Voluntary industry standards: an experimental investigation of a Greek gift

Abstract

One reason for firms to voluntarily increase their environmental or social production standards is to prevent consumers from lobbying for stricter mandatory standards. In this sense, voluntary overcompliance serves as a Greek gift, as consumers might be worse off in the end. Strategically, a Greek gift deteriorates the consumer's incentive for lobbying and, as such, might be unkind. In many experiments it was shown that unkind actions which decrease the other's payoff are punished by negative reciprocal behavior. This paper experimentally investigates whether negative reciprocity can also be observed if unkind behavior is not directed at payoffs but rather at a deterioration of strategic incentives. (author's abstract)