Similarity and social discounting

Benjamin Beranek and Geoffrey Castillo

Working Papers from HAL

Abstract: Social discounting refers to the idea that decision-makers discount payoffs as a function of social distance. We introduce a method to meas- ure social distance using interpersonal similarity; that is, how similar or different others are to the decision-maker. We use data from our own preregistered experiments as well from an existing, independently conducted, lab-in-the-field experiment to estimate the structural para- meters of social discounting and find evidence for it. Our experiments control for competing explanations to isolate the effect of similarity and thus show that people have a preference for more similar others. Our estimates imply that in order for a decision-maker to willingly forgo 1 USD and have it instead benefit a dissimilar other, then it would need to increase to at least 1.25 USD. We also find evidence for quasi-hyperbolic social discounting.

Keywords: similarity; social distance; social discounting; choice experiment; Inclusion of Other in the Self (search for similar items in EconPapers)
Date: 2025-02-05
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