Economic conformity: eliciting conformity in a public goods game Open Access
Liu, Albert (Spring 2022)
Abstract
Consumer behavior is highly dependent upon the opinions and reviews of others. This invisible force where heterogeneous individual preferences converge is known in psychology as conformity. Conformity has become a main driver for demand across multiple industries and businesses, including fast-fashion, TikTok, and other “hype”-driven goods and services. This study investigates the duration, degree, and extent of experimentally-induced conformity utilizing the public goods game as a lens of analysis. The control was a standard five-round public goods game, while the experimental condition induced peer pressure to measure conformity. Through this methodology, we consider the mean token contributions by participants as a form of willingness to pay (as a form of price) for conformity (as a form of product) to a group’s dynamics. We find that the proportion of people who fully conform to an immediate conforming pressure is approximately 19% and the proportion of people who at either partially or fully conform is approximately 63% of people. Gender and ethnicity did not affect who had conformed significantly. Further, the mean willingness to pay increased by approximately 0.50 of the original mean willingness to pay when initially faced with a conforming pressure. This change may be influenced by group size or MPCR, as participants in a group size of 3 with an MPCR of 0.333 had a higher initial willingness to pay compared to participants in a group size of 4 with an MPCR of 0.25. While this change in the price point of conformity only lasts for one iteration of decision making, it resurfaces in the long-term, where the mean willingness to pay was approximately 0.87 higher than the mean willingness to pay without a constant conforming pressure. Third, learning behavior of participants converged in the presence of constant conformity pressure, with participants having an approximately equal probability of continuing to conform or becoming independent over time. These results have important implications for sustainable business projections and behavioral economic modelling to accurately predict demand of goods which exhibit conformity pressure.
Table of Contents
TABLE OF CONTENTS
1. INTRODUCTION 1
2. LITERATURE REVIEW 3
2.1 CONFORMITY AND CONSUMERISM 3
2.2 ECONOMIC STUDIES 5
2.3 PROFIT MAXIMIZATION STRATEGIES IN VCMS 9
3. METHODOLOGY 11
3.1 RECRUITMENT 11
3.2 SURVEY 12
3.2.1 DEMOGRAPHIC QUESTIONNAIRE 12
3.2.2 ABRIDGED BIG FIVE INVENTORY PERSONALITY TEST 12
3.2.3 POST-GAME SURVEY 12
3.3 PUBLIC GOODS GAME
13 3.4 STUDY DESIGN 14
3.4.1 CONFORMITY INDUCTION AND QUANTIFICATION 15
3.4.2 ECONOMIC SPENDING AND CONFORMITY MODELING 15
4. RESULTS 19
4.1 QUANTIFYING THE DURATION AND DEGREE OF CONFORMITY 20
4.1.1 BEGINNING OF EXPERIMENT (ROUND 1) 22
4.1.2 MIDDLE OF EXPERIMENT (ROUND 2 AND 3) 23
4.1.3 END OF EXPERIMENT (ROUND 4 AND 5) 24
4.1.4 GROUP SIZE 24
4.2 QUANTIFYING THE PROBABILITY OR PROPORTION OF FULLY CONFORMING PARTICIPANTS
27
4.3 PARTIAL CONFORMITY AND LEARNING BEHAVIOR 32
4.4 REGRESSION RESULTS 35
5. DISCUSSION 40
5.1 QUANTIFYING THE DURATION AND DEGREE OF CONFORMITY 40
5.1.1 BEGINNING OF THE EXPERIMENT (ROUND 1) 41
5.1.2 MIDDLE OF EXPERIMENT (ROUND 2 AND 3) 41
5.1.3 END OF EXPERIMENT (ROUND 4 AND 5) 42
5.1.4 GROUP SIZE 42
5.2 QUANTIFYING THE PROBABILITY OR PROPORTION OF CONFORMITY 43
5.3 PARTIAL CONFORMITY AND LEARNING BEHAVIOR 43
5.4 REGRESSION RESULTS 44
5.5 STUDY DESIGN, STRENGTHS, AND LIMITATIONS 45
5.5.1 STUDY DESIGN SPECIFICATIONS 45
5.5.2 STRENGTHS 47
5.5.3 LIMITATIONS 49
5.6 FUTURE DIRECTIONS 50
6. CONCLUSION 51
REFERENCES 54
APPENDIX 60
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