Social Preferences and the Efficiency of Bilateral Exchange

Under what conditions do social preferences, such as altruism or a concern for fair outcomes, generate efficient trade? I analyze theoretically a simple bilateral exchange game: Each player sequentially takes an action that reduces his own material payoff but increases the other player’s. Each player’s preferences may depend on both his/her own material payoff and the other player’s. I identify necessary conditions and sufficient conditions on the players’ preferences for the outcome of their interaction to be Pareto efficient. The results have implications for interpreting the rotten kid theorem, gift exchange in the laboratory, and gift exchange in the field

Intermediated Social Preferences: Altruism in an Algorithmic Era

What are the consequences of intermediating moral responsibility through complex organizations or transactions? This paper examines individual decision-making when choices are known to be obfuscated under randomization. It reports the results of a data entry experiment in an online labor market. Individuals enter data, grade another individual’s work, and decide to split a bonus. However, before they report their decision, they are randomized into settings with different degrees of intermediation. The key finding is that less generosity results when graders are told the split might be implemented by a new procurement algorithm. Those whose decisions are averaged or randomly selected among a set of graders are more generous relative to the asocial treatment. These findings relate to “the great transformation” whereby moral mentalities are shaped by modes of (a)social interaction

Is Fairness in the Eye of the Beholder? An Impartial Spectator Analysis of Justice

A popular sentiment is that fairness is inexorably subjective and incapable of being determined by objective standards. This study, on the other hand, seeks to establish evidence on unbiased justice and to propose and demonstrate a general approach for measuring impartial views empirically. Most normative justice theories associate impartiality with limited information and with consensus, i.e., a high level of agreement about what is right. In both the normative and positive literature, information is usually seen as the raw material for self-serving bias and disagreement. In contrast, this paper proposes a type of impartiality that is associated with a high level of information. The crucial distinction is the emphasis here on the views of impartial spectators, rather than implicated stakeholders. I describe the quasi-spectator method, i.e., an empirical means to approximate the views of impartial spectators that is based on a direct relationship between information and consensus, whereby consensus refers to the level of agreement among actual evaluators of real world situations. Results of surveys provide evidence on quasi-spectator views and support this approach as a means to elicit moral preferences. By establishing a relationship between consensus and impartiality, this paper seeks to help lay an empirical foundation for welfare analysis, social choice theory and practical policy applications