Social Preferences: Some Simple Tests and a New Model

Abstract

Departures from pure self interest in economic experiments have recently \ninspired models of "social preferences". We conduct experiments on \nsimple two-person and three-person games with binary choices that test \nthese theories more directly than the array of games conventionally \nconsidered. Our experiments show strong support for the prevalence of \n"quasi-maximin" preferences: People sacrifice to increase the payoffs \nfor all recipients, but especially for the lowest-payoff recipients. \nPeople are also motivated by reciprocity: While people are reluctant \nto sacrifice to reciprocate good or bad behavior beyond what they would \nsacrifice for neutral parties, they withdraw willingness to sacrifice to \nachieve a fair outcome when others are themselves unwilling to \nsacrifice. Some participants are averse to getting different payoffs \nthan others, but based on our experiments and reinterpretation of \nprevious experiments we argue that behavior that has been presented as \n"difference aversion" in recent papers is actually a combination of \nreciprocal and quasi-maximin motivations. We formulate a model in which \neach player is willing to sacrifice to allocate the quasi-maximin \nallocation only to those players also believed to be pursuing the \nquasi-maximin allocation, and may sacrifice to punish unfair players.