Altruistic Preferences Research Articles

A Research on the Optimal Decision of Green Supply Chain Considering Reciprocal Altruistic Preference and Government Subsidies

A Research on the Optimal Decision of Green Supply Chain Considering Reciprocal Altruistic Preference and Government Subsidies

COMMON‐ENEMY EFFECTS: MULTIDISCIPLINARY ANTECEDENTS AND ECONOMIC PERSPECTIVES

AbstractA disparate literature hypothesizes what can broadly be described as the common‐enemy effect: the fact that the interaction with a common enemy (formed by Nature, an individual, or a group) increases cooperation. This review identifies the multidisciplinary antecedents of this effect, and then distinguishes between several strands of literature applying noncooperative game theory to account for it. A first strand argues that the threat posed by a common enemy makes each player's cooperative effort more critical. In a second strand a behavioral common‐enemy effect caused by group interaction is studied experimentally. A third strand models the common‐enemy effect as the formation of a coalition of players against another player in a contest. A fourth strand formalizes the principle that the ‘enemy of my enemy is my friend’, either in a model of social relations, interdependent altruistic preferences, or indirect reciprocity in repeated games. The connections between these strands of literature are investigated, and questions for future research are proposed.

Altruistic observational learning

We report a laboratory experiment that tests the causal impact of altruism on observational learning behavior. Once endowed with a private signal, subjects submit their guess about the payoff-relevant state in two parallel sequences. In the observed sequence, guesses are revealed publicly so that subjects in both sequences can benefit from guesses that are informative. Unobserved guesses, on the other hand, never reveal any information to others as they remain private. We find that observed guesses are significantly more informative than unobserved guesses. The strong responses to private information benefit information aggregation as observational learning behavior is informationally more efficient in the observed sequence than in standard equilibrium outcomes. Once the incentives to make the empirically optimal guess are large enough, observed and unobserved behave quite similarly, and observed guesses are significantly less informative if fewer successors can benefit from the revelation of private signals. These findings are well in line with the qualitative predictions of an observational learning model where players have altruistic preferences.

Peer‐to‐peer lending and financial inclusion with altruistic investors

AbstractPeer‐to‐peer lending platforms are increasingly important alternatives to traditional forms of credit intermediation for small value loans. There are high hopes that they improve financial inclusion and provide better terms for borrowers. To study these hopes, we introduce altruistic investors into a peer‐to‐peer model of credit intermediation. We find that altruistic investors do not improve financial inclusion but that the borrowing rates are lower than the ones obtained with self‐interested investors. Furthermore, investors with strong altruistic preferences are willing to finance projects which generate an expected loss to them. For a certain range of parameters, the model's allocation is observationally equivalent to a model with self‐interested investors with low bargaining power. Outside of this range, the model generates allocations that are not incentive feasible in a model with self‐interested investors.

Interdependent Altruistic Preference Models

Altruistic preferences or the desire to improve the well‐being of others even at one’s own expense can be difficult to incorporate into traditional value and utility models. It is straightforward to construct a multiattribute preference structure for one decision maker that includes the outcomes experienced by others. However, when multiple individuals incorporate one another’s well‐being into their decision making, this creates complex interdependencies that must be resolved before the preference models can be applied. We provide representation theorems for additive altruistic value functions for two-person, n-person, and group outcomes in which multiple individuals are altruistic. We find that in most cases it is possible to resolve the preference interdependencies and that modeling the preferences of altruistic individuals and groups is tractable.

Intergenerational Altruism and Retirement Transfers

I contribute new evidence on altruistic preferences in intergenerational transfers using variation in Social Security benefits induced by an inflation-indexing mistake. The instrument is most relevant for those with low education, so I focus on this group. I find support for pure altruism because individuals who received additional Social Security benefits passed on 15.4 percent to children via inter vivos transfers without receiving any additional care in return. On the contrary, children reduce caregiving monotonically with increases in parental Social Security benefits. Adult female children appear to be the most affected as they both receive monetary transfers and reduce caregiving.

