Fairness-based Altruism

Yves Breitmoser and Pauline Vorjohann
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Yves Breitmoser: Center for Mathematical Economics, Bielefeld University
Pauline Vorjohann: Center for Mathematical Economics, Bielefeld University

No 666, Center for Mathematical Economics Working Papers from Center for Mathematical Economics, Bielefeld University

Abstract: Why do people give when asked, but prefer not to be asked, and even take when possible? We introduce a novel analytical framework that allows us to express context dependence and narrow bracketing axiomatically. We then derive the utility representation of distributive preferences additionally obeying standard axioms such as separability and scaling invariance. Such pref- erences admit a generalized prospect-theoretical utility representation reminiscent of fairness- based altruism. As in prospect theory, the underlying preferences are reference dependent and non-convex, which directly predicts the previously irreconcilable empirical evidence on giving, sorting, and taking. We test the model quantitatively on data from seminal experiments and observe significantly improved fit in relation to existing models, both in-sample and out-of- sample.

Keywords: Social preferences; axiomatic foundation; robustness; giving; charitable donations (search for similar items in EconPapers)
Pages: 63
Date: 2022-05-13
New Economics Papers: this item is included in nep-exp, nep-soc and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:bie:wpaper:666

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