Experimental and Game Theoretical Analyses of the Unconditional Basic Income

  • Toshiji KawagoeEmail author
Part of the Contributions to Economics book series (CE)


In this chapter we show the results of economic analyses of the Unconditional Basic Income (UBI). Moral hazard and adverse selection problems are addressed, which may arise under the UBI scheme. As for the moral hazard problem, the Negative Income Tax (NIT) and the UBI are compared in a laboratory experiment. In a setting where the NIT and the UBI are identical, we find that UBI increases labour supply significantly more than NIT. We also find that more individualistic and competitive people increase their labour supply even when the UBI is introduced. The conjecture that the UBI makes people lazier is rejected. As for the adverse selection problem, we apply a simple evolutionary game model in order to check whether the introduction of the UBI promotes freedom and self-maintenance of the people who have a weaker position in the household, such as women, children, people of advanced age, and people with disability. We show that there is an equilibrium where women are willing to marry in order to get a higher income for the household, even if such decisions keep them in their weaker positions.


Basic income Negative income tax Moral hazard Adverse selection Evolutionary game 


  1. Atkinson, A. B. (1995a). Incomes and the welfare state. Essays on Britain and Europe. Cambridge: Cambridge University Press.Google Scholar
  2. Atkinson, A. B. (1995b). Public economics in action. The basic income/flat tax proposal. Oxford: Clarendon.Google Scholar
  3. Atkinson, A. B. (1996). The case for a participation income. The Political Quarterly, 67(1), 67–70. CrossRefGoogle Scholar
  4. Benito-Ostolaza, J., Hernandez, P., & Sanchis-Llopis, J. (2016). Do individuals with higher cognitive ability play more strategically? Journal of Behavioral and Experimental Economics, 64, 5–11. CrossRefGoogle Scholar
  5. Bowles, S., & Gintis, H. (1998). Recasting egalitarianism. London: Verso.Google Scholar
  6. Burks, S., Carpenter, J., Goette, L., & Rustichini, A. (2009). Cognitive skills affect economic preferences, strategic behavior, and job attachment. Proceedings of the National Academy of Sciences, 106(19), 7745–7750. CrossRefGoogle Scholar
  7. Burtless, G. (1986). The work response to a guaranteed income: A survey of experimental evidence. In A. H. Munnell (Ed.), Lessons from the income maintenance experiments (pp. 22–52). Boston: Federal Reserve Bank of Boston.Google Scholar
  8. Cadsby, C. B., Song, F., & Tapon, F. (2007). Sorting and incentive effects of pay-for-performance: An experimental investigation. Academy of Management Journal, 50(2), 387–405. CrossRefGoogle Scholar
  9. Calsamiglia, C., Franke, J., & Rey-Biel, P. (2013). The incentive effects of affirmative action in a real-effort tournament. Journal of Public Economics, 98, 15–31. CrossRefGoogle Scholar
  10. Carpenter, J., Graham, M., & Wolf, J. (2013). Cognitive ability and strategic sophistication. Games and Economic Behavior, 80, 115–130. CrossRefGoogle Scholar
  11. Charness, G., & Kuhn, P. (2011). Lab labor: What can labor economists learn from the lab? Handbook of labor economics, 4, 229–330. CrossRefGoogle Scholar
  12. Charness, G., & Rabin, M. (2002). Understanding social preferences with simple tests. Quarterly Journal of Economics, 117(3), 817–869. CrossRefGoogle Scholar
  13. Chen, C.-C., Chiu, I.-M., Smith, J., & Yamada, T. (2013). Too smart or be selfish? Measures of cognitive ability, social preferences, and consistency. Journal of Economic Behavior & Organization, 90(Issue C), 112–122. CrossRefGoogle Scholar
  14. Delsen, L. (1995) Atypical employment: An international perspective. Causes, consequences and policy. Groningen: Wolters-Noordhoff (PhD dissertation).Google Scholar
  15. Delsen, L. (1997). A new concept of full employment. Economic and Industrial Democracy, 18(1), 119–135. CrossRefGoogle Scholar
  16. Fitzpatrick, T. (1999). Freedom and security. An introduction to the basic income debate. London: Palgrave.Google Scholar
  17. Friedman, D., & Sunder, S. (1994). Experimental methods: A primer for economists. New York: Cambridge University Press.CrossRefGoogle Scholar
  18. Gamel, C., Balsan, D., & Vero, J. (2006). The impact of basic income on the propensity to work: Theoretical issues and micro-econometric results. The Journal of Socio-Economics, 35(3), 476–497. CrossRefGoogle Scholar
