Template-Type: ReDIF-Paper 1.0 Author-Name: Klaus Moeltner Author-Name-First: Klaus Author-Name-Last: Moeltner Author-Email: moeltner@cabnr.unr.edu Author-Workplace-Name: Department of Agricultural and Applied Economics, Virginia Tech Author-Name: James J. Murphy Author-Name-First: James Author-Name-Last: Murphy Author-Email: murphy@uaa.alaska.edu Author-Workplace-Name: Department of Economics, University of Alaska Anchorage Author-Name: John K. Stranlund Author-Name-First: John Author-Name-Last: Stranlund Author-Email: stranlund@resecon.umass.edu Author-Workplace-Name: Department of Resource Economics, University of Massachusetts Amherst Author-Name: Maria Alejandra Velez Author-Name-First: Maria Alejandra Author-Name-Last: Velez Author-Email: mav@adm.uniandes.edu.co Author-Workplace-Name: School of Management, Universidad de los Andes Title: Institutional Heterogeneity in Social Dilemma Games: A Bayesian Examination Abstract: A main research focus in many Social Dilemma Games is the suitability of external institutional treatments in inducing socially optimal outcomes. It is likely that participating subjects exhibit unobserved heterogeneity in their reaction to these treatments. This type of “institutional heterogeneity” has to date not found much attention in the experimental literature. We propose a Hierarchical Bayesian estimation framework to highlight these heterogeneity effects. We illustrate that models that ignore treatment-specific heterogeneity can severely under-estimate the variability in treatment-induced decisions amongst the subject population. The resulting misleading picture of comparative treatment effects can lead to sub-optimal institutional choices and related policy decisions. Creation-date: 2012-11 File-URL: http://www.econpapers.uaa.alaska.edu/RePEC/ala/wpaper/ALA201204.pdf File-Format: Application/pdf Classification-JEL: C11, C24, C52, C93, Q28, C72, C73, Q56 Keywords: experimental economics, Social Dilemma Games, Hierarchical Modeling, Bayesian Simulation, Common Property Resource, environmental economics Publication-Status: published in Handbook on Experimental Economics and the Environment. John A. List and Michael K. Price, editors. Northampton, MA: Edward Elgar. Number: 2012-04 Handle: RePEc:ala:wpaper:2012-04