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Why Social Preferences Matter - The Impact of Non-Selfish Motives on Competition

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Ernst Fehr
Urs Fischbacher

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Abstract

A substantial number of people exhibit social preferences, which means they are not solely motivated by material self-interest but also care positively or negatively for the material payoffs of relevant reference agents. We show empirically that economists fail to understand fundamental economic questions when they disregard social preferences, in particular, that without taking social preferences into account, it is not possible to understand adequately (i) the effects of competition on market outcomes, (ii) laws governing cooperation and collective action, (iii) effects and the determinants of material incentives, (iv) which contracts and property rights arrangements are optimal, and (v) important forces shaping social norms and market failures.

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Paper provided by Institute for Empirical Research in Economics - IEW in its series IEW - Working Papers with number iewwp084.

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Related research
Keywords: Social Preferences Reciprocity Competition Cooperation Incentives

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Find related papers by JEL classification:
D00 - Microeconomics - - General - - - General
H00 - Public Economics - - General - - - General
J00 - Labor and Demographic Economics - - General - - - General
D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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