  19. Gneezy, U., & List, J. A. (2006). Putting behavioral economics to work: Testing for gift exchange in labor markets using field experiments. Econometrica, 74(5), 1365–1384. CrossRefGoogle Scholar
  20. Goldsmith, S. (2010) The Alaska permanent fund dividend: A case study in implementation of a basic income guarantee. In Paper presented at the 13th Basic Income Earth Network Congress, Sao Paulo, Brazil. Retrieved June 18, 2019, from
  21. Gosling, S. D., Rentfrow, P. J., & Swann, W. B. (2003). A very brief measure of the Big-Five personality domains. Journal of Research in Personality, 37(6), 504–528. CrossRefGoogle Scholar
  22. Groot, L. (2006). Reasons for launching a basic income experiment. Basic Income Studies, 1(2), Article 8. CrossRefGoogle Scholar
  23. Hebst, D., & Mas, A. (2015). Peer effects on worker output in the laboratory generalize to the field. Science, 350(6260), 545–549. CrossRefGoogle Scholar
  24. Holt, C. A., & Laury, S. K. (2002). Risk aversion and incentive effects. American Economic Review, 92(5), 1644–1655. CrossRefGoogle Scholar
  25. Messick, D. M., & McClintock, C. G. (1968). Motivational bases of choice in experimental games. Journal of Experimental Social Psychology, 4(1), 1–25. CrossRefGoogle Scholar
  26. Murphy, L., & Nagel, T. (2002). The myth of ownership, taxes and justice. Oxford: Oxford University Press.CrossRefGoogle Scholar
  27. Noguera, J. A., & De Wispelaere, J. (2006). A plea for the use of laboratory experiments in basic income research. Basic Income Studies, 1(2), Article 11. CrossRefGoogle Scholar
  28. Ozawa, S. (2002). Welfare society and social security reform: A new ground of basic income concept. Kyoto: Takasuga Publishing. (in Japanese).Google Scholar
  29. Peeters, H., & Marx, A. (2006). Lottery games as a tool for empirical basic income research. Basic Income Studies, 1(2), Article 10. CrossRefGoogle Scholar
  30. Raven, J. C. (1936) Mental tests used in genetic studies: The performances of related individuals on tests mainly educative and mainly reproductive. MSc thesis, University of London.Google Scholar
  31. Robins, P. K. (1985) A comparison of the labor supply findings from the four negative income tax experiments, Journal of Human Resources, 20 (4): 567-582.Retrieved May 15, 2019, from. CrossRefGoogle Scholar
  32. Smith, J. M. (1982). Evolution and the theory of games. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  33. Stanford Basic Income Lab. (2018) Basic income in cities. A guide to city experiments and pilot project. Retrieved June 8, 2019, from
  34. Tondani, D. (2009). Universal basic income and negative income tax: Two different ways of thinking redistribution. The Journal of Socio-Economics, 38(2), 246–255. CrossRefGoogle Scholar
  35. Van Lange, P. A. M., Otten, W., De Bruin, E. M. N., & Joireman, J. A. (1997). Development of prosocial, individualistic, and competitive orientations: Theory and preliminary evidence. Journal of Personality and Social Psychology, 73(4), 733–746. CrossRefGoogle Scholar
  36. Vanderborght, Y., & Yamamori, T. (Eds.). (2014). Basic income in Japan: Prospects for a radical idea in a transforming welfare state. Basingstoke: Palgrave MacMillan.Google Scholar
  37. Virjo, I. (2006). A piece of the puzzle: A comment on the basic income experiment debate. Basic Income Studies, 1(2), Article 12. CrossRefGoogle Scholar
  38. Weibull, J. W. (1995). Evolutionary game theory. Cambridge, MA: The MIT Press.Google Scholar
  39. Werner, G. W. (2006). Ein Grund für die Zukunft: Das Grundeinkommen. Stuttgart: Verlag Freies Geistesleben & Urachhaus.Google Scholar
  40. Widerquist, K. (2005). A failure to communicate: What (if anything) can we learn from the negative income tax experiments? Journal of Socio-Economics, 34(1), 49–81. CrossRefGoogle Scholar
  41. Widerquist, K. (2006). The bottom line in a basic income experiment. Basic Income Studies, l(2), Article 9. CrossRefGoogle Scholar
  42. Yi, G. (2017) The effects of basic income on labour supply. Paper for the 17th BIEN Congress: Implementing a Basic Income, 25–27 September, Lisbon. Retrieved June 8, 2019, from fects_of_Basic_Income_on_Labour_Supply.pdf

Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  1. 1.Department of Complex and Intelligent SystemsFuture University HakodateHakodateJapan

Personalised recommendations