Dual-channel environmental hotel supply chain network equilibrium decision under altruism preference and demand uncertainty

To study the influence of the altruistic preference of decision makers and the low-carbon preference of consumers on decision-making behaviour in all layers of a dual-channel environmental hotel supply chain, this paper constructs a dual-channel supply chain network equilibrium model comprising hotels, online travel agent(OTA) platforms and demand markets. Under the condition of uncertain demand from the merchant and agency mode perspectives, variational inequalities are used to describe the altruistic preference of each layer of agents and their mutual influence and the low-carbon preference of consumers. Then the equilibrium conditions of the system are obtained and the optimal decision-making results are obtained by using the improved projection gradient algorithm. Finally, the effectiveness of the model is verified through a numerical case analysis. It is found that the increase effort in carbon emission reduction has a significant impact on the profits of hotels and online travel agency platforms. The altruistic preferences of decision makers have different impacts on the supply chain under the merchant mode and the agency mode. When the altruistic preference for the OTA platform increases, the OTA platform model is more profitable than the merchant model. The deeper the degree of hotel altruism preference is, the greater the intra-hotel cooperation, which may lead to the rise of an Environmental Tourism Products and Service(ETP&S) volume in the direct selling market of hotels and make the profit of the OTA platform decrease slightly; however, the profit under the OTA platform is still higher than that under the merchant mode.

Health and fairness with other-regarding preferences

This paper explores how to rank social allocations when individuals have other-regarding preferences (ORPs). Unlike the few existing studies on this issue, we focus on two different private goods, only one of which generates ORPs concerns. Specifically, individuals exhibit other-regarding views about the social health state but have standard self-centered preferences over other goods, namely consumption. Our social evaluation also incorporates a fairness view that aims to reduce inequalities that originate from factors for which individuals should not be deemed responsible. By resorting to a non-resourcist approach, we derive social preferences that seek to reduce individual well-being inequalities. Such differences are assessed by means of an interpersonal comparable measure that is related to an ideal situation which involves neither externalities nor unfair inequalities. We obtain that the use of the state of perfect health as the reference value leads society to give a higher priority to those who exhibit more altruistic preferences.

Altruistic Preferences in the Dictator Game: Replication of Andreoni and Miller (2002) in Japan

We conducted two replication studies of Andreoni and Miller’s (2002) modified dictator game study, which revealed that participants’ altruistic decisions were consistent with the notion of utility maximization. The two studies (Study 1 with small stake sizes and Study 2 with large stake sizes) included 11 modified dictator games, in which participants allocated a fixed number of tokens between themselves and their recipient. In eight of the 11 games, each token’s value was different for each player. In Study 1 (N = 78), 85% of participants did not violate the generalized axiom of revealed preference (GARP) throughout the 11 games. In Study 2 (N = 58), 81% of participants did not violate GARP. These results suggest that participants’ decisions were largely consistent with utility maximization. Following Andreoni and Miller’s analysis, we classified all participants (except one anomalous case) into the Selfish, Leontief (egalitarian), and Perfect Substitutes (utilitarian) groups. The majority of participants were classified into either the Leontief or Prefect Substitutes groups (i.e., non-selfish groups).

Recycling decisions of low-carbon e-commerce closed-loop supply chain under government subsidy mechanism and altruistic preference

For a low-carbon e-commerce closed-loop supply chain (LCE-CLSC), the influence of a government subsidy and a remanufacturer’s altruistic preference on the decision-making is discussed. Additionally, from the perspective of social value, decisions of LCE-CLSC are compared and analyzed. On this basis, the ‘Altruistic Preference Joint Commission’ contract is given to realize the system coordination. Finally, verify the models’ conclusions by the numerical analysis. The results are as follows: government subsidies improve the overall supply chain operational efficiency and the total social surplus. The altruistic preference behavior increases the revenue of the e-commerce platform and improves the efficiency of the LCE-CLSC, but is not advantageous to the remanufacturer. In addition, the effects of altruistic behavior on promoting the recycling of waste products are inferior to the effects of government subsidies of the same strength. Both the consumer surplus and the total social surplus are the highest under the centralized model. The increase in the consumers’ awareness of low-carbon environmental protections is seen to increase the substantiality of the contract negotiation space and the feasibility of the coordination mechanism of the ‘Altruistic Preference Joint Commission’ contract as well.

GOVERNMENT SUBSIDIES IN PUBLIC-PRIVATE PARTNERSHIP PROJECTS BASED ON ALTRUISTIC THEORY

Nowadays, the public-private partnership (PPP) scheme has been widely adopted in infrastructure projects around the world. In PPP projects, the governments participate as a principal and the investors play the role of an agent, and therefore their behaviours and incentive strategies can be explained and designed by the principal-agent theory. As “economic men” with limited rationality, both the governments and the investors have altruistic preferences during cooperation. This paper studies how project participants’ altruistic preferences affect government subsidies based on the principal-agent theory. To this end, a principal-agent model in the presence of altruism is developed. The results show that the amount of government compensation is related to the altruistic preferences, the expected revenue, costs and investors’ efforts. Contrary to intuition, the governments’ altruism actually undermines the investors’ enthusiasm in cooperation and the risk-sharing propensity, although it increases the utilities of both parties. Moreover, when selecting the investors, governments should examine their operating capacity carefully, which has a significant impact on the sustainable development of the projects and even PPP arrangements. The findings contribute new insights into the development of incentive mechanisms between governments and private investors from the perspective of the behavioural preferences.

