Rethinking Reciprocity

Posted: 8 Aug 2014

See all articles by Ulrike Malmendier

Ulrike Malmendier

University of California, Berkeley - Department of Economics; University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Vera teVelde

University of California, Berkeley - Department of Economics

Roberto A. Weber

University of Zurich - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: August 2014

Abstract

Reciprocal behavioral has been found to play a significant role in many economic domains, including labor supply, tax compliance, voting behavior, and fund-raising. What explains individuals’ tendency to respond to the kindness of others? Existing theories posit internal preferences for the welfare of others, inequality aversion, or utility from repaying others’ kindness. However, recent evidence on the determinants of (unilateral) sharing decisions suggests that external factors such as social pressure are equally important. So far, this second wave of social preference theories has had little spillover to two-sided reciprocity environments, in which one individual responds to the actions of another. We present a novel laboratory reciprocity experiment (the double-dictator game with sorting) and show that failure to account for external motives leads to a significant overestimation of internal motives such as fairness and altruism. The experimental data illustrate the importance of combining reduced-form and structural analyses to disentangle internal and external determinants of prosocial behavior.

Suggested Citation

Malmendier, Ulrike and teVelde, Vera and Weber, Roberto A., Rethinking Reciprocity (August 2014). Annual Review of Economics, Vol. 6, pp. 849-874, 2014, Available at SSRN: https://ssrn.com/abstract=2477774 or http://dx.doi.org/10.1146/annurev-economics-080213-041312

Ulrike Malmendier (Contact Author)

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Vera TeVelde

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

Roberto A. Weber

University of Zurich - Department of Economics ( email )

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