Other-regarding Preferences Research Articles

Pre-commitment in bargaining with endogenous credibility

We study whether negotiators adopt commitment tactics in bargaining, a concept first proposed by Schelling (1956), and their choice of the credibility of commitment. In a modified ultimatum game experiment, the responder is allowed to pre-commit to a minimum acceptable offer (MAO) before an offer is proposed. Meanwhile, they choose the credibility of the commitment, measured by a cost of backing down (CBD) incurred if the responder accepts an offer lower than the MAO. We find that nearly 40% of responders chose a CBD substantially lower than their MAO, despite the fact that proposers were more likely to cave in and offer a larger share of the bargaining surplus when fully credible commitments were made. Informing responders of the proposers' minimum acceptable share of the bargaining surplus does not reduce partially credible commitments, suggesting that these commitments were unlikely made to enlarge the contract zone. Further treatments and analyses suggest that other-regarding preferences may be the reason behind partially credible commitments.

The impact of group size on giving versus demand for redistribution

We report the results of an online experiment studying preferences for giving and preferences for group-wide redistribution in small (4-person) and large (200-person) groups. We find that the desire to engage in voluntary giving decreases significantly with (perceived) group size. However, voting for group-wide redistribution is precisely estimated to not depend on group size. Moreover, people’s perceptions of what constitutes the relevant group are malleable, and affect their desire to give. These results suggest that government programs, such as progressive tax-and-transfer systems, can help satisfy other-regarding preferences for redistribution in a way that creating opportunities for voluntary giving cannot.

To Catch a Stag: Identifying payoff- and risk-dominance effects in coordination games

Five decades after Harsanyi and Selten's seminal work on equilibrium selection, we remain unable to predict the outcomes of real-life coordination even in simple cases. One reason is that experiments have struggled to quantify the effects of payoff- and risk-dominance and to separate them from context factors like feedback, repetition, and complexity. This experiment is the first to demonstrate that both payoff- and risk-dominance significantly and independently impact coordination decision-making. Three innovations characterize the design: First, payoff- and risk-dominance are disentangled using orthogonal measures of strategic incentives and welfare externalities. Second, a no-feedback, choice-list task format minimizes deviations from one-shot incentives. Third, beliefs about others' behavior are elicited. Strikingly, heterogeneous beliefs across the population rationalize not only reactions to risk dominance but also most reactions to payoff dominance. In addition, deviations from expected-value maximization in specific games suggest a minor role for social projection or other-regarding preferences.

Fairness with unequal productive skills among other-regarding individuals

AbstractThis paper deals with the fair ranking of allocations when individuals endowed with heterogeneous skills have other-regarding preferences over the average consumption of the other members of society. By assuming that such preferences matter for equality, we construct three social ordering functions that aim to reduce differences which originate in unequal productivities. These functions seek to maximise the smallest value of an interpersonally comparable measure of individual well-being that is related to a situation which involves neither unfair opportunities nor inequalities in consumption. More importantly, they provide society with different options at the time of making welfare evaluations when individuals are endowed with unequal productive skills and heterogeneous preferences.

Competition between self- and other-regarding preferences in resolving social dilemmas

Evolutionary game theory assumes that individuals maximize their benefits when choosing strategies. However, an alternative perspective proposes that individuals seek to maximize the benefits of others. To explore the relationship between these perspectives, we develop a model where self- and other-regarding preferences compete in public goods games. We find that other-regarding preferences are more effective in promoting cooperation, even when self-regarding preferences are more productive. Cooperators with different preferences can coexist in a new phase where two classic solutions invade each other, resulting in a dynamical equilibrium. As a consequence, a lower productivity of self-regarding cooperation can provide a higher cooperation level. Our results, which are also valid in a well-mixed population, may explain why other-regarding preferences could be a viable and frequently observed attitude in human society.

The ICT revolution and preferences for taxing top earners

ABSTRACT How has the ICT-driven transformation of labour markets in recent decades affected redistributive preferences? We move beyond existing research by focusing on the ‘winners’ of the ICT revolution and on other-regarding preferences for taxing top earners. We carry out an interactive, online experiment with around 3000 US respondents to test whether fairness perceptions and redistributive preferences differ when top incomes are gained through luck, routine work, or complex work. This set up aims to mirror the changing nature of tasks performed by high-earning workers in the US labour market as a result of the ICT revolution. We find that the desired tax rate on top earners is up to 5.3 percentage points lower for the complex work than the routine work treatment, and that high incomes from complex work are perceived as fairer and more deserved. A follow-up vignettes study then provides strong evidence that high-earning jobs are perceived to be more complex. Taken together, our findings highlight an important and previously under-explored channel through which the ICT revolution may have dampened demand for progressive taxation in the advanced democracies.

