Relative Position, Prices of Sacrifice and Reciprocity: An Experimental Study Using Individual Decisions

• Authors: Jordi Brandts.
• BSE Working Paper: 1256 | September 15
• Keywords: experiments , social preferences , Reciprocity , Difference Aversion
• JEL codes: C70, C90, D63, D64
• experiments
• social preferences
• Reciprocity
• Difference Aversion

We use experimental data to obtain a detailed description of individuals’ pro-sociality. Participants are faced with a large number of decisions involving variations in the tradeoffs between own and others’ payoffs, as well as in other potentially important factors like individuals’ positions vis-à-vis others. We find that decisions are affected by payoff trade-offs in an intuitive way but also by whether individuals obtain more or less than others. We find little reciprocity of the type linked to menu-dependence. The influence of social welfare preferences is stronger than that of difference aversion; however, Leontieff preferences are not more important than difference aversion in our data.