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Income effect and altruism

  • Subhashish Modak Chowdhury

    (University of East Anglia)

  • Joo Young Jeon

    (University of East Anglia)

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    We investigate the consequences of a pure income effect on the altruistic behavior of donors. Inequity aversion theories predict either no effect or a decrease in giving, whereas warm-glow theory predicts an increase in giving with an increase in the common income of donor and receiver. Theoretical predictions being contradictory, we run a dictator game in which we vary the common show-up fee of both the dictator and the recipient, but keep an extra amount to be shared the same. The prediction of the warm-glow theory is supported.

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    File URL: http://www.uea.ac.uk/documents/166500/0/CBESS-12-04/a6f82f55-c04a-4b4f-927c-283c8d7342f9
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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 12-04.

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    Date of creation: 01 Oct 2012
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    Handle: RePEc:uea:wcbess:12-04
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