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The 1/d Law of Giving

  • Jacob K. Goeree
  • Margaret A. McConnell
  • Tiffany Mitchell
  • Tracey Tromp
  • Leeat Yariv

We combine survey data on friendship networks and individual characteristics with experimental observations from dictator games. Dictator offers are primarily explained by social distance, giving follows a simple inverse distance law. While student demographics play a minor role in explaining offer amounts, individual heterogeneity is important for network formation. In particular, we detect significant homophilous behavior; students connect to others similar to themselves. Moreover, the network data reveal a strong preference for cliques, students connect to those already close. The study is one of the first to identify network architecture with individual behavior in a strategic context. (JEL D44, H82)

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Article provided by American Economic Association in its journal American Economic Journal: Microeconomics.

Volume (Year): 2 (2010)
Issue (Month): 1 (February)
Pages: 183-203

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Handle: RePEc:aea:aejmic:v:2:y:2010:i:1:p:183-203
Note: DOI: 10.1257/mic.2.1.183
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  1. Charness, Gary B & Rabin, Matthew, 2001. "Understanding Social Preferences With Simple Tests," University of California at Santa Barbara, Economics Working Paper Series qt0dc3k4m5, Department of Economics, UC Santa Barbara.
  2. Quoc-Anh Do & Stephen Leider & Markus M. Mobius & Tanya Rosenblat, 2008. "Directed Altruism and Enforced Reciprocity in Social Networks," Working Papers 17-2008, Singapore Management University, School of Economics.
  3. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
  4. Topa, Giorgio, 1997. "Social Interactions, Local Spillovers and Unemployment," Working Papers 97-17, C.V. Starr Center for Applied Economics, New York University.
  5. Gary E. Bolton & Rami Zwick & Elena Katok, 1998. "Dictator game giving: Rules of fairness versus acts of kindness," International Journal of Game Theory, Springer, vol. 27(2), pages 269-299.
  6. Nicola Persico & Andrew Postlewaite & Dan Silverman, 2003. "The Effect of Adolescent Experience on Labor Market Outcomes: The Case of Height," PIER Working Paper Archive 03-036, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  7. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March.
  8. David Marmaros & Bruce Sacerdote, 2006. "How Do Friendships Form?," The Quarterly Journal of Economics, MIT Press, vol. 121(1), pages 79-119, 02.
  9. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2010. "Social Incentives in the Workplace," Review of Economic Studies, Oxford University Press, vol. 77(2), pages 417-458.
  10. Glaeser, Edward L & Sacerdote, Bruce & Scheinkman, Jose A, 1996. "Crime and Social Interactions," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 507-48, May.
  11. Baccara, Mariagiovanna & Yariv, Leeat, 2010. "Similarity and polarization in groups," Discussion Papers, Research Unit: Market Behavior SP II 2010-20, Social Science Research Center Berlin (WZB).
  12. Steven D. Levitt & John A. List, 2007. "What Do Laboratory Experiments Measuring Social Preferences Reveal About the Real World?," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 153-174, Spring.
  13. Arun Sundararajan, 2004. "Local Network Effects and Network Structure," Industrial Organization 0412011, EconWPA.
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