The impact of relative position and returns on sacrifice and reciprocity: an experimental study using individual decisions

Recognition Program

Authors: Jordi Brandts, Enrique Fatas and Francisco Lagos

Social Choice and Welfare, Vol. 45, No 3, 489-511, October, 2015

We present a comprehensive experimental design that makes it possible to characterize other-regarding preferences and their relationship to the decision maker’s relative position. Participants are faced with a large number of decisions involving variations in the trade-offs between own and other’s payoffs, as well as in other potentially important factors like the decision maker’s relative position. We find that: (1) choices are responsive to the cost of helping and hurting others; (2) The weight a decision maker places on others’ monetary payoffs depends on whether the decision maker is in an advantageous or disadvantageous relative position; and (3) We find no evidence of reciprocity of the type linked to menu-dependence. The results of a mixture-model estimation show considerable heterogeneity in subjects’ motivations and confirm the absence of reciprocal motives. Pure selfish behavior is the most frequently observed behavior. Among the subjects exhibiting social preferences, social-welfare maximization is the most frequent, followed by inequality-aversion and by competitiveness.

This paper originally appeared as Barcelona GSE Working Paper 256
This paper is acknowledged by the Barcelona GSE Research Recognition Program