Social Preferences

Standard economic models assume people are self-interested and seek to maximize their monetary pay-offs in social interactions. However, people exhibit social preferences; that is, they base their choices partly on the outcomes others obtain in a social interaction and on what others believe about them.  People care about fairness, and reciprocity affects behavior. For example, people give gratuity to a waiter, although they may be unlikely to ever return to the restaurant. On the negative side, customers who suspect a supplier treats them unfairly are likely to feel angry and may search for (possibly more costly) alternatives. People trust others and cooperate even though they risk losing monetary payoffs.

In