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Altruism, Equity, And Reciprocity In A Gift-Exchange Experiment: An Encompassing Approach

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Author Info
Gary Charness (University of California, Santa Barbara)
Ernan Haruvy (University of Texas)

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Abstract

Considerable experimental evidence suggests that non-pecuniary motives must be addressed when modeling behavior in economic contexts. Recent models of non-pecuniary motives can be classified as either altruism-based, equity-based, or reciprocity-based. We estimate and compare leading approaches in these categories, using experimental data. We then offer a flexible approach that nests the above three approaches, thereby allowing for nested hypothesis testing and for determining the relative strength of each of the competing theories. In addition, the encompassing approach provides a functional form for utility in different settings without the restrictive nature of the approaches nested within it. Using this flexible form for nested tests, we find that intentional reciprocity, distributive concerns, and altruistic considerations all play a significant role in players' decisions.

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Publisher Info
Paper provided by Department of Economics, UC Santa Barbara in its series University of California at Santa Barbara, Economics Working Paper Series with number 13-99.

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Date of creation: 01 Mar 1999
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Handle: RePEc:cdl:ucsbec:13-99

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Related research
Keywords: Altruism; Experiment; Equity; Encompassing; Fairness; Inequality Aversion; Reciprocity;

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  1. Marius Brülhart & Jean-Claude Usunier, 2004. "Verified Trust: Reciprocity, Altruism, and Noise in Trust Games," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 04.15, Université de Lausanne, Faculté des HEC, DEEP. [Downloadable!]
    Other versions:
  2. Brady, Michael P. & Wu, Steven Y., 2008. "The Effect of Intragroup Communication on Preference Shifts in Groups," IZA Discussion Papers 3429, Institute for the Study of Labor (IZA). [Downloadable!]
  3. James Andreoni & William Harbaugh & Lise Vesterlund, 2003. "The Carrot or the Stick: Rewards, Punishments, and Cooperation," American Economic Review, American Economic Association, vol. 93(3), pages 893-902, June. [Downloadable!]
    Other versions:
  4. Georg Kirchsteiger & Luca Rigotti & Aldo Rustichini, 2001. "Your Morals Are Your Moods," Department of Economics, Working Paper Series 1018, Department of Economics, Institute for Business and Economic Research, UC Berkeley. [Downloadable!]
    Other versions:
  5. Gary Charness & Matthew Rabin, 2003. "Understanding Social Preferences with Simple Tests," General Economics and Teaching 0303002, EconWPA. [Downloadable!]
    Other versions:
  6. Emrah Arbak & Laurence Kranich, 2005. "Can Wages Signal Kindness?," Working Papers 0511, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure. [Downloadable!]
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