Abstract
Does altruism and morality lead to socially better outcomes in strategic interactions than selfishness? We shed some light on this complex and non-trivial issue by examining a few canonical strategic interactions played by egoists, altruists and moralists. By altruists, we mean people who do not only care about their own material payoffs but also about those to others, and, by a moralist, we mean someone who cares about own material payoff and also about what would be his or her material payoff if others were to act like himself or herself. It turns out that both altruism and morality may improve or worsen equilibrium outcomes, depending on the nature of the game. Not surprisingly, both altruism and morality improve the outcomes in standard public goods games. In infinitely repeated games, however, both altruism and morality may diminish the prospects of cooperation, and to different degrees. In coordination games, morality can eliminate socially inefficient equilibria while altruism cannot.
Highlights
Few humans are motivated solely by their private gains
We ask whether altruism and morality help improve the material welfare properties of equilibria in strategic interactions
Our analysis reveals a complex picture; sometimes, altruism and morality have beneficial effects, sometimes altruism is better than morality, sometimes the reverse is true, sometimes they are equivalent, and sometimes self-interest is best!
Summary
Few humans are motivated solely by their private gains. Most have more complex motivations, usually including some moral considerations, a concern for fairness or an element of altruism or even spite or envy towards others. The aim of the present study is to examine strategic interactions between altruists, as well as between moralists, more closely, in order to shed light on the complex and non-trivial effects of altruism and morality on equilibrium behavior and the associated material welfare. Our study complements other theoretical analyses of the effects of pro-social preferences and/or moral values on the qualitative nature of equilibrium outcomes in a variety of strategic interactions. Brekke, Kverndokk, and Nyborg (2003) [9] show that a certain kind of moral concerns enhances efficiency in the private provision of public goods. This is certainly not the only way morality can be modeled. We turn to studying repeated interactions (Section 3), and coordination games (Section 4), and conclude
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