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A system of non-tradable credits that flow between individuals like karma, hence proposed under that name, is a mechanism for repeated resource allocation that comes with attractive efficiency and fairness properties, in theory. In this study, we test karma in an online experiment in which human subjects repeatedly compete for a resource with time-varying and stochastic individual preferences or urgency to acquire the resource. We confirm that karma has significant and sustained welfare benefits even in a population with no prior training. We identify mechanism usage in contexts with sporadic high urgency, more so than with frequent moderate urgency, and implemented as a simple (binary) karma bidding scheme as particularly effective for welfare improvements: relatively larger aggregate efficiency gains are realized that are (almost) Pareto superior. These findings provide guidance for further testing and for future implementation plans of such mechanisms in the real world.

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BALTIMORE, MD, March 1, 2023 – New audio is available for media use featuring Renata Konrad. She’s an associate professor of business at the Business School of Worcester Polytechnic Institute. Konrad continues our series on trafficking. She focuses on human trafficking and America’s borders. This content is provided by INFORMS, the largest association for the decision and data sciences. What follows are four questions and responses. These responses were provided on February 27, 2023.

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