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Similarity and social discounting

Author

Listed:
  • Benjamin Beranek

    (Missouri State University)

  • Geoffrey Castillo

    (Nottingham Trent University)

Abstract

Social discounting refers to the idea that decision-makers discount payoffs as a function of social distance. We introduce a method to meas- ure social distance using interpersonal similarity; that is, how similar or different others are to the decision-maker. We use data from our own preregistered experiments as well from an existing, independently conducted, lab-in-the-field experiment to estimate the structural para- meters of social discounting and find evidence for it. Our experiments control for competing explanations to isolate the effect of similarity and thus show that people have a preference for more similar others. Our estimates imply that in order for a decision-maker to willingly forgo 1 USD and have it instead benefit a dissimilar other, then it would need to increase to at least 1.25 USD. We also find evidence for quasi-hyperbolic social discounting.

Suggested Citation

  • Benjamin Beranek & Geoffrey Castillo, 2025. "Similarity and social discounting," Working Papers hal-04627788, HAL.
    • Handle: RePEc:hal:wpaper:hal-04627788
    Note: View the original document on HAL open archive server: https://hal.science/hal-04627788v3
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    File URL: https://hal.science/hal-04627788v3/document
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