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The 1/d Law of Giving

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  • Jacob K. Goeree
  • Margaret A. McConnell
  • Tiffany Mitchell
  • Tracey Tromp
  • Leeat Yariv

Abstract

We combine survey data on friendship networks and individual characteristics with experimental observations from dictator games. Dictator offers are primarily explained by social distance, giving follows a simple inverse distance law. While student demographics play a minor role in explaining offer amounts, individual heterogeneity is important for network formation. In particular, we detect significant homophilous behavior; students connect to others similar to themselves. Moreover, the network data reveal a strong preference for cliques, students connect to those already close. The study is one of the first to identify network architecture with individual behavior in a strategic context. (JEL D44, H82)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Microeconomics.

Volume (Year): 2 (2010)
Issue (Month): 1 (February)
Pages: 183-203

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Handle: RePEc:aea:aejmic:v:2:y:2010:i:1:p:183-203

Note: DOI: 10.1257/mic.2.1.183
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  1. Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2009. "Social Incentives in the Workplace," IZA Discussion Papers 4190, Institute for the Study of Labor (IZA).
  2. Nicola Persico & Andrew Postlewaite & Dan Silverman, 2003. "The Effect of Adolescent Experience on Labor Market Outcomes: The Case of Height," PIER Working Paper Archive 03-036, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  3. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
  4. Charness, Gary & Rabin, Matthew, 2002. "Understanding Social Preferences with Simple Tests," Department of Economics, Working Paper Series qt3d04q5sm, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  5. David Marmaros & Bruce Sacerdote, 2006. "How Do Friendships Form?," The Quarterly Journal of Economics, MIT Press, vol. 121(1), pages 79-119, 02.
  6. Stephen Leider & Markus M. Möbius & Tanya Rosenblat & Quoc-Anh Do, 2009. "Directed Altruism and Enforced Reciprocity in Social Networks," The Quarterly Journal of Economics, MIT Press, vol. 124(4), pages 1815-1851, November.
  7. Arun Sundararajan, 2004. "Local Network Effects and Network Structure," Industrial Organization 0412011, EconWPA.
  8. Mariagiovanna Baccara & Leeat Yariv, 2008. "Similarity and Polarization in Groups," Working Papers 08-27, New York University, Leonard N. Stern School of Business, Department of Economics.
  9. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March.
  10. Topa, Giorgio, 2001. "Social Interactions, Local Spillovers and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 68(2), pages 261-95, April.
  11. Glaeser, Edward L & Sacerdote, Bruce & Scheinkman, Jose A, 1996. "Crime and Social Interactions," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 507-48, May.
  12. Gary E. Bolton & Rami Zwick & Elena Katok, 1998. "Dictator game giving: Rules of fairness versus acts of kindness," International Journal of Game Theory, Springer, vol. 27(2), pages 269-299.
  13. Steven D. Levitt & John A. List, 2007. "What Do Laboratory Experiments Measuring Social Preferences Reveal About the Real World?," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 153-174, Spring.
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