Date of Original Version

11-28-2005

Type

Article

Abstract or Description

Experiments provide a controlled setting where factors can be isolated and studied more easily than in the field, but they often do not allow participants to sort into or out of en-vironments based on their preferences, beliefs, and skills. We conduct an experiment to dem-onstrate the importance of sorting in the context of social preferences. When individuals are constrained to play a dictator game, 74% of the subjects share. But when subjects are allowed to avoid the situation altogether, less than one third share. This reversal of proportions illus-trates that the influence of sorting limits the generalizability of experimental findings that do not allow sorting. Moreover, institutions designed to entice pro-social behavior may induce adverse se-lection. We find that increasing the dictator-game surplus prevents foremost those subjects from opting out who shared the least initially. Thus the impact of social preferences remains much lower than in a mandatory dictator game, even if sharing is subsidized by higher pay-offs. Our experiment also sheds light on the motives for sharing. While much sharing is con-sistent with other-regarding preferences, the majority of subjects share without really wanting to, as evidenced by their willingness to avoid the dictator game and to even pay to avoid do-ing so.

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