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Endogenouse Social Preferences


  • Jeffrey Carpenter



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.

Suggested Citation

  • Jeffrey Carpenter, 2002. "Endogenouse Social Preferences," Middlebury College Working Paper Series 0209, Middlebury College, Department of Economics.
  • Handle: RePEc:mdl:mdlpap:0209

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    References listed on IDEAS

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    Cited by:

    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.
    2. Michel Marechal & Christian Thoni, 2007. "Do managers reciprocate? Field experimental evidence from a competitive market," Natural Field Experiments 00310, The Field Experiments Website.
    3. Carpenter, Jeffrey P., 2002. "Information, fairness, and reciprocity in the best shot game," Economics Letters, Elsevier, vol. 75(2), pages 243-248, April.
    4. John Smith & Katerina Bezrukova, 2008. "Towards an Understanding of the Endogenous Nature of Identity in Games," Departmental Working Papers 200806, Rutgers University, Department of Economics.
    5. Spash, Clive L. & Theine, Hendrik, 2016. "Voluntary Individual Carbon Trading," SRE-Discussion Papers 5206, WU Vienna University of Economics and Business.
      • Clive L. Spash & Hendrik Theine, 2016. "Voluntary Individual Carbon Trading," SRE-Disc sre-disc-2016_04, Institute for Multilevel Governance and Development, Department of Socioeconomics, Vienna University of Economics and Business.
    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. Carpenter Jeffrey P & Seki Erika, 2005. "Competitive Work Environments and Social Preferences: Field Experimental Evidence from a Japanese Fishing Community," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(2), pages 1-25, December.
    8. Panos, Georgios & Theodossiou, Ioannis, 2009. "Union Mediation and Adaptation to Reciprocal Loyalty Arrangements," MPRA Paper 15471, University Library of Munich, Germany.
    9. Chen, Chia-Ching & Chiu, I-Ming & Smith, John & Yamada, Tetsuji, 2013. "Too smart to be selfish? Measures of cognitive ability, social preferences, and consistency," Journal of Economic Behavior & Organization, Elsevier, vol. 90(C), pages 112-122.
    10. 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.
    11. Lotito, Gianna & Migheli, Matteo & Ortona, Guido, 2017. "Competition, Information and Cooperation," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201731, University of Turin.
    12. John Smith, 2012. "The endogenous nature of the measurement of social preferences," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 11(2), pages 235-256, December.
    13. Georgios A. Panos & Ioannis Theodossiou, 2013. "Reciprocal Loyalty and Union Mediation," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52(3), pages 645-676, July.
    14. Rigdon, Mary L. & Levine, Adam Seth, 2009. "The Role of Expectations and Gender in Altruism," MPRA Paper 19372, University Library of Munich, Germany.

    More about this item


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

    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; Philanthropy; Intergenerational Transfers

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