What’s moral wiggle room? A theory specification

Abstract The term ‘moral wiggle room’ (MWR) is often used to describe features of social situations that reduce the transparency between behaviors and their consequences. Previous research found that MWR decreases the likelihood of prosocial behavior and inferred that prosocial behavior is driven not only by genuine prosocial preferences but also by the desire to appear prosocially. Unfortunately, this postulation has never been specified as a theory. Consequently, studies testing the MWR effect reveal substantial heterogeneity in the understanding of core concepts, their operationalizations, and boundary conditions. To advance the field of MWR research, we remove these ambiguities by providing a verbal proposition-based theory specification. We first outline the original formulation of the MWR effect and its mediating mechanism, and we identify its loopholes. On this basis, we propose, refine, and distinguish between core propositions and auxiliary assumptions as well as relevant concepts and their operationalizations. The result is a fully testable theory of MWR (MWR-T) that includes a sharpened concept of MWR, distinguishes between three underlying psychological mechanisms of the behavioral MWR effect (i.e., anticipated social image damage, perceived social norms, and anticipatory guilt), and takes into account the role of individual differences in susceptibility to MWR (i.e., the joint effect of dispositional other-regarding preferences and social image concerns). Lastly, we relate MWR-T to existing theories and draw a roadmap for future work. With our contribution, we hope to stimulate more rigorous research on MWR and provide an example of the utility of verbal proposition-based theory specification.

Bargaining with own-preference uncertainty: An experiment

While ‘standard’ theory argues that more information typically increases efficiency from exchange, the literature on fairness and bargaining suggests that information may inhibit agreements. However, the literature has typically focussed on information related to the payoffs of the other party. In many real-world interactions, a buyer is uncertain about their own value for a good they are purchasing. We consider a series of modified ultimatum games where we vary buyers’ certainty about their own values. We find that agreements increase when buyers discover their values. However, buyers potentially lose from this discovery if they are uncertain about sellers’ costs. Our results are driven by an increased aversion towards uncertainty when buyers are uncertain about both their own and the seller's payoff. This ‘twofold uncertainty effect’ cannot be rationalised by outcome-based other-regarding preferences and extends current understanding of the influence of uncertainty on perceptions of fair exchange.

Isolating the Roles of Religion, Ethnicity, and Political Ideology in Mass Atrocities, 1800–2020

Religion, ethnicity, and political ideology all lend themselves to the perpetration of mass atrocities by creating a sense of identity that sets up an Us/Them dichotomy. Atrocities are modelled here as arising from the motive of acquiring territory but augmented by other-regarding preferences that capture the role of identity. My empirical results using data for the period 1800–2020 confirm that all these identity-driven motivators are associated with mass atrocities, with religion being more powerful than ethnicity. Monotheistic religions (with the strong exception of Judaism) are seen to be associated with more mass atrocity deaths than (polytheistic) Hinduism, lending partial credibility to Hume’s (1757/2010) view on the intolerance of monotheism. While democracies are associated with fewer mass atrocities than autocracies, Christian liberal democracies are not. My statistical analysis rejects the popular presumption that Islam is more violent than Christianity. In fact, in the post-World War II (WWII) era, among the major religions Christianity has been associated with the most mass atrocity deaths. The results also show that mass deaths were higher in atrocities that took place in settler colonies, especially in the post-WWII period of decolonisation. Using mass atrocities as the metric of violence, the correlations found in the empirical work of this paper offer many new and surprising findings.

Individual versus collective bargaining under relative income concerns

We compare individual and collective bargaining when workers have relative income concerns and employment relationships are characterized by moral hazard. We show that collective bargaining internalizes externality effects that arise from other-regarding preferences. This improves firms’ abilities to create effort incentives and can therefore reduce inefficiencies associated with asymmetric information. We show that if relative income concerns are not too strong, both firms and workers strictly prefer collective bargaining.

The evolution of preferences and charitable giving: a panel study of the university years

Abstract Economic preferences are often taken as given, yet evidence shows that preferences respond to life events and change over time. We examine the evolution of other-regarding preferences for a cohort of university students over 5 years, starting before they matriculate and extending one year beyond graduation. Using survey and incentivized measures of preferences, we show that altruism declines over the university years. This decline is reflected in changes in charitable giving over three donation opportunities. We rule out several alternative explanations for the observed change, including cohort differences, perceptions of the charities, and experience with experiments. We show evidence of a ‘giving type’ in charitable giving, with consistency in behavior across giving opportunities. Methodologically, we also show that the incentivized and survey measures are similar at predicting giving types. We conclude that preferences reflect common tendencies over time, while simultaneously showing an overall decline in generosity during the university years.

