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Endogenouse Social Preferences

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Author Info
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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Publisher 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;

Other versions of this item:

Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
D64 - Microeconomics - - Welfare Economics - - - Altruism

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Hoffman Elizabeth & McCabe Kevin & Shachat Keith & Smith Vernon, 1994. "Preferences, Property Rights, and Anonymity in Bargaining Games," Games and Economic Behavior, Elsevier, vol. 7(3), pages 346-380, November. [Downloadable!] (restricted)
  2. James Andreoni, 2001. "Giving According to GARP," Theory workshop papers 339, UCLA Department of Economics. [Downloadable!]
  3. Harrison, Glenn W & Hirshleifer, Jack, 1989. "An Experimental Evaluation of Weakest Link/Best Shot Models of Public Goods," Journal of Political Economy, University of Chicago Press, vol. 97(1), pages 201-25, February. [Downloadable!] (restricted)
    Other versions:
  4. Hoffman, Elizabeth & McCabe, Kevin A & Smith, Vernon L, 1996. "On Expectations and the Monetary Stakes in Ultimatum Games," International Journal of Game Theory, Springer, vol. 25(3), pages 289-301.
  5. Offerman, Theo & Sonnemans, Joep & Schram, Arthur, 1996. "Value Orientations, Expectations and Voluntary Contributions in Public Goods," Economic Journal, Royal Economic Society, vol. 106(437), pages 817-45, July. [Downloadable!] (restricted)
  6. Prasnikar, Vesna & Roth, Alvin E, 1992. "Considerations of Fairness and Strategy: Experimental Data from Sequential Games," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 865-88, August. [Downloadable!] (restricted)
  7. Hirschman, Albert O, 1982. "Rival Interpretations of Market Society: Civilizing, Destructive, or Feeble?," Journal of Economic Literature, American Economic Association, vol. 20(4), pages 1463-84, December. [Downloadable!] (restricted)
  8. Neil Buckley & Kenneth Chan & James Chowhan & Stuart Mestelman & Mohamed Shehata, 2001. "Value Orientations, Income and Displacement Effects, and Voluntary Contributions," Experimental Economics, Springer, vol. 4(2), pages 183-195, October. [Downloadable!] (restricted)
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  9. Gary E. Bolton & Axel Ockenfels, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March. [Downloadable!] (restricted)
  10. Carpenter, Jeffrey P., 2002. "Information, fairness, and reciprocity in the best shot game," Economics Letters, Elsevier, vol. 75(2), pages 243-248, April. [Downloadable!] (restricted)
  11. Samuel Bowles, 1998. "Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 75-111, March. [Downloadable!] (restricted)
  12. Forsythe Robert & Horowitz Joel L. & Savin N. E. & Sefton Martin, 1994. "Fairness in Simple Bargaining Experiments," Games and Economic Behavior, Elsevier, vol. 6(3), pages 347-369, May. [Downloadable!] (restricted)
  13. Carpenter, Jeffrey P., 2003. "Is fairness used instrumentally? Evidence from sequential bargaining," Journal of Economic Psychology, Elsevier, vol. 24(4), pages 467-489, August. [Downloadable!] (restricted)
  14. Joseph Henrich & Robert Boyd & Samuel Bowles & Colin Camerer & Herbert Gintis & Richard McElreath & Ernst Fehr, 2001. "In Search of Homo Economicus: Experiments in 15 Small-Scale Societies," Artefactual Field Experiments 0059, The Field Experiments Website. [Downloadable!]
  15. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December. [Downloadable!] (restricted)
  16. Schotter, Andrew & Weiss, Avi & Zapater, Inigo, 1996. "Fairness and survival in ultimatum and dictatorship games," Journal of Economic Behavior & Organization, Elsevier, vol. 31(1), pages 37-56, October. [Downloadable!] (restricted)
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  17. Colin F. Camerer & Ernst Fehr, . "Measuring Social Norms and Preferences using Experimental Games: A Guide for Social Scientists," IEW - Working Papers iewwp097, Institute for Empirical Research in Economics - IEW. [Downloadable!]
    Other versions:
  18. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory Of Fairness, Competition, And Cooperation," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 817-868, August. [Downloadable!] (restricted)
    Other versions:
  19. Camerer, Colin F & Thaler, Richard H, 1995. "Ultimatums, Dictators and Manners," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 209-19, Spring. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. 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. [Downloadable!]
  2. 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. [Downloadable!]
  3. Jeffrey Carpenter & Erika Seki, 2005. "Competitive Work Environments and Social Preferences: Field Experimental Evidence from a Japanese Fishing Community," IZA Discussion Papers 1691, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Stephan Kroll & Todd Cherry & Jason Shogren, 2007. "The impact of endowment heterogeneity and origin on contributions in best-shot public good games," Experimental Economics, Springer, vol. 10(4), pages 411-428, December. [Downloadable!] (restricted)
    Other versions:
  5. repec:bep:eapcon:v:5:y:2006:i:2:p:1460-1460 is not listed on IDEAS
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