Are Environmentalists Altruists? An Empirical Study

Previous studies on environmental evaluation suggest that women have more altruistic preferences and therefore value the surrounding environment more than men. This study examined the relationship between environmental concerns and altruistic preferences in a simple way. As a result, unlike findings from previous studies, both variables did not correlate with each other. Moreover, gender differences in altruism were confirmed, but those in environmentalism were not. A possible explanation for such discrepancies is that altruistic preferences are context-specific and not invoked until altruistic decisions are defined based on environmental issues.

Intergenerational Altruism and Retirement Transfers: Evidence from the Social Security Notch

I contribute new evidence on altruistic preferences in intergenerational transfers using variation in Social Security benefits induced by an inflation-indexing mistake. The instrument is most relevant for those with low education, so I focus on this group. I find support for pure altruism because individuals who received additional Social Security benefits passed on 15.4 percent to children via inter vivos transfers without receiving any additional care in return. On the contrary, children reduce caregiving monotonically with increases in parental Social Security benefits. Adult female children appear to be the most affected as they both receive monetary transfers and reduce caregiving.

The Impact of Social Preferences and Information on the Willingness to Pay for Fairtrade Products

This paper investigates the impact of social preferences and information about the value chain on the willingness to pay (WTP) for Fair-trade products. More specifically, the perceived social and economic benefits for Fair-trade farmers are analyzed in order to study whether altruistic preferences or information biases may shift consumers’ WTP. By means of an online survey, the empirical analysis is carried out for the coffee market. After grouping and comparing participants with respect to their WTP, social preferences, and demographic backgrounds, we find some evidence that consumers wrongly estimate, and lack information on, the financial benefits of Fair-trade certification that are eventually allocated to the coffee farmers. Large multinational enterprises often seem to make use of the Fair-trade system in order to gain financial and competitive advantages by “fair-washing” their products. This demonstrably leads to a higher WTP for an ethical premium that is not necessarily justified.

Interactive Decisions Analysis in an Online Shopping Service Supply Chain Considering Reciprocal Altruism

Cooperative relationships and interactive decision behaviors between online stores and third-party logistics (TPL) have attracted increasing attention from academics as well as practitioners with the development of the online retailing industry. However, the decisions and performance of each member in a decentralized supply chain are not in line with the actual performance and decision behaviors of them, especially when taking individual altruism preference into account. Hence, without considering the truism of channel members will lead to unrealistic decisions and obtain anamorphic performance of firms and the entire system based on conventional self-interested models. This paper develops an evolutionary bilateral decision-making model to characterize the effects of all members’ altruism in an online shopping service supply chain (OSSSC). The model considers different altruism of each member in the supply chain and their changes at various intervals. The decision equilibrium and interactive rules of all members are deeply analyzed based on the evolutionary bilateral decision-model as the change of altruism of each party. Our results identify that: altruism preference impacts the decisions of all participants in the OSSSC system. When the TPL and the online store have high altruism and low altruism, respectively, both retail price and logistics service price tend toward low levels and all participants have high utilities. However, this situation is more favorable for the online store. In this case, changes in the altruism level of either party will adversely impact the utilities of all parties and the performance of the whole system; specially, when the online stores are self-interested while the TPL has altruism that fluctuates within a specific range, improving logistics service level will help to lower the retail price and increase market shares. Numerical experiments are conducted to examine and verify the results and some optimal managerial insights for online retailers and TPLs are provided.

COMMENT ON “GIVING ACCORDING TO GARP: AN EXPERIMENTAL TEST OF THE CONSISTENCY OF PREFERENCES FOR ALTRUISM”

We present clean experimental evidence that a methodological confound was introduced by Andreoni and Miller (2002) that leads to diametrically opposed conclusions regarding comparisons of preferences between categories of fellow human beings distinguished by gender or age. Our study is a warning not to run the Andreoni-Miller tests of the consistency of altruistic preferences on the basis of their ‘interactive’ experimental protocol, and in particular not to perform preference estimations with the purpose of said comparisons. It is more interpretable and controllable to run the traditional, standard dictator game.

Elimination of non-individualistic preferences in large population aggregative games

We study evolution of preferences in large population aggregative games. In such games, all agents in society interact with each other. The material payoff or fitness of agents is entirely individualistic. Subjective payoffs, which represent preferences, depend upon a non-individualistic component which is adjusted through a type-dependent preference parameter. Using the indirect evolutionary approach, we show that the individualistic type enjoys fitness dominance under any type distribution in such games. Hence, under a class of evolutionary dynamics that satisfy monotone percentage growth, all non-individualistic types are eliminated. We apply this analysis to two classes of non-individualistic preferences-altruistic and Kantian. Altruistic preferences put a positive weight on the externality imposed on society while Kantian preferences incorporate the Kantian categorical imperative. In two important economic models, the tragedy of the commons and the public goods game, we show that both these classes of preferences are eliminated.