Other-regarding preferences in pro-environmental behaviours: Empirical analysis and policy implications of organic and local food products purchasing in Italy

This paper investigates the link between organic and local food products purchasing as pro-environmental behaviours, and “other-regarding preferences”, such as altruism, intrinsic motivation and self-image, which is measured through individuals’ environmental concerns, volunteering, participation in ecological associations and pro-social behaviours. Using the Italian data from the Multipurpose survey on households “Aspects of daily life” conducted in 2019, and bivariate probit models, this paper shows that environmental egoistic and altruistic concerns, volunteering in formal organizations and participation in ecological associations are positively correlated with the purchase of more organic and local food products. Higher pro-social behaviours correlate positively with the purchase of more local products and negatively with the purchase of more organic products. Furthermore, higher education and better household economic conditions are strongly correlated with the purchase of more organic products, while participation in cultural activities is positively associated with the purchase of more organic and local food products.

What do Happiness Data Mean? Theory and Survey Evidence

Abstract What utility notion—e.g. flow/lifetime, self/family-centered—do self-reported well-being (SWB) questions measure? Existing applications make different assumptions regarding the (i) life domains, (ii) time horizons, and (iii) other-regarding preferences captured by SWB data. To obtain relevant evidence, we ask survey respondents what they had in mind regarding (i)–(iii) when answering commonly used—life satisfaction, happiness, ladder—and new SWB questions. We find that respondents’ self-reports differ from researchers’ assumptions and differ across SWB questions and sociodemographic groups. At the same time, simple SWB-question wording tweaks are effective in moving self-reports toward desired interpretations. We outline actionable suggestions for SWB researchers. (JEL: D69, D90, I31)

Reciprocal, but inequality averse as well? Mixed motives for punishment and reward

Considerable experimental evidence indicates that reciprocity and inequality aversion are important motivations to understand deviations from self-interested behavior, and in particular costly punishment and reward. We use a within-subject experimental design to evaluate the share of subjects whose second-party reward and punishment choices are best accounted for by pure reciprocity, pure inequality aversion, a mixture of these two motives, or other motivations like altruism or competitiveness. We find that the largest fraction of punishment and rewards is motivated by a mixture of both inequality aversion and reciprocity, while smaller fractions are primarily motivated by pure inequality aversion and pure reciprocity. These findings provide new insights into the literature on other-regarding preferences and may help to organize some results in the experimental literature on second-party punishment and reward.

Care and anger motives in social dilemmas

This paper provides evidence for the following novel insights: (1) People’s economic decisions depend on their psychological motives, which are shaped predictably by the social context. (2) In particular, the social context influences people’s other-regarding preferences, their beliefs and their perceptions. (3) The influence of the social context on psychological motives can be measured experimentally by priming two antagonistic motives—care and anger—in one player towards another by means of an observance or a violation of a fairness norm. Using a mediation approach, we find that the care motive leads to higher levels of cooperation which are driven by more optimistic beliefs, a different perception of the game as well as by a shift towards more pro-social preferences.

Optimal incentive contracts with a spiteful principal: Single agent

We, first with discrete outcomes and continuous effort, characterize the optimal contracts when a spiteful principal interacts with an other-regarding agent. We show that the optimal wage is weakly decreasing in principal’s spitefulness. When the principal and the agent have exactly opposite other-regarding preferences, under certain situations, we get back the self-regarding benchmark optimal contract. Next with continuous outcomes and general functional forms, we characterize the optimal wage schedule and get back the sufficient statistics result when the principal and the agent have exactly opposite other-regarding preferences.

No-vaxxers are different in public good games

In September 2021 we conducted a survey to 1482 people in Italy, when the vaccination campaign against Covid19 was going on. In the first part of the survey we run three simple tests on players’ behavior in standard tasks with monetary incentives to measure their risk attitudes, willingness to contribute to a public good in an experimental game, and their beliefs about others’ behavior. In the second part, we asked respondents if they were vaccinated and, if not, for what reason. We classified as no-vaxxers those (around 12% of the sample) who did not yet start the vaccination process and declared that they intended not to do it in the future. We find that no-vaxxers contribute less to the public good in the experimental game because they trust others less to do so. from the three tests we extrapolated a classification based on the benchmark of rationality and other-regarding preferences for each respondent, and we found that in this respect no-vaxxers do not differ from the rest of the population.

