Paper #368

Title:

Altruism, equity and reciprocity in a gift-exchange experiment: An encompassing approach

Authors:

Gary Charness and Ernan Haruvy

Date:

March 1999

Abstract:

Considerable experimental evidence suggests that non-pecuniary motives must be addressed when modeling behavior in economic contexts. Recent models of non-pecuniary motives can be classified as either altruism- based, equity-based, or reciprocity-based. We estimate and compare leading approaches in these categories, using experimental data. We then offer a flexible approach that nests the above three approaches, thereby allowing for nested hypothesis testing and for determining the relative strength of each of the competing theories. In addition, the encompassing approach provides a functional form for utility in different settings without the restrictive nature of the approaches nested within it. Using this flexible form for nested tests, we find that intentional reciprocity, distributive concerns, and altruistic considerations all play a significant role in players' decisions.

Keywords:

Altruism, experiment, equity, encompassing, fairness, inequality aversion, reciprocity, Leex

JEL codes:

A13, C50, C70, C91, D21, J30

Area of Research:

Behavioral and Experimental Economics

Published in:

Games and Economic Behavior, 40(2002), 2, pp. 203-231

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