  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 an easy
(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.
