Glossary
Social preferences
What are social preferences?
Social preferences depend on other people's outcomes or actions as well as your own. They can include altruistic concern for others, inequality aversion—a dislike of unequal outcomes—and reciprocity, in which a response depends on another person’s actions.
What the models explain
Fehr and Schmidt model how concern about inequity can help explain bargaining and cooperation. Their model allows people to differ; it does not assume everyone is equally fair or generous.
Cox's experiments show why comparisons between conditions are needed to separate trust and reciprocity from unconditional concern for others. Giving money does not reveal a single motive by itself.
A hypothetical allocation
Suppose you can choose between keeping $10 while another person gets nothing, or receiving $8 each. Choosing the second option costs you $2 and raises the other person’s payoff by $8. Several social preferences could favor it, for different reasons.
- Altruistic concern: how much do you value the other person receiving more?
- Inequality aversion: how much does the gap between your payoffs matter?
- Reciprocity: would your choice change if the other person had previously helped or harmed you?
One choice between these options cannot separate those explanations. For example, a reciprocity test needs information about the other person’s prior action and a suitable comparison condition, not only the final amounts.
Example
A donation total might influence someone because it provides information, suggests a norm, or changes expectations about others. Seeing a donation follow the display does not tell you which explanation is right.
Why it matters
Other people's outcomes can matter to a decision. Identifying how they matter requires more than labeling a choice generous or selfish.