Sorting, Prices, and Social Preferences

56 Pages Posted: 4 May 2006 Last revised: 8 Apr 2010

See all articles by Edward P. Lazear

Edward P. Lazear

Stanford Graduate School of Business; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Roberto A. Weber

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

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)

Date Written: February 2006

Abstract

What impact do social preferences have in market-type settings where individuals can sort in response to relative prices? We show that sorting behavior can distinguish between individuals who like to share and those who share but prefer to avoid the sharing environment altogether. In four laboratory experiments, prices and social preferences interact to determine the composition of sharing environments: Costless sorting reduces the number of sharers, even after inducing positive reciprocity. Subsidized sharing increases entry, but mainly by the least generous sharers. Costly sharing reduces entry, but attracts those who share generously. We discuss implications for real-world giving with sorting.

Suggested Citation

Lazear, Edward P. and Weber, Roberto A. and Malmendier, Ulrike, Sorting, Prices, and Social Preferences (February 2006). NBER Working Paper No. w12041. Available at SSRN: https://ssrn.com/abstract=883090

Edward P. Lazear (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
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National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics

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Roberto A. Weber

University of Zurich - Department of Economics ( email )

Zuerich, 8006
Switzerland

CESifo (Center for Economic Studies and Ifo Institute) ( email )

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Germany

Ulrike Malmendier

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

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Berkeley, CA 94720-3880
United States
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(510) 642-6615 (Fax)

HOME PAGE: http://www.econ.berkeley.edu/~ulrike/

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
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Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

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United Kingdom

Institute for the Study of Labor (IZA)

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

HOME PAGE: http://www.iza.org/en/webcontent/personnel/photos/index_html?key=918

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