Reasons for Doing Good: Behavioural Explanations of Prosociality in Economics

Abstract

IntroductionThe homo economicus model until quite recently was almost unanimously accepted as, at least, a normative standard of economic behaviour. A subject within this model is characterised with a set of elegant attributes, although from a relatively long time we know that these attributes are at odds with properties of actual economic actors. Among features forming the core of homo economicus we usually find self-interest, maximisation of expected utility, consistent preferences, rationality, knowledge of inference rules and complete information (Solek, 2010, p. 22). Above all, however, her actions are intentional, based on knowledge and she always chooses proper tools to achieve intended objectives (Szarzec, 2014, p. 195).This model includes thus a number of assumptions but most of them met, sooner or later, with an open criticism. Already in the 50s of the previous century we were informed that actual cognitive capacities are inconsistent with those described in the standard model. Only slightly later psychologists (including Slovic, Lichtenstein, Kahneman and Tversky) proved that people in their choices are driven by risk aversion, and therefore weigh expected utilities differently that the orthodox theory predicts. Shortly after publication of the classic paper written by Kahneman and Tversky (1979), there came another offensive. This time, however, the blow was struck by economists themselves: Guth, Schmittberger i Schwarze (1982) somewhat accidentally proved that people are not only more stupid and fearful than homo economicus, but also less selfish (Solek, 2010, p. 22). They designed a game called later ultimatum that revealed another weakness of the formal model of economic behaviour. A victim of this not entirely intended coup was egoism. Already earlier this assumption had been challenged by Simon, who indisputably showed that when maximisation, due to cognitive constraints, is impossible, a subject will rather choose a satisfying, or as Akerlof says near-rational, action (Akerlof, 2002). 1982 is, however, the year that could be accepted as a conventional turning point, after which we observed an intense growth of interest in altruistic behaviour and motivations, and the economic theory was enriched with another, beside the cognitive one, behavioural pillar indicating how motivational factors systematically lead the mind astray. More often than it is expected people pay their taxes, protect environment, participate in charity actions, vote and finally less frequently free ride. Before, however, we resolve, whether the observed behaviour is altruistic or not, we should focus for a moment on the experiment that caused all the fuss.1.The ultimatum game has begunThe intellectual turn toward studying a philosophical in its nature issue is all the more surprising when taking into account the simplicity of the tool applied. The first player, X, receives a certain amount of money, say 100 dollars, and is required to divide it between herself and the other player (some designs allow submitting zero offers). A decision made by the second player, Y, ends the game. If the offer is accepted, then the amount is divided accordingly. If, however, Y rejects the proposed share, both players end the game emptyhanded (see Figure 1).Is it indeed possible, that this uncomplicated game could constitute a riddle? Let us consider the rationality assumption in its classic form - in this game Y could gain at least 1 dollar. Because 1 is better than 0, a rational player limited in her motivations to narrow selfinterest, should always accept an offer, regardless its nominal value. On the other hand, a rational player X should always offer the least possible amount - if she must share, then the lower the offer is, the better. If, additionally, X assumes that Y is rational, then she needs not fear that her offer will be rejected (see Figure 2).So much for the theory. Empirical studies performed across the world and with great dedication showed that reality disproves it. …