The Law and Economics of Tort Liability for Human Rights Violations in Global Supply Chains

AbstractThe human rights of foreign workers in global supply chains are routinely violated, yet the problem so far has largely evaded a legal solution. Economic analysis shows why domestic tort liability can partially address this problem. Many consumers in developed countries have a lower willingness-to-pay for products produced by global supply chains that systemically subject foreign workers to egregiously dangerous working conditions in gross violation of their human rights. This attribute of consumer demand provides a basis for subjecting the domestic chain leader to domestic tort liability for the bodily injuries suffered by these foreign workers, including those employed by independent suppliers. Chain leaders, like other product sellers, are obligated to warn about foreseeable safety risks that are not known by consumers and would be material to their decision about whether to purchase or use a product. The tort duty also requires sellers to instruct consumers about the ways in which the purchase or use of the product might foreseeably harm third parties. A domestic seller that is the chain leader of a global supply chain would breach this duty by not warning domestic consumers that the product is produced by foreign workers who are systemically subjected to working conditions that are so unsafe as to amount to a gross violation of their human rights. Because the purchase of the product foreseeably exposes foreign workers to this ongoing risk of physical harm, they are protected by the tort duty and can recover for its breach. Causation can be established by the logic of the breached tort duty. If consumers had been warned that the product is produced in such a systemically unsafe work environment, a substantial number of them would not have purchased it – they would instead have purchased the same product at the higher price necessary to protect the foreign workers from these ongoing safety violations. By distorting consumer demand in this manner, the domestic product seller’s failure to warn domestic consumers of these human rights violations in the global supply chain proximately caused injury to these foreign workers, entitling them to compensation. By remedying these human rights violations, domestic chain leaders would satisfy the reasonable expectations of domestic consumers who have altruistic preferences to rescue foreign workers from extreme dangers within the production process. Tort law cannot redress the full range of human rights violations in global supply chains, but consumer demand provides a sound basis for tort liability that addresses a limited, though important component of the problem.

Changing Preferences: An Experiment and Estimation of Market-Incentive Effects on Altruism

This paper studies how altruistic preferences are changed by markets and incentives. We conduct a laboratory experiment in a within-subject design. Subjects are asked to choose health care qualities for hypothetical patients in monopoly, duopoly, and quadropoly. Prices, costs, and patient benefits are experimental incentive parameters. In monopoly, subjects choose quality to tradeoff between profits and altruistic patient benefits. In duopoly and quadropoly, we model subjects playing a simultaneous-move game. Each subject is uncertain about an opponentI s altruism, and competes for patients by choosing qualities. Bayes-Nash equilibria describe subjects' quality decisions as functions of altruism. Using a nonparametric method, we estimate the population altruism distributions from Bayes-Nash equilibrium qualities in di§erent markets and incentive conOIˆgurations. Markets tend to reduce altruism, although duopoly and quadropoly equilibrium qualities are much higher than those in monopoly. Although markets crowd out altruism, the disciplinary powers of market competition are stronger. Counterfactuals confirm markets change preferences.

Quality efforts in medical supply chains considering patient benefits

We consider supply chain (SC) contracts in a new setting, the medical equipment industry, where concern for patient benefits is essential and quality efforts are critical for profits compared with supply chains (SCs) in other industries. It remains unclear how quality efforts and patient concern levels affect SC performance and how medical equipment manufacturers’ quality effort levels are linked to their patient concern levels. This study focuses on the impact of a manufacturer's and a retailer's patient concern levels on optimal pricing and quality decisions in an SC consisting of a manufacturer facing quality effort-dependent demand and a retailer in the medical equipment industry. We use the Stackelberg game to characterize and determine the optimal operational decisions in five scenarios and address the effects of patient concern levels under above five scenarios. A real case is studied and shows that optimized quality efforts can improve SC profits. The parameters settings are derived from the real data. Our findings bridge the gap between SC quality management and patient benefits and help to understand contract design in relation to patient concerns in different SC structures. This paper is among the earliest to investigate quality efforts for SC contract design in relation to patient concerns and to study SC contract design in the medical equipment industry. Our managerial insights are expected to help manufacturers move toward better quality effort decisions considering patient benefits and are also applicable to other SCs with effort-dependent demand and the effect of altruistic preferences.