Fairness-Based Altruism

Abstract

Why do people give when asked, but prefer not to be asked, and even take when possible? We introduce a novel analytical framework expressing context dependence and narrow bracketing axiomatically. From these behavioral regularities, we derive a utility representation of distributive preferences. Our result characterizes altruism as a concern for the well-being of others captured by prospect-theoretical value functions. The implied reference dependence and non-convexity of preferences predict previously irreconcilable empirical evidence on giving, taking, and sorting. We test the model on data from seminal experiments and observe significantly improved fit in relation to existing models, both in- and out-of-sample.

Keywords: social preferences, axiomatic foundation, robustness, giving, charitable donations