Exploring the volunteer’s dilemma

Every year faculty members within each college select a peer as the Madison Scholar, and this year’s College of Business honoree is Angela Smith, professor in the Department of Economics. Madison Scholars exemplify scholarly excellence and achievement in their respective discipline. To mark Smith’s selection, she presented her research on experimental economics on September 25 in Hartman Hall’s Forum. 

Smith’s research has been accepted for publication in numerous noteworthy journals such as Games and Economic Behavior and Eastern Economic Journal, and she has served as a referee for multiple publications, including Review of Behavioral Economics where she was an associate editor. 

Much of Smith’s research falls within the realm of experimental economics; however, this methodology allows for plenty of flexibility in investigation of specific topics, allowing Smith to satisfy her broad and far-reaching interests. One of the most common themes throughout Smith’s previous research is the attempt to use experiments to identify situations where behavior deviates from theoretical predictions and to then develop explanations for the observed deviations. 

Her Madison Scholar presentation was based on a previously published paper titled “An Experimental Examination of the Volunteer’s Dilemma,” which was published in March 2017 in Games and Economic Behavior, with co-authors Jacob K. Goeree of the University of New South Wales and Charles A. Holt from the University of Virginia. 

Smith earned her Ph.D. and M.A. from the University of Virginia, and her B.A. from the College of William and Mary. She has been a faculty member in the College of Business since August 2008 and has taught various economics courses including introductions to macro- and microeconomics, mathematical economics and experimental economics.

Prior to her Madison Scholar presentation, Smith shared the following insights about her research and its impact on the field. 

College of Business: You’ve worked on a range of topics within experimental economics. How do you decide which topics to explore?

Angela Smith: As an experimental economist, it's really the methodology that is the uniting theme in my research. It gives me the opportunity to explore a wide variety of topics. It's mostly a combination of what my current interests are and where I think I can contribute to the existing literature. Generally, I'm most intrigued by situations where we have a theoretical prediction that's counterintuitive. That's the case in the volunteer's dilemma paper that I chose to present. You need one volunteer to make it so this entire group gets a benefit. It's intuitive to think that it's more likely that at least somebody volunteers, right? That's what we see in the data; that's what's intuitive. But that's not what the theory predicts. Delving into these situations where there is this deviation from theory and what we absorb in terms of behavior is something I've really enjoyed because I like thinking about what could explain the observed behavior.

CoB: Can you talk about the flexibility of experimental economics and how it allows you to explore diverse phenomena?

Smith: Experiments are great because you can use them anytime you can find a way to mimic an environment using financial incentives and that has been done to study so many different things. In my own research it ranges from more traditional public economics topics like volunteers dilemma or the presence of rent seeking, to more atypical topics like security threats and strategic interactions between attackers and defenders. And it doesn't have to be situation-based. A lot of experiments, including some of my own, focus on more foundational decision-making constructs, like belief formation, belief elicitation, learning and overconfidence. Those sorts of things that have a wide variety of contexts can be applicable too, so I love the flexibility.

CoB: With your volunteer's dilemma paper cited over 70 times, what do you think is the most significant impact your research has had in this area?

Smith: I think the most significant impact of that particular paper just comes from the fact that it was among the first ones to explore the volunteers' dilemma using traditional laboratory economics experiments with repeated interactions with this group size. It at least helps to provide a framework design so that others could change it and adapt it to study the questions they want to study. A lot of the citations are exactly that; they're looking at different things. So some involve asymmetric voluntary costs or uncertainty about group size, or some look at gender differences and volunteer behavior. It’s slightly different, but in related ways.

CoB: Can you give examples of where the volunteer’s dilemma might appear in everyday scenarios? 

Smith: One of the most common examples you hear has to do with an individual in peril. Someone's drowning and there's a beach full of people that see and they need a volunteer to jump in and save them. That's usually the most cited. But honestly, it's everywhere. It could be any situation where an entire group benefits if at least one person undergoes a costly volunteer procedure. It could be figuring out who's going to do logistical tasks in a group project among students. It can even be as simple as who does the dishes? These are all situations where we would all want it to happen and we would all benefit from someone doing it. And if no one else was going to do it, we would likely do it ourselves, but we'd rather someone else volunteer.

CoB:  What real-world applications do you see for the findings from this experiment?

Smith: There's three that I'll point out. 1) In the paper we find that noise plays a role in decision making. The model we look at, this quantal response equilibrium with noisy decision making, does a better job explaining what we actually see rather than the strict Nash equilibrium with no noise. 2) We’ve also noted the group size effect. So noting that what people do gels with our intuition as opposed to the existing theory. That could have implications for even someone making an appeal for a volunteer. I'm thinking about group size and how appealing to a larger group might increase your likelihood of actually getting someone to say yes. 3) Towards the end of the paper we focus on heterogeneity across individuals. We see some subjects volunteer a lot, and some subjects volunteer none - there's this big heterogeneity across individuals. Others have delved into that deeper and found some interesting results.