Social preferences and moral biases

A consensus seems to be emerging in economics that at least three motives are at work in many strategic decisions: distributive preferences, reciprocal preferences and self-interest. An important obstacle to this research, however, has been moral biases, i.e., the distortions created by self-interest that can obscure our measures of social preferences. Among other things, this has led to disagreement about the relative importance of self-interest, distributive and reciprocal preferences. This paper describes a simple experiment that decomposes behavior into these three forces. We compare the decisions of implicated “stakeholders ” with those of impartial “spectators, ” who have no stake. Several surprising and interesting results emerge. For example, stakeholders are less inclined to respond to the generosity of others than are spectators acting on their behalf. This experiment also helps clarify a result in previous research (e.g., Offerman, 2002) that stakeholders tend to punish unkindness more than they reward kindness. We find that this asymmetry in reciprocity has two sources: there is an asymmetry in the underlying preference that even impartial spectators display, but, in addition, stakeholders exhibit a moral bias, i.e., they punish more and reward less than spectators. In sum, we find that all three motives have important and significant effects on final allocations