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Non-isolation, reversals, and social preference

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  • Cheung, Paul H.Y.
  • Ellis, Keaton

Abstract

Recent evidence suggests that non-isolation behavior could significantly impact laboratory experiments using the random problem selection (RPS) payment mechanism through lottery integration. Theoretical work also highlights social preferences that can violate statewise monotonicity, a necessary and sufficient condition for incentive compatibility with the RPS payment mechanism in case of lottery integration. Additionally, non-isolation can influence decisions through non-consequential dynamic concerns. In a series of three simple and parsimonious experiments and three tests, we examine the occurrence of the two kinds of non-isolation and reversal behaviors. We find significant evidence for positive reversal behavior, where subjects are more likely to make a fair choice if there is an alternative possible realization of an unfair outcome (which they chose themselves). In addition, the lower bounds for the prevalence of non-isolation in terms of lottery integration and dynamic non-consequential concern are estimated to be approximately 10% and 20%, respectively.

Suggested Citation

  • Cheung, Paul H.Y. & Ellis, Keaton, 2025. "Non-isolation, reversals, and social preference," Games and Economic Behavior, Elsevier, vol. 154(C), pages 159-174.
    • Handle: RePEc:eee:gamebe:v:154:y:2025:i:c:p:159-174
    DOI: 10.1016/j.geb.2025.08.016
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    Cited by:

    1. Schill, Marie & Fosse-Gomez, Marie-Hélène, 2025. "Consumer climate change engagement in fostering well-being and mitigation behaviors," Journal of Business Research, Elsevier, vol. 198(C).

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