Assortment and Reciprocity Mechanisms for Promotion of Cooperation in a Model of Multilevel Selection

In the study of the evolution of cooperation, many mechanisms have been proposed to help overcome the self-interested cheating that is individually optimal in the Prisoners' Dilemma game. These mechanisms include assortative or networked social interactions, other-regarding preferences considering the payoffs of others, reciprocity rules to establish cooperation as a social norm, and multilevel selection involving simultaneous competition between individuals favoring cheaters and competition between groups favoring cooperators. In this paper, we build on recent work studying PDE replicator equations for multilevel selection to understand how within-group mechanisms of assortment, other-regarding preferences, and both direct and indirect reciprocity can help to facilitate cooperation in concert with evolutionary competition between groups. We consider a group-structured population in which interactions between individuals consist of Prisoners' Dilemma games and study the dynamics of multilevel competition determined by the payoffs individuals receive when interacting according to these within-group mechanisms. We find that the presence of each of these mechanisms acts synergistically with multilevel selection for the promotion of cooperation, decreasing the strength of between-group competition required to sustain long-time cooperation and increasing the collective payoff achieved by the population. However, we find that only other-regarding preferences allow for the achievement of socially optimal collective payoffs for Prisoners' Dilemma games in which average payoff is maximized by an intermediate mix of cooperators and defectors. For the other three mechanisms, the multilevel dynamics remain susceptible to a shadow of lower-level selection, as the collective outcome fails to exceed the payoff of the all-cooperator group.

Preferences vs. strategic thinking: An investigation of the causes of overcommunication

The extent of information sharing in strategic communication experiments persistently exceeds what theory predicts. The literature identifies homegrown preferences and heterogeneity in strategic thinking as two major causes of overcommunication. We design an experiment that features team decisions and combines strategic and non-strategic communication to evaluate these competing explanations. We find that (a) the vast majority of strategic truthful behavior in communication of private information coincides with best responses to beliefs about opponents, (b) truthful behavior observed in non-strategic communication has limited ability to predict behavior in strategic communication, and (c) other-regarding preferences play a minimal role in influencing communication behavior in our strategic environments. Our findings favor strategic thinking as the primary explanation of overcommunication and caution that truthful preferences documented in non-strategic settings may not readily explain strategic truthful behavior.

The school education, ritual customs, and reciprocity associated with self-regulating hand hygiene practices during COVID-19 in Japan

BackgroundThe role of social ties, other-regarding preferences, and cultural traits in boosting community resilience and minimizing citizens’ vulnerability to crises such as COVID-19 is increasingly being recognized. However, little is presently known about the possible routes through which such personal preferences and cultural norms pertinent to social behaviors are formulated. Thus, in this paper, factors that can be potentially associated with individuals to self-regulate strict hand hygiene practices before the pandemic, during the state of emergency, and after the state of emergency was lifted in Japan are investigated. Focus is given to the handwashing education in primary school, a cultural practice originating from the old Shinto tradition, and individuals’ reciprocal inclinations. As people in Japan are known to be highly conscious of hygiene in all aspects of their daily life and are less likely to contract an infection, evidence obtained in this specific context could contribute to the better understanding of individuals’ health-related behaviors in general, and during crises in particular.MethodsUsing the data derived from a four-wave nationwide longitudinal online survey, we examined the extent to which elementary school education, childhood cultural experiences at shrines, and individual other-regarding preferences are associated with self-regulating hand hygiene practices prior to the pandemic and people’s efforts to comply with the government-imposed measures aimed at preventing the spread of COVID-19 infection during the state of emergency. We also investigated the long-term trends in the relationships among these factors (i.e., after the abolishment of the state of emergency) using panel data.ResultsOur findings reveal that childhood education and cultural experiences related to handwashing practices, as well as reciprocal inclinations, are significantly associated with Japanese attitudes toward personal hygiene (beyond handwashing practices) prior to, during, and after the state of emergency. In recognition of the possible effects of recall bias and measurement errors, several important attempts to mitigate these issues were made to strengthen the value of our findings.ConclusionsThe importance of school education received during childhood, as well as culture and other-regarding preferences, in the individual attitudes toward hand hygiene in adulthood highlighted in this study contributes to the better understanding of the role that these factors play in the variations in voluntary compliance with strict hand hygiene practices before and during an uncertain and prolonged crisis.