Table of Contents

Handbook on the Economics of Reciprocity and Social Enterprise

Handbook on the Economics of Reciprocity and Social Enterprise

Elgar original reference

Edited by Luigino Bruni and Stefano Zamagni

The recent era of economic turbulence has generated a growing enthusiasm for an increase in new and original economic insights based around the concepts of reciprocity and social enterprise. This stimulating and thought-provoking Handbook not only encourages and supports this growth, but also emphasises and expands upon new topics and issues within the economics discourse.

Chapter 33: Social preferences

Samuel Bowles and Herbert Gintis

Subjects: economics and finance, behavioural and experimental economics, economic psychology, public sector economics, politics and public policy, social entrepreneurship, social policy and sociology, economics of social policy

Extract

Social preferences are motives such as altruism, reciprocity, intrinsic pleasure in helping others, inequity aversion, ethical commitments and other motives that induce people to behave more pro-socially (that is helping others and punishing those who hurt others) than would an own-material-payoff maximizing individual. Our use of the term is not restricted to cases in which the actor assigns some value to the payoffs received by another person, as in the utility functions of Fehr and Schmidt (1999), Rabin (1993) and Levine (1998). While this is a convenient way to model some of the motivations for pro-social behavior, we use the broader definition because moral, intrinsic, or other reasons unrelated to a concern for another’s payoffs often motivate people to help others, adhere to social norms, and act in other pro-social ways even when it is personally costly to do so. A person, for example, may adhere to a social norm not because of the harm that a transgression would do to others, but because of the kind of person she would like to be; helping the homeless may be motivated by Andreoni’s ‘warm glow’ of giving rather than a concern with the well being of the poor (Andreoni, 1990). Social preferences are nicely illustrated in the ultimatum game, which is a one-shot, anonymous game in which one subject, called the ‘proposer,’ is allocated a sum of money, say $10, and is instructed to offer any number of dollars, from $0 to $10, to a second subject, called the ‘responder.’

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