Social Preference Types Research Articles

Social Preferences and Redistributive Politics

Abstract We study the link between social preferences and a behaviorally validated measure of support for redistribution. We uncover three fundamentally distinct social preference types: predominantly selfish, inequality averse and altruistic individuals. Inequality averse and altruistic individuals display a much stronger support for redistribution, particularly if they are more affluent. Beliefs about the role of effort and luck for success play no role for selfish individuals but are highly relevant for other-regarding individuals. Finally, while inequality averse individuals display strong support for policies aimed at reducing the incomes of the rich, altruistic individuals are considerably less supportive of these policies.

Social preferences, support for redistribution, and attitudes towards vulnerable groups

In this work, I explore the explanatory power of experimentally-elicited social preferences over self-reported support for redistribution. Social preferences are obtained by means of a simplified dictator game embedded in an online survey that also includes a questionnaire on preferences for redistribution, beliefs, inequality perceptions, and ideological positioning. I find that social preferences covary strongly with self-reported support for increased taxation. Besides, more generous social preference types are more likely to have favourable views towards specific welfare beneficiaries, especially those usually regarded as less deserving, such as migrants, the unemployed, or the poor. Some elements that correlate negatively with preferences for redistribution are being older than 65, having a right-wing ideology, believing that personal effort is the main driver of one’s economic position, and distrusting others; while being a parent or perceiving high inequality have the opposite effect. Social preferences help thus further understand public support for redistribution and the political feasibility of redistributive policies.

Do elicited promises affect people's trust? —Observations in the trust game experiment

Promises and promise keeping play an important role in our daily life as well as in various economic situations, but maybe not all promises are voluntary and spontaneous. We examine experimentally the impact of elicited promises on trust and cooperation using the trust game. We find that, in general, elicited promises have no significant influence on the trust and trustworthy behavior. When subjects are classified into different social preference types, we find that promises can increase the amount returned by selfish types and decrease the amount returned by reciprocal types. Moreover, we analyze promise keeping and its influence factors. The results show that elicited promises are not very credible. When we exclude the observations where trustees receive nothing, about 41% of trustees break their promises. Promise keeping is also relevant to subjects’ social preferences.

How Social Preferences Shape Incentives in (Experimental) Markets for Credence Goods.

Credence goods markets suffer from inefficiencies caused by superior information of sellers about the surplus‐maximising quality. While standard theory predicts that equal mark‐up prices solve the credence goods problem if customers can verify the quality received, experimental evidence indicates the opposite. We identify a lack of robustness with respect to heterogeneity in social preferences as a possible cause of this and conduct new experiments that allow for parsimonious identification of sellers’ social preference types. Our results confirm the assumed heterogeneity in social preferences and provide strong support for our explanation of the failure of verifiability to increase efficiency.

Cooperative choice and its framing effect under threshold uncertainty in a provision point mechanism

This paper explores how threshold uncertainty affects cooperative behaviors in the provision of public goods and the prevention of public bads. The following facts motivate our study. First, environmental (resource) problems are either framed as public bads prevention or public goods provision. Second, the occurrence of these problems is characterized by thresholds that are interchangeably represented as “nonconvexity,” “bifurcation,” “bi-stability,” or “catastrophes.” Third, the threshold location is mostly unknown. We employ a provision point mechanism with threshold uncertainty and analyze the responses of cooperative behaviors to uncertainty and to the framing for each type of social preferences categorized by a value orientation test. We find that aggregate framing effects are negligible, although the response to the frame is the opposite depending on the type of social preferences. “Cooperative” subjects become more cooperative in negative frames than in positive frames, whereas “individualistic” subjects are less cooperative in negative frames than in positive ones. This finding implies that the insignificance of aggregate framing effects arises from behavioral asymmetry. We also find that the percentage of cooperative choices non-monotonically varies with the degree of threshold uncertainty, irrespective of framing and value orientation. Specifically, the degree of cooperation is highest at intermediate levels of threshold uncertainty and decreases as the uncertainty becomes sufficiently large.

One bad apple? Heterogeneity and information in public good provision

Previous research demonstrates that individuals vary in their social preferences. Less well-understood is how group composition affects the behavior of different social preference types. Does one bad apple really spoil the bunch? This paper exogenously identifies experimental participants’ social preferences, then systematically assigns individuals to homogeneous or heterogeneous groups to examine the impact of ‘bad apples’ on cooperation and efficiency. Consistent with previous research, we find that groups with more selfish types achieve lower levels of efficiency. We identify two mechanisms for the effect. First, the selfish players contribute less. Second, selfish players induce lower contributions from the conditional cooperators, and this effect increases in the number of selfish players. These results are not sensitive to information about the distribution of types in the group.

