| Abstract: |
There is vast heterogeneity in the human willingness to weigh others’
interests in decision making. This heterogeneity concerns the motivational
intricacies as well as the strength of other-regarding behaviors, and raises
the question how one can parsimoniously model and characterize heterogeneity
across several dimensions of social preferences while still being able to
predict behavior over time and across situations. We tackle this task with an
experiment and a structural model of preferences that allows us to
simultaneously estimate outcome-based and reciprocity-based social
preferences. We find that non-selfish preferences are the rule rather than the
exception. Neither at the level of the representative agent nor when we allow
for several preference types do purely selfish types emerge in our sample.
Instead, three temporally stable and qualitatively different other-regarding
types emerge endogenously, i.e., without pre-specifying assumptions about the
characteristics of types. When ahead, all three types value others’ payoffs
significantly more than when behind. The first type, which we denote as
strongly altruistic type, is characterized by a relatively large weight on
others’ payoffs – even when behind – and moderate levels of reciprocity. The
second type, denoted as moderately altruistic type, also puts positive weight
on others’ payoff, yet at a considerable lower level, and displays no positive
reciprocity, while the third type is behindness averse, i.e., puts a large
negative weight on others’ payoffs when behind and behaves selfishly
otherwise. We also find that there is an unambiguous and temporally stable
assignment of individuals to types. In addition, we show that
individual-specific estimates of preferences offer only very modest
improvements in out-of-sample predictions compared to our three-type model.
Thus, a parsimonious model with only three types captures the bulk of the
information about subjects’ social preferences. |