Good Samaritans and the Market: Experimental Evidence on Other-Regarding Preferences

Some evidence suggests that people behave more pro-socially in small groups than in market-like situations. We construct an experiment in which people choose between allocations that affect their payoff and that of others. The choices of some participants are randomly selected to determine payoffs. We test whether people exhibit different other-regarding preferences depending on how the choice is framed. To mimic a market-like environment, we ask subjects to select a type of partner, either high or low. Selecting a partner of a given type effectively removes this pairing from other players. We compare this treatment to two alternatives where people are first assigned to groups of two high and two low participants. In one treatment, they are then asked to choose between a high and low partner. In the other, they are asked to choose between two payoff allocations for the four individuals. These two treatments make the implication of one's choice on others more salient. We find that most subjects pursue their self-interest, but high payoff participants behave more altruistically in small groups while low payoff participants display more invidious choices in the market-like environment. The implication is that while some efficiency can be achieved in small groups thanks to altruism, a market-like environment reduces good samaritan tendencies, possibly because the negative effect of one's choice on others is less salient.