Favor transmission and social image concern: An experimental study

Abstract

This paper investigates how social image concern affects favor transmission in one-shot interactions. We conduct a laboratory experiment in which a provider gives a favor to a recipient, who can then only return the favor to an anonymous third party beneficiary. We find that when the recipient's behavior is observable by the provider – e.g., there exists social image concern – the recipient's repayment increases by 25%. To investigate the possible channels of the effect, in our design the provider has the option to send a costly request to the recipient, asking for a favorable treatment of the beneficiary, in addition to varying degrees of social connection between the provider and the beneficiary. We show that the increase in repayment under social image concern is largely attributable to the recipient's increasing desire to meet the provider's request. On the other hand, the providers are more likely to send the request when they can observe the repayment. These results suggest that the concern for social image not only affects the amount of favor transmitted, but also has interesting and important interactions with other underlying motives.