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Social preferences: fundamental characteristics and economic consequences

Author

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  • Ernst Fehr
  • Gary Charness

Abstract

We review the vast literature on social preferences by assessing what is known about their fundamental properties, their distribution in the broader population, and their consequences for important economic and political behaviors. We provide, in particular, an overview of the empirical characteristics of distributional preferences and how they are affected by merit, luck, and concerns for equality of opportunity. In addition, we identify what is known about belief-dependent social preferences such as reciprocity and guilt aversion. Furthermore, we discuss and assess the empirical relevance of self image and social image concerns in prosocial behaviors. The overall evidence indicates that a large majority of individuals have some sort of social preference, while purely selfinterested subjects are a minority. We also document the converging insights from lab and field evidence on the role of social preferences for a deeper understanding of important phenomena such as the consequences of wage inequality on work morale, employees’ resistance to wage cuts, individuals’ self-selection into occupations that are more or less prone to morally problematic behaviors, as well as issues of distributive politics. However, although much has been learned in recent decades, there are still many important, unresolved, yet exciting, questions waiting to be tackled.

Suggested Citation

  • Ernst Fehr & Gary Charness, 2023. "Social preferences: fundamental characteristics and economic consequences," ECON - Working Papers 432, Department of Economics - University of Zurich, revised Mar 2024.
  • Handle: RePEc:zur:econwp:432
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    References listed on IDEAS

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    Cited by:

    1. Daniele De Luca, 2023. "Power relations in Game Theory," Papers 2307.14170, arXiv.org.
    2. Daniele De Luca, 2024. "A mathematical theory of power," Papers 2401.16406, arXiv.org.
    3. Simon Gächter & Esther Kaiser & Manfred Königstein, 2024. "Incentive contracts crowd out voluntary cooperation: Evidence from gift-exchange experiments," Discussion Papers 2024-02, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    4. Niklas M. Witzig, 2024. "Cognitive Noise and Altruistic Preferences," Papers 2410.07647, arXiv.org.
    5. Florian H. Schneider & Fanny Brun & Roberto A. Weber, 2024. "Sorting and wage premiums in immoral work," CEBI working paper series 24-12, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    6. Felix Kölle & Simone Quercia & Egon Tripodi, 2023. "Social Preferences under the Shadow of the Future," Rationality and Competition Discussion Paper Series 406, CRC TRR 190 Rationality and Competition.
    7. Abigail Barr & Anna Hochleitner & Silvia Sonderegger, 2023. "Does increasing inequality threaten social stability? Evidence from the lab," Discussion Papers 2023-13, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    8. Rezaei, Sarah & Rosenkranz, Stephanie & Weitzel, Utz & Westbrock, Bastian, 2024. "Social preferences on networks," Journal of Public Economics, Elsevier, vol. 234(C).
    9. Keigo Inukai & Yuta Shimodaira & Kohei Shiozawa, 2022. "Revisiting CES utility functions for distributional preferences: Do people face the equality–efficiency trade-off?," ISER Discussion Paper 1195r, Institute of Social and Economic Research, Osaka University, revised Sep 2024.
    10. Yosuke Hashidate & Tetsuya Kawamura & Fabrice Le Lec & Yusuke Osaki & Benoît Tarroux, 2024. "Impure motivations in social preferences: Experimental evidence from menu choices," Working Papers 2406, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.

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    More about this item

    JEL classification:

    • D0 - Microeconomics - - General
    • D2 - Microeconomics - - Production and Organizations
    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • H0 - Public Economics - - General
    • J0 - Labor and Demographic Economics - - General
    • P0 - Political Economy and Comparative Economic Systems - - General

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