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Endogenouse Social Preferences

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  • Jeffrey Carpenter

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Abstract

A long-standing discussion in economics has developed around the issue of whether institutions (specifically markets) affect people’ social preferences. One theory posits that markets force people to interact repeatedly, and in doing do reduce anonymity, curtail opportunistic behavior, and make agents more socially minded. The opposing view contends that markets are alienating because they make interactions more (not less) anonymous and competition erodes peoples’ preferences to engage in selfless, group-beneficial acts. This paper presents the results of an experiment designed to quantify the extent to which different aspects of markets affect peoples’ social preferences by varying the level of anonymity, the incentive to reciprocate friendly acts, and the degree of competition. We find that reducing anonymity does make people more social, but mostly because reducing anonymity reduces peoples’ ability to engage in opportunistic acts. More importantly, we find that market competition erodes social preferences through two mechanisms. First, market competition encourages opportunistic behavior which creates a less friendly atmosphere and second, controlling for the first effect the market institution itself decreases the other-regardingness of our participants.

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File URL: http://www.middlebury.edu/services/econ/repec/mdl/ancoec/0209.pdf
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Bibliographic Info

Paper provided by Middlebury College, Department of Economics in its series Middlebury College Working Paper Series with number 0209.

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Length: 31 pages
Date of creation: Jun 2002
Date of revision:
Handle: RePEc:mdl:mdlpap:0209

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Related research

Keywords: endogenous preferences; experiment; value orientation; ultimatum game; best shot game; market competition;

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References

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  16. Carpenter, Jeffrey P., 2002. "Information, fairness, and reciprocity in the best shot game," Economics Letters, Elsevier, vol. 75(2), pages 243-248, April.
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Citations

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Cited by:
  1. Smith, John, 2010. "The endogenous nature of the measurement of social preferences," MPRA Paper 23282, University Library of Munich, Germany.
  2. Chen, Chia-Ching & Chiu, I-Ming & Smith, John & Yamada, Tetsuji, 2012. "Too smart to be selfish? Measures of cognitive ability, social preferences, and consistency," MPRA Paper 41078, University Library of Munich, Germany.
  3. Michel André Maréchal & Christian Thöni, 2007. "Do Managers Reciprocate? Field Experimental Evidence From a Competitive Market," University of St. Gallen Department of Economics working paper series 2007 2007-09, Department of Economics, University of St. Gallen.
  4. Juan Camilo Cardenas & Jeffrey P. Carpenter, 2005. "Experiments and Economic Development: Lessons from Field Labs in the Developing World," Middlebury College Working Paper Series 0505, Middlebury College, Department of Economics.
  5. Jeffrey Carpenter & Erika Seki, 2005. "Competitive Work Environments and Social Preferences: Field experimental evidence from a japanese fishing community," Middlebury College Working Paper Series 0513, Middlebury College, Department of Economics.
  6. Lotito, Gianna & Migheli, Matteo & Ortona, Guido, 2011. "An experimental inquiry into the nature of relational goods," POLIS Working Papers 160, Institute of Public Policy and Public Choice - POLIS.
  7. Panos, Georgios A. & Theodossiou, Ioannis, 2010. "Union Mediation and Adaptation to Reciprocal Loyalty Arrangements," SIRE Discussion Papers 2010-119, Scottish Institute for Research in Economics (SIRE).
  8. Bezrukova, Katerina & Smith, John, 2008. "Towards an understanding of the endogenous nature of identity in games," MPRA Paper 14447, University Library of Munich, Germany.
  9. Carpenter, Jeffrey P., 2002. "Information, fairness, and reciprocity in the best shot game," Economics Letters, Elsevier, vol. 75(2), pages 243-248, April.
  10. Rigdon, Mary L. & Levine, Adam Seth, 2009. "The Role of Expectations and Gender in Altruism," MPRA Paper 19372, University Library of Munich, Germany.
  11. Canegallo, Claudia & Ortona, Guido & Ottone, Stefania & Ponzano, Ferruccio & Scacciati, Francesco, 2008. "Competition versus cooperation: Some experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(1), pages 18-30, February.

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