Coordinating Resistance Through Communication and Repeated Interaction

Organizational and political leaders often engage in “divide-and-conquer” transgression, in which a leader extracts surplus from a victim and shares it with a beneficiary to gain the latter’s support for his transgression. This paper conducts the first experimental study to evaluate how repeated interactions with and without communication between “responders” can coordinate their resistance towards divide-and-conquer transgressions. It also investigates theoretically and empirically how social preferences can affect successful resistance against divide-and-conquer transgressions with repetition. In our experiment, repetition without communication reduces the transgression rate. Joint resistance is more common in early rounds of a supergame when players have more uncertainty about social preference types, and leaders target beneficiaries who resist transgression. We also find that repetition alone is only as effective as cheap talk communication in the one-shot game in reducing transgression. Our findings suggest that the risk associated with cooperation can impose a limit on the effectiveness of repeated interaction in facilitating cooperation in this repeated Coordinated Resistance game.

The Effects of Group Composition and Social Preference Heterogeneity in a Public Goods Game: An Agent-Based Simulation

Behavioural economics highlights the role of social preferences in economic decisions. Further, populations are heterogeneous, suggesting that the composition of social preference types within a group may impact the ability to sustain voluntary public goods contributions. We conduct agent-based simulations of contributions in a public goods game, varying group composition and the weight individuals place on their beliefs versus their underlying social preference type. We then examine the effect of each of these factors on contributions. We find that social preference heterogeneity negatively impacts provision over a wide range of the parameter space, even controlling for the share of types in a group.

Two studies on the interplay between social preferences and individual biological features

Biological features and social preferences have been studied separately as factors influencing human strategic behaviour. We run two studies in order to explore the interplay between these two sets of factors. In the first study, we investigate to what extent social preferences may have some biological underpinnings. We use simple one-shot distribution experiments to attribute subjects one out of four types of social preferences: self-interested (SI), competitive (C), inequality averse (IA) and efficiency-seeking (ES). We then investigate whether these four groups display differences in their levels of facial fluctuating asymmetry (FA) and in proxies for exposure to testosterone during phoetal development and puberty. We observe that development-related biological features and social preferences are relatively independent. In the second study, we compare the relative weight of these two set of factors by studying how they affect subjects’ behaviour in the Ultimatum game (UG). We find differences in offers made and rejection rates across the four social preference groups. The effect of social preferences is stronger than the effect of biological features even though the latter is significant. We also report a novel link between facial masculinity (a proxy for exposure to testosterone during puberty) and rejection rates in the UG. Our results suggest that biological features influence behaviour both directly and through their relation with the type of social preferences that individuals hold.

Principals’ preferences for agents with social preferences

This study explores a nested representation of ethical, moral, social identity, motivated, opportunistic and reciprocal agent preferences to characterize screening contracts in a principal–agent model under adverse selection. This leads to a ranking of the type of social preferences that principals should seek in agents, based upon the information rents associated with each agent type. When moral hazard is introduced the ranking further depends upon the interaction of limited liability with self-selection. These results are interpreted in light of the 2010 Dodd-Frank Act and principal–agent experiments.

Gender and Social Preferences in the US: An Experimental Study

This contribution provides evidence that social preferences differ by gender among United States college students. Tracking within-person choices over ten dictator exercises in which individuals choose one of three allocations of money between themselves and two other participants, this study precisely maps social preference types and identifies consistency of preferences within groups of roughly two-thirds of participants. Contrary to previous studies that identify a dominant social preference, this study' rigorous identification system reveals that other-regarding individuals are heterogeneous and almost evenly split between inequity aversion and social surplus maximization. But, even among individuals raised in a culture that stresses equal opportunity, there are gender differences. Women are substantially more likely than men to be inequity averters and less likely to be social surplus maximizers. However, a large majority of participants, both men and women, choose allocations consistent with compassion for the least well off.

Distributive and reciprocal fairness: What can we learn from the heterogeneity of social preferences?

This study evaluates people’s concerns for distributive fairness (equality of outcomes and payoffs to those worse-off) and reciprocal fairness (receiving what one is due based on one’s past actions) using dictator, ultimatum, and trust games. In the dictator games we classify individuals’ preferences as self-interested, inequity averse, efficiency maximizing, or compassionate social surplus maximizing. We find that the different utility functions of the social preference types guide participants’ behavior in the ultimatum and trust games. The self-interested and efficiency maximizers make the lowest offers in the ultimatum game, are least likely to reject a low offer in the ultimatum game, and send back the least amount in the trust game. Consistent with the goal of maximizing the sum of payoffs however, efficiency maximizers and compassionate social surplus maximizers make the highest offers in the trust game, and in attempts to ensure equal outcomes, inequity averters make low offers. Because those classified as self-interested or efficiency maximizing do not exhibit concern for pure distributive fairness, we identify positive offers as first movers in both games as evidence of expectations of reciprocity by second movers and some choices as second movers as clear evidence of their own concerns for reciprocal fairness. Furthermore, we find strong evidence supporting general concern for reciprocal fairness in the trust games where the modal response of second movers in all preference groups is to equalize payments across participants.

Cooperative Choice and its Framing Effect Under Threshold Uncertainty in a Provision Point Mechanism

This paper examines how threshold uncertainty affects cooperative behaviors in each of public goods provision and public bads prevention. The intent is mainly motivated by the following facts. First, resource and environmental problems can be either framed as public bads prevention or public goods provision. Second, the occurrence of these problems is characterized by the existence of thresholds which is interchangeably represented by “nonconvexity”, “bifurcation”, “bi-stability”, or “catastrophes”. Third, the location of such a threshold is mostly unknown to us. For our purpose, we employ a provision point mechanism with threshold uncertainty, and analyze the response of cooperative behaviors to uncertainty and to the framing in each type of social preferences categorized by a value orientation test. First, we find aggregate framing effects are identified to be negligible, though response to the frame is opposite depending on the type of social preference in each subject. “Cooperative” subjects cooperate less, whereas “indivisualistic” subjects cooperate more in a public goods setting. This implies that insignificance of the aggregate framing effect arises from the behavioral asymmetry. Second, we find the percentage of cooperative choices non-monotonically varies with the degree of threshold uncertainty, irrespective of framing and value orientation. More specifically, the degree of cooperation is highest in the intermediate level of threshold uncertainty, whereas it sharply drops as the uncertainty becomes sufficiently large.

Social Preferences in Childhood and Adolescence: A Large-Scale Experiment

Social preferences have been shown to be an important determinant of economic decision making for many adults. We present a large-scale experiment with 883 children and adolescents, aged eight to seventeen years. Participants make decisions in eight simple, one-shot allocation tasks, allowing us to study the distribution of social preference types across age and across gender. Our results show that when children and teenagers grow older, inequality aversion becomes a gradually less prominent motivating force of allocation decisions. At the same time, efficiency concerns increase in importance for boys, and maximin-preferences turn more important in shaping decisions of girls.

One Bad Apple: Uncertainty and Heterogeneity in Public Good Provision

Previous research demonstrates that individuals vary in their social preferences. Less well-understood is how group composition affects the behavior of different social preference types. Does one bad apple really spoil the bunch? This paper exogenously identifies experimental participants’ social preferences, then systematically assigns individuals to homogeneous or heterogeneous groups to examine the impact of ‘bad apples’ on cooperation and efficiency. Consistent with previous research, we find that groups with more selfish types achieve lower levels of efficiency. We identify two mechanisms for the effect. First, the selfish players contribute less. Second, selfish players induce lower contributions from the conditional cooperators, and this effect increases in the number of selfish players. These results are not sensitive to information about the distribution of types in the group.

Distributive and Reciprocal Fairness: What Can We Learn from Heterogeneous Social Preferences?

This study evaluates people’s concerns for distributive fairness (equality of outcomes and payoffs to those worse-off) and reciprocal fairness (receiving what one is due based on one’s past actions) utilizing dictator, ultimatum, and trust games. In the dictator games we classify individuals’ preferences as self-interested, inequity averse, efficiency maximizing, or compassionate social surplus maximizing. We find that the different utility functions of the social preference types guide participants’ behavior in the ultimatum and trust games. The self-interested and efficiency maximizers make the lowest offers in the ultimatum game, are least likely to reject a low offer in the ultimatum game, and send back the least amount in the trust game. Consistent with the goal of maximizing the sum of payoffs however, efficiency maximizers and compassionate social surplus maximizers make the highest offers in the trust game, and in attempts to ensure equal outcomes, inequity averters make low offers. Because those classified as self-interested or efficiency maximizing do not exhibit concern for pure distributive fairness, we can identify choices, in particular positive offers in the ultimatum games and positive amounts sent back in the trust games, as motivated only by concerns for reciprocal fairness. Furthermore, we find strong evidence supporting concern for reciprocal fairness in the trust games where the modal response of second movers in all preference groups is to equalize payments across participants.

Social Preferences and Political Participation

Models of political participation have begun to incorporate actors who possess “social preferences.” However, these models have failed to take into account the potentially incongruent political goals of different social preference types. These goals are likely to play an important role in shaping political behavior. To examine the effect of distinct social preferences on political activity we conducted an experiment in which participants played five rounds of a modified dictator game (Andreoni and Miller 2002). We used the decisions in these games to determine their preference type and mapped these types to reported political activity. Our results show that subjects who were most interested in increasing total welfare in the dictator game were more likely to participate in politics than subjects with selfish preferences, whereas subjects most interested in reducing the difference between their own well-being and the well-being of others were no more likely to participate than subjects with selfish prefere...

Social Preferences and Political Participation

Models of political participation have begun to incorporate actors who possess preferences. However, these models have failed to take into account the potentially incongruent political goals of different social preference types. These goals are likely to play an important role in shaping political behavior. To examine the effect of distinct social preferences on political activity we conducted an experiment in which participants played five rounds of a modified dictator game (Andreoni and Miller 2002). We used the decisions in these games to determine their preference type and mapped these types to reported political activity. Our results show that subjects who were most interested in increasing total welfare in the dictator game were more likely to participate in politics than subjects with selfish preferences, whereas subjects most interested in reducing the difference between their own well-being and the well-being of others were no more likely to.