, there exists a generically unique social comparison equilibrium in every decomposable game. We show that social comparison equilibria often result in undesirable outcomes, sometimes worse than any outcome that would arise if all players were material payoff maximizers. Examples of decomposable games include the minimum effort game, the public goods game, the tragedy of the commons, and all 2-by-2 coordination games.