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Paying it forward: an experimental study on social connections and indirect reciprocity

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  • Pinghan Liang

    (Sun Yat-Sen University)

  • Juanjuan Meng

    (Peking University)

Abstract

This paper studies how in-group social connections affect outsiders’ pro-social behavior towards group members. We employ an indirect investment game, in which a recipient of a good deed has to return to a beneficiary, instead of the original donor. We introduce the naturally-occurring social connections between the donor and the beneficiary, and show that such connections increase the recipients’ transfer to a beneficiary by 42% when the donor’s transfer is above average. The spillover does not function through the signaling of the donor’s expectations, and altruism with an endogenous reference group explains our results well.

Suggested Citation

  • Pinghan Liang & Juanjuan Meng, 2023. "Paying it forward: an experimental study on social connections and indirect reciprocity," Review of Economic Design, Springer;Society for Economic Design, vol. 27(2), pages 387-417, June.
    • Handle: RePEc:spr:reecde:v:27:y:2023:i:2:d:10.1007_s10058-022-00298-3
    DOI: 10.1007/s10058-022-00298-3
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    More about this item

    Keywords

    Indirect reciprocity; Social connections; Social preferences;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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