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Sorting, Prices, and Social PreferencesEdward P. LazearStanford Graduate School of Business; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA) Roberto A. WeberUniversity of Zurich - Department of Economics Library; CESifo (Center for Economic Studies and Ifo Institute for Economic Research) Ulrike MalmendierUniversity of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA) February 2006 NBER Working Paper No. w12041 Abstract: What impact do social preferences have in market-type settings where individuals can sort in response to relative prices? We show that sorting behavior can distinguish between individuals who like to share and those who share but prefer to avoid the sharing environment altogether. In four laboratory experiments, prices and social preferences interact to determine the composition of sharing environments: Costless sorting reduces the number of sharers, even after inducing positive reciprocity. Subsidized sharing increases entry, but mainly by the least generous sharers. Costly sharing reduces entry, but attracts those who share generously. We discuss implications for real-world giving with sorting.
Number of Pages in PDF File: 56 working papers seriesDate posted: May 4, 2006Suggested CitationContact Information
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