How prosocial motives shape market exchange: experimental evidence from street vending

Ronak Jain

No 451, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: Markets are often seen as impersonal mechanisms of exchange, yet many real-world transactions are deeply social. This paper examines how prosocial motives interact with economic exchange and how this affects market outcomes. I study these questions in the context of street vending—a ubiquitous informal market in developing countries— combining multiple experiments with detailed observational data and surveys. Partnering with vendors in a field experiment, I show that buyers are twice as likely to purchase from children as from adults selling identical goods. Sellers, including children, anticipate these preferences, adjusting prices and whom they target. I develop and test a simple model that rationalizes these behaviors: buyers derive utility not only from consumption but also from altruism toward sellers and from avoiding the discomfort of refusal when solicited to buy. Experimental evidence supports both mechanisms and shows that sellers strategically leverage this to extract rents, creating an advantage for children in this market. More broadly, the findings show how social preferences influence market exchange, granting socioeconomically vulnerable sellers a form of market power in competitive environments.

Keywords: Social preferences; child labor; price discrimination; behavioral rents (search for similar items in EconPapers)
JEL-codes: C93 D91 J46 L10 O17 (search for similar items in EconPapers)
Date: 2024-09, Revised 2026-01
New Economics Papers: this item is included in nep-exp, nep-ipr and nep-lma
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:451

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