Why Social Preferences Matter - the Impact of Non-Selfish Motives on Competition, Cooperation and Incentives

Zurich IEER Working Paper No. 84

44 Pages Posted: 1 Feb 2002

See all articles by Ernst Fehr

Ernst Fehr

University of Zurich - Department of Economics

Urs Fischbacher

University of Konstanz - Faculty of Economics and Statistics

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Abstract

A substantial number of people exhibit social preferences, which means they are not solely motivated by material self-interest but also care positively or negatively for the material payoffs of relevant reference agents. We show empirically that economists fail to understand fundamental economic questions when they disregard social preferences, in particular, that without taking social preferences into account, it is not possible to understand adequately (i) the effects of competition on market outcomes, (ii) laws governing cooperation and collective action, (iii) effects and the determinants of material incentives, (iv) which contracts and property rights arrangements are optimal, and (v) important forces shaping social norms and market failures.

Suggested Citation

Fehr, Ernst and Fischbacher, Urs, Why Social Preferences Matter - the Impact of Non-Selfish Motives on Competition, Cooperation and Incentives. Zurich IEER Working Paper No. 84, Available at SSRN: https://ssrn.com/abstract=299142 or http://dx.doi.org/10.2139/ssrn.299142

Ernst Fehr (Contact Author)

University of Zurich - Department of Economics ( email )

Blümlisalpstrasse 10
Zuerich, 8006
Switzerland
+41 1 634 3709 (Phone)
+41 1 634 4907 (Fax)

Urs Fischbacher

University of Konstanz - Faculty of Economics and Statistics ( email )

Universitaetsstr. 10
78457 Konstanz
Germany

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