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Saving face through preference signaling and obligation avoidance

Matthew Chao,Jonathan Chapman

Published 2020 in Journal of Economic Behavior and Organization

ABSTRACT

Abstract Many individuals act more selfishly in games when actions are hidden and their image is not at risk. However, some individuals may still desire to publicly signal reciprocity or other socially desired behavior in these contexts. These individuals may view hidden actions not as an opportunity to act selfishly, but rather as an obstacle to signaling preferences or type. Study 1 tests this by implementing a trust game where nature stochastically intervenes and allocates nothing in place of the second-mover's choice. When nature intervenes, many second-movers choose to sacrifice pay in order to truthfully signal that they attempted to allocate more, and that they therefore tried to reciprocate. Since signaling can be costly, Study 2 tests whether some individuals strategically reject interactions that could necessitate this type of signaling response. Players play two rounds of dictator games of increasing size, swapping roles in between. In treatments that allow it, many players reject allocations from their partner in the first round; they then act more selfishly as the dictator in the subsequent, higher-stakes round. Together, these results emphasize that the need to signal reciprocity or other socially desired behavior can influence how people engage with and respond to others in strategic contexts.

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