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Income effect and altruism

Author

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  • Subhashish Modak Chowdhury

    (University of East Anglia)

  • Joo Young Jeon

    (University of East Anglia)

Abstract

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.

Suggested Citation

  • Subhashish Modak Chowdhury & Joo Young Jeon, 2012. "Income effect and altruism," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 12-04, School of Economics, University of East Anglia, Norwich, UK..
  • Handle: RePEc:uea:wcbess:12-04
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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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    References listed on IDEAS

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    More about this item

    Keywords

    dictator game; altruism; income effect; inequity aversion; warm-glow;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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