Utility versus Income-Based Altruism

Alexander Kritikos and Friedel Bolle

No 249, Discussion Papers from European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics

Abstract: In Dictator Game experiments where the information status of the participants varies we find that a certain type of proposer tends to reduce his offers when the recipient has incomplete information about the pie size. We also find that a certain type of recipient tends to reject too small offers in the Impunity Game when the proposer has incomplete information about the recipient type. To explain these puzzling results we reconsider Becker's [1974] theory of altruism, which assumes that externalities are caused by other people's utility. When incomplete information about the other person is introduced, it turns out that his approach predicts – in contrast to other theories of altruism - that some altruistic persons will change their behavior as observed in our experiments. Thus, a kind of utility based altruism (and spite as its opposite form) can be assumed as the main principle governing behavior in this class of games.

Date: 2006
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