2017-07: Moral Costs and Rational Choice: Theory and Experimental Evidence
Author(s): James C. Cox, John A. List, Michael Price, Vjollca Sadiraj and Anya Samek
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- January 7, 2017 Create Date
The literature exploring other-regarding behavior sheds important light on interesting social phenomena, yet less attention has been given to how the received results speak to foundational assumptions within economics. Our study synthesizes the empirical evidence, showing that recent work challenges convex preference theory but is largely consistent with rational choice theory. Guided by this understanding, we design a new, more demanding test of a central tenet of rational choice—the Contraction Axiom—within a sharing framework. Making use of more than 300 dictators participating in a series of allocation games, we show that sharing choices violate the Contraction Axiom. We advance a new theory of moral reference points that augments standard models to explain our experimental data. Beyond capturing the data patterns in our experiment, our theory also organizes the broader sharing patterns in the received literature and has applications to strategic games with contractions.
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