Opening-Up the Objective Function: Choice Behavior and Economic and Non-Economic Variables – Core and Marginal Altruism
Economics Bulletin, Vol. 4, No. 33, pp. 1- 11, 2006
Posted: 17 Jan 2010
Date Written: 2006
A revised model of the preference function is presented incorporating utility maximizing acts of material self-sacrifice. This model incorporates neoclassical and behavioral arguments, allowing for the stylized fact that economic agents are motivated by both material and non-material incentives. Given such a preference function, choice behavior is modeled as a function of relative opportunity costs (price) and real income. Preferences are determined by a variety of variables inclusive of social capital and education. There is therefore a core preference based upon non-economic variables and a ‘marginal’ component which is a function of conventional economic variables. The relative importance of these two components in determining choice behavior is an empirical question. Building upon conventional tools, a demand curve for moral acts is derived and underlying income and substitution effects discussed. Empirical evidence from the tipping literature is used to illustrate the model.
Keywords: Choice behaviour, Altruism, Variables, Utility maximisation, Self-sacrifice
JEL Classification: D03, B40
Suggested Citation: Suggested Citation