When it pays to be kind: The allocation of indirect reciprocity within power hierarchies

Indirect reciprocity – the notion that third-party observers offer rewards to prosocial actors – is known to increase levels of cooperative behavior. Yet we know relatively little about how people decide to grant indirect reciprocity. This process is complex because it relies on assessing moral character, which is unobservable. In the current research, we identify a salient cue in the social environment that observers use to calibrate their indirect reciprocity: power differences. Across three experiments, observers were less likely to offer indirect reciprocity to employees who targeted their generosity toward higher- rather than lower-power co-workers. Indirect reciprocity was measured through the allocation of participants’ own financial resources (Experiments 1 and 2), as well as behavioral intentions (Experiment 3). Experiment 3 also showed that this effect is driven by observers’ perceptions of actors’ motives, which inform assessments of moral character.