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Altruism, equity and reciprocity in a gift-exchange experiment: An encompassing approach

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  • Gary Charness
  • Ernan Haruvy

Abstract

Considerable experimental evidence suggests that non-pecuniary motives must be addressed when modeling behavior in economic contexts. Recent models of non-pecuniary motives can be classified as either altruism- based, equity-based, or reciprocity-based. We estimate and compare leading approaches in these categories, using experimental data. We then offer a flexible approach that nests the above three approaches, thereby allowing for nested hypothesis testing and for determining the relative strength of each of the competing theories. In addition, the encompassing approach provides a functional form for utility in different settings without the restrictive nature of the approaches nested within it. Using this flexible form for nested tests, we find that intentional reciprocity, distributive concerns, and altruistic considerations all play a significant role in players' decisions.

Suggested Citation

  • Gary Charness & Ernan Haruvy, 1999. "Altruism, equity and reciprocity in a gift-exchange experiment: An encompassing approach," Economics Working Papers 368, Department of Economics and Business, Universitat Pompeu Fabra.
  • Handle: RePEc:upf:upfgen:368
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    References listed on IDEAS

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    More about this item

    Keywords

    Altruism; experiment; equity; encompassing; fairness; inequality aversion; reciprocity; Leex;

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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