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Annual Review of Economics

Volume 6, 2014

Rethinking Reciprocity

Abstract

Reciprocal behavioral has been found to play a significant role in many economic domains, including labor supply, tax compliance, voting behavior, and fund-raising. What explains individuals’ tendency to respond to the kindness of others? Existing theories posit internal preferences for the welfare of others, inequality aversion, or utility from repaying others’ kindness. However, recent evidence on the determinants of (unilateral) sharing decisions suggests that external factors such as social pressure are equally important. So far, this second wave of social preference theories has had little spillover to two-sided reciprocity environments, in which one individual responds to the actions of another. We present a novel laboratory reciprocity experiment (the double-dictator game with sorting) and show that failure to account for external motives leads to a significant overestimation of internal motives such as fairness and altruism. The experimental data illustrate the importance of combining reduced-form and structural analyses to disentangle internal and external determinants of prosocial behavior.

Keyword(s): double-dictator game, external and internal motivations, social image, social preferences, social pressure, structural estimation
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2014-08-02
2024-04-26
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Rethinking Reciprocity
Annual Review of Economics 6, 849 (2014); https://doi.org/10.1146/annurev-economics-080213-041312
/content/journals/10.1146/annurev-economics-080213-041312
/content/journals/10.1146/annurev-economics-080213-041312
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  • Article Type: Review Article

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