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Ashamed to be Selfish

  • David Dillenberger

    ()

    (Department of Economics, University of Pennsylvania)

  • Philipp Sadowski

    ()

    (Department of Economics, Duke University)

We study a two-stage choice problem, where alternatives are allocations between the decision maker (DM) and a passive recipient. The recipient observes choice behavior in stage two, while stage one choice is unobserved. Choosing selfishly in stage two, in the face of a fairer available alternative, may inflict shame on DM. DM has preferences over sets of alternatives that represent period two choices. We axiomatize a representation that identifies DM’s selfish ranking, her norm of fairness and shame. Altruism is the most prominent motive that can explain non-selfish choice. We identify a condition under which shame to be selfish can mimic altruism, when only stage-two choice is observed by the experimenter. An additional condition implies that the norm of fairness can be characterized as the Nash solution of a bargaining game induced by the second-stage choice problem. The representation is generalized to allow for finitely many recipients and applied to a simple strategic situation, a game of trust.

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File URL: http://economics.sas.upenn.edu/system/files/working-papers/08-037.pdf
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Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 08-037.

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Length: 39 pages
Date of creation: 10 Oct 2008
Date of revision:
Handle: RePEc:pen:papers:08-037
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