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Rket in mitigating and mediating various forms of behavior is perhaps the central issue facing behavioral economics today. This study designs a field experiment that is explicitly linked to a controlled laboratory experiment to examine whether, and to what extent, social preferences influence outcomes in actual market transactions. While agents drawn from a well-functioning marketplace reveal strong reciprocity motives in tightly controlled laboratory experiments, when observed in environments t.
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I-RF FAQ
-
Social preferences are individual preferences that are influenced by social factors, not the preferences of an entire society.
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Altruism is a social preference in which an individual's utility is increased by benefits to others. Other social preferences are inequality aversion (a preference for more equal outcomes); and spite and envy—in which cases, benefits to others may reduce the individual's utility.
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Expanding the definition of social preference to include a process component allows us to also classify reciprocity – treating only kind acts with kindness – as a social preference. Pure reciprocity, however, is more elusive than inequality aversion because one needs to show that outcomes and intentions matter.
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Existing models of social preferences can be divided into two types: distributive preferences and reciprocal preferences.
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The effect of social preferences, such as altruism and trust, on economic development is widely recognized. However, the reciprocal impact, i.e., how individuals experience the economic environment and how this shapes their social preferences, has remained largely under-explored.
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Game theory has studied and modeled several common types of social preferences, such as altruism, inequality aversion, reciprocity, and fairness. Altruism is when one is willing to sacrifice some of their payoff to benefit others. Inequality aversion is when one prefers a balanced distribution of payoffs.
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We follow the literature in defining a social preference as an individual's preference regarding the payoffs or well-being of others (Charness and Rabin, 2002; Levitt and List, 2007).
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Game theory has studied and modeled several common types of social preferences, such as altruism, inequality aversion, reciprocity, and fairness. Altruism is when one is willing to sacrifice some of their payoff to benefit others. Inequality aversion is when one prefers a balanced distribution of payoffs.
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