Becoming Friends or Foes? How Competitive Environments Shape Altruistic Preferences

Abstract

We study the interaction between competition and social proximity on altruism, trust, and reciprocity, with an emphasis on gender differences. We decompose the behavioral channels by utilizing variants of both the Trust Game and the Dictator Game in a design that systematically controls the transmission of relevant information regarding the outcome of a previous competition and the social proximity between the competitors. On an aggregate level, our results suggest that knowledge of a victory over a socially proximate opponents leads to a large and significant increase in participants' investment in the Trust Game, but not in the Dictator Game. However, we also found substantial gender heterogeneity across treatments: men tend to show higher levels of altruism upon learning that their competitor shares similar characteristics with them. Moreover, this information yields a significant increase in men's trust when they are also told that they won the competition. In contrast, women's decisions about trust and altruism are not responsive to any of our treatment conditions. Our results provide helpful insights into the structure of incentives within institutions and companies, which are known to affect performance.