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Heterogeneous social preferences

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  • Erlei, Mathias

Abstract

Recent research has shown the usefulness of social preferences in explaining behavior in laboratory experiments. This paper demonstrates that models of social preferences are particularly powerful in explaining behavior if they are embedded in a setting of heterogeneous actors with heterogeneous (social) preferences. For this purpose a simple model is introduced that combines the basic ideas of inequity aversion, social welfare preferences, reciprocity and heterogeneity. This model is applied to 43 games, and its predictive accuracy is clearly higher than that of the isolated approaches. Furthermore, it can explain most of the "anomalies" discussed in Goeree and Holt [Goeree, J., Holt, Ch.A., 2001. Ten little treasures of game theory and ten intuitive contradictions, American Economic Review 91, 1402-1422].

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  • Erlei, Mathias, 2008. "Heterogeneous social preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 436-457, March.
    • Handle: RePEc:eee:jeborg:v:65:y:2008:i:3-4:p:436-457
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    Cited by:

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    2. Fadong Chen & Urs Fischbacher, 2020. "Cognitive processes underlying distributional preferences: a response time study," Experimental Economics, Springer;Economic Science Association, vol. 23(2), pages 421-446, June.
    3. Chang, Jae Bong & Lusk, Jayson L., 2009. "Fairness and food choice," Food Policy, Elsevier, vol. 34(6), pages 483-491, December.
    4. Kamas, Linda & Preston, Anne, 2012. "Distributive and reciprocal fairness: What can we learn from the heterogeneity of social preferences?," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 538-553.
    5. Adrian Bruhin & Ernst Fehr & Daniel Schunk, 2019. "The many Faces of Human Sociality: Uncovering the Distribution and Stability of Social Preferences," Journal of the European Economic Association, European Economic Association, vol. 17(4), pages 1025-1069.
    6. Fadong Chen & Urs Fischbacher, 2015. "Cognitive Processes of Distributional Preferences: A Response Time Study," TWI Research Paper Series 101, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    7. Robson, Matthew, 2021. "Inequality aversion, self-interest and social connectedness," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 744-772.
    8. Marcelo Tyszler & Arthur Schram, 2013. "Strategic Voting in Heterogeneous Electorates: An Experimental Study," Games, MDPI, vol. 4(4), pages 1-24, November.
    9. Linda Kamas & Anne Preston, 2012. "Gender and Social Preferences in the US: An Experimental Study," Feminist Economics, Taylor & Francis Journals, vol. 18(1), pages 135-160, January.
    10. John D. Marvel, 2020. "Evolution and egalitarianism: A behavioral account of managers' performance pay decisions," Journal of Behavioral Public Administration, Center for Experimental and Behavioral Public Administration, vol. 3(2).
    11. Marie-Laure Cabon-Dhersin & Nathalie Etchart-Vincent, 2012. "The puzzle of cooperation in a game of chicken: an experimental study," Theory and Decision, Springer, vol. 72(1), pages 65-87, January.
    12. Erlei Mathias & Schenk-Mathes Heike, 2017. "Bounded Rationality in Principal-Agent Relationships," German Economic Review, De Gruyter, vol. 18(4), pages 411-443, December.
    13. Hayat Khan, 2009. "Modeling Social Preferences: A Generalized Model of Inequity Aversion," EERI Research Paper Series EERI_RP_2009_21, Economics and Econometrics Research Institute (EERI), Brussels.
    14. Tilman Becker & Michael Carter & Jörg Naeve, 2005. "Experts Playing the Traveler's Dilemma," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 252/2005, Department of Economics, University of Hohenheim, Germany.
    15. Zarri, Luca, 2008. "Endogenous Social Preferences, Heterogeneity and Cooperation," AICCON Working Papers 51-2008, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
    16. Fehr, Ernst & Schmidt, Klaus M., 2005. "The Economics of Fairness, Reciprocity and Altruism – Experimental Evidence and New Theories," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 66, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    17. Leonardo Becchetti & Vittorio Pelligra & Francesco Salustri, 2017. "Testing for heterogeneity of preferences in randomized experiments: a satisfaction-based approach applied to multiplayer prisoners’ dilemmas," Applied Economics Letters, Taylor & Francis Journals, vol. 24(10), pages 722-726, June.
    18. Paetzel, Fabian & Traub, Stefan, 2017. "Skewness-adjusted social preferences: Experimental evidence on the relation between inequality, elite behavior, and economic efficiency," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 68(C), pages 130-139.
    19. Boschini, Anne & Muren, Astri & Persson, Mats, 2013. "The Social Egoist," Research Papers in Economics 2013:14, Stockholm University, Department of Economics.
    20. Ispano, Alessandro, 2015. "A note on the equilibria of the unbounded traveler’s dilemma," Mathematical Social Sciences, Elsevier, vol. 77(C), pages 52-54.
    21. Kurt A. Ackermann & Ryan O. Murphy, 2019. "Explaining Cooperative Behavior in Public Goods Games: How Preferences and Beliefs Affect Contribution Levels," Games, MDPI, vol. 10(1), pages 1-34, March.
    22. Deborah Kerley Keisner & Kent D. Messer & William D. Schulze & Homa Zarghamee, 2013. "Testing Social Preferences for an Economic “Bad”: An Artefactual Field Experiment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 115(1), pages 27-61, January.
    23. Bolle, Friedel & Liepmann, Hannah & Vogel, Claudia, 2012. "How much social insurance do you want? An experimental study," Journal of Economic Psychology, Elsevier, vol. 33(6), pages 1170-1181.

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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