Behavioral Game Theory

The conventional way to charge consumers for something is pretty simple - they pay for every unit they buy. But, there are alternatives. One is to charge an up-front fee and then refund customers for every unit they purchase below some threshold. Google's new Project Fi has an element of this built into it, as they explain - 'Let's say you go with 3GB for $30 and only use 1.4GB one month. You'll get $16 back, so you only pay for what you use'.           It is simple to design a pay and refund pricing policy that are theoretically equivalent. For instance, suppose you regularly buy movies from an online website. Also, suppose that you would never buy more than 20 movies a month. Then the following pricing policies are equivalent: Pay: You pay £5 for every movie you download. Refund: You pay a monthly fee of £100 and receive £5 back, per movie, if you download less than 20 movies.  For example, if you buy 10 movies in a month then this either costs £1

In a social dilemma what is good for the group is not necessarily good for the individual. For instance, if Fred donates time and money to charity that costs Fred but benefits society. Similarly, if Fred cycles to work so as to not pollute that costs Fred but benefits society. We know in the lab that many people (typically around 50%) are willing to put the interests of the group ahead of their own. This gives hope when it comes to things like combating climate change. There is, however, an intriguing and unexplained framing effect regarding willingness to cooperate.          Any social dilemma can be framed in two alternative ways. One can frame things in terms of Fred making a contribution to the group or in terms of Fred making a withdrawal from the group . Some things, like giving to charity, are more naturally thought of in terms of contribution. And others, like cycling to work, are more naturally thought of in terms of withdrawal. But, one can always reframe things. For inst