Why Social Preferences Matter - The Impact of Non-Selfish Motives on Competition

Ernst Fehr and Urs Fischbacher

No 84, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich

Abstract: A substantial number of people exhibit social preferences, which means they are not solely motivated by material self-interest but also care positively or negatively for the material payoffs of relevant reference agents. We show empirically that economists fail to understand fundamental economic questions when they disregard social preferences, in particular, that without taking social preferences into account, it is not possible to understand adequately (i) the effects of competition on market outcomes, (ii) laws governing cooperation and collective action, (iii) effects and the determinants of material incentives, (iv) which contracts and property rights arrangements are optimal, and (v) important forces shaping social norms and market failures.

Keywords: Social Preferences; Reciprocity; Competition; Cooperation; Incentives (search for similar items in EconPapers)
JEL-codes: D00 D23 H00 H41 J00 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe and nep-pke
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Citations: View citations in EconPapers (349)

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