Peer Effects in Pro-Social Behavior: Social Norms or Social Preferences?

61 Pages Posted: 25 Feb 2012

See all articles by Simon Gaechter

Simon Gaechter

University of Nottingham; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute)

Daniele Nosenzo

University of Nottingham

Martin Sefton

University of Nottingham - School of Economics

Abstract

We compare social preference and social norm based explanations for peer effects in a three-person gift-exchange game experiment. In the experiment a principal pays a wage to each of two agents, who then make effort choices sequentially. In our baseline treatment we observe that the second agent's effort is influenced by the effort choice of the first agent, even though there are no material spillovers between agents. This peer effect is predicted by a model of distributional social preferences (Fehr-Schmidt, 1999). As we show from a norms-elicitation experiment, it is also consistent with social norms compliance. A conditional logit investigation of the explanatory power of payoff inequality and elicited norms finds that the second agent's effort can be best explained by the social preferences model. In further treatments with modified games we find that the presence/strength of peer effects changes as predicted by the social preferences model. As with the baseline treatment, a conditional logit analysis favors an explanation based on social preferences, rather than social norms following for these treatments. Our results suggest that, in our context, the social preferences model provides a parsimonious explanation for the observed peer effect.

Keywords: peer effects, social influence, gift-exchange, experiment, social preferences, inequity aversion, measuring social norms

JEL Classification: A13, C92, D03

Suggested Citation

Gachter, Simon and Nosenzo, Daniele and Sefton, Martin, Peer Effects in Pro-Social Behavior: Social Norms or Social Preferences?. IZA Discussion Paper No. 6345. Available at SSRN: https://ssrn.com/abstract=2010940

Simon Gachter (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Daniele Nosenzo

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Martin Sefton

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

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