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Altruism and welfare when preferences are endogenous

  • Anders Poulsen

    (University of East Anglia)

  • Odile Poulsen

    (University of East Anglia)

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    We study whether an altruistic preference can survive in competition with other preferences and investigate the relationship between the equilibrium proportion of altruism and equilibrium material and subjective welfare. Altruism survives whenever preferences are sufficiently observable. Altruism can co-exist with reciprocal and materialistic preferences. Any policy that increases the equilibrium proportion of altruism raises economic prosperity but can reduce some people's subjective equilibrium welfare. Some of the policies that increase the equilibrium proportion of altruism are, at first sight at least, counter-intuitive. There can be a non-monotonic relationship between the degree of anonymity of interaction in society (the probability that an individual knows other people's preferences) in society and welfare.

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    Paper provided by School of Economics, University of East Anglia, Norwich, UK. in its series Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) with number 09-02.

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    Date of creation: 01 Oct 2009
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    Handle: RePEc:uea:wcbess:09-02
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    14. Rajiv Sethi & E.Somanathan, 2002. "Understanding reciprocity," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 02-05, Indian Statistical Institute, New Delhi, India.
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    17. Hirshleifer, Jack, 1977. "Shakespeare vs. Becker on Altruism: The Importance of Having the Last Word," Journal of Economic Literature, American Economic Association, vol. 15(2), pages 500-502, June.
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