So You Say You Want A Revolution:

Experimental Findings from Indonesia

Berly MartawardayaBerly MartawardayaLabSi – Universita’ di Siena (Italy)LabSi – Universita’ di Siena (Italy)

and Universitas Indonesiaand Universitas Indonesia

StructureStructure

• IntroductionIntroduction

• Literature Literature

• Experiment SetupExperiment Setup

• Results Results

• ConclusionConclusion

IntroductionIntroduction

• Revolution has strong impact to Revolution has strong impact to social and economics conditionssocial and economics conditions

• Economic factor has role in many Economic factor has role in many revolutionsrevolutions

• But a rarely touch topic in But a rarely touch topic in economics, unlike in political scienceeconomics, unlike in political science

Literature Literature

• Dudley (2000) Dudley (2000) revolution in Europe (950-1950) by relative revolution in Europe (950-1950) by relative importance of fixed costs and network effects in importance of fixed costs and network effects in producing the information to allocate society producing the information to allocate society resources. resources.

• Navqi and Wemhoner (1995) Navqi and Wemhoner (1995) three agents models (landlord, labourer and three agents models (landlord, labourer and merchant) and three commoditiesmerchant) and three commodities landlord can landlord can wield power in SBPE of an infinite-move, extensive-wield power in SBPE of an infinite-move, extensive-form game of complete and perfect information. form game of complete and perfect information.

• Hatlebakk (2002) Hatlebakk (2002) allowed the landlord to pay the merchant and allowed the landlord to pay the merchant and stage game with less rationality (more robust SBPE)stage game with less rationality (more robust SBPE)

Experiment SetupExperiment Setup

- Combining dicator game and social Combining dicator game and social exclusion gameexclusion game

- Revolution as movement of the many Revolution as movement of the many poor against the few richpoor against the few rich

- The poor must make colective The poor must make colective contribution to make a succesful contribution to make a succesful revolutionrevolution

- Insufficient contribution = failed Insufficient contribution = failed revolutionrevolution

Experiment Setup (2)Experiment Setup (2)

1) Three player game (A, B, C)2) Endowment of B = Endowment of C = Rp 200

rupiah but Endowment of A is very high (Rp 1000).4) A decide how much to give (equally) to B & C5) B & C contribute to common pool. If > threshold

(Rp 300) then it succed, if less then revolution fail but B & C keep the gain. If B or C don’t contribute then both get 0

5) Repeat for 5 roundsDictator setting: A is randomly chosenMerit setting: A is chosen by a short test

Game TreeGame TreeAA

(give x/2 )(give x/2 )

B B BB B B

SSBB + S + SCC ≥ T ≥ T S SBB + S + SCC < T < T S SBB or S or SCC = 0 = 0

0 0 E EAA – x – x E EAA - x - x

EEAA / 2 / 2 EEBB + x/2 - S + x/2 - SBB 0 0

Experiment Setup (3)Experiment Setup (3)

• N: 114N: 114• LocationLocation

U of IndonesiaU of Indonesia• Subject:Subject:

undergrad inundergrad in econ/businessecon/business• Paper basePaper base• AnonymousAnonymous• Random Random

assignmentassignment

Results : Results : Average Proposer’s Average Proposer’s giftgift

0

50

100

150

200

250

300

350

400

450

500

1 2 3 4 5

Round

Pro

po

se

r's

gif

t (R

up

iah

)

Dictator Merit

Results : Results : Average Proposer’s Average Proposer’s giftgift

t test between proposer's offer in dictator setting and merit setting

round1 Round 2 Round 3 Round 4 Round 5

value 5,7123 6,0051 5,6728 5,7186 5,6825

prob 0 0 0 0 0

Results : Results : Average Responders’ Average Responders’

contributioncontribution

0

20

40

60

80

100

120

140

160

180

1 2 3 4 5

Round

Res

po

nd

er's

Co

ntr

ibu

tio

n (

rup

iah

)

Dictator Merit

Results : Results : Average Responders’ Average Responders’ contributioncontribution

t test between respondent's contribution in dictator setting and merit setting

Round 1

Round 2

Round3

Round 4

Round 5

value 1,0245 -1,1971 2,6018 -7,7759 -14,0817

prob 0,3081 0,2341 0,0107 0 0

Result: Result: Average RevoltAverage Revolt

0

5

10

15

20

25

30

1 2 3 4 5

Round

% R

evo

lt

Dictator Merit

ConclusionConclusion

• The proposer is more generous in The proposer is more generous in dictator setting where they did not dictator setting where they did not earn their position. earn their position.

• the merit setting lead to higher rate the merit setting lead to higher rate of revolution. of revolution.

• Regret? Where everyone could be Regret? Where everyone could be supreme leader, all non supreme supreme leader, all non supreme leader are losers.leader are losers.

You say you want a revolutionYou say you want a revolutionWell you knowWell you know

We all want to change the worldWe all want to change the world

You ask me for a contributionYou ask me for a contributionWell you knowWell you know

We're doing what we canWe're doing what we can

Don't you know it's gonna be alrightDon't you know it's gonna be alrightAlright AlrightAlright Alright

John Lennon in “Revolution”John Lennon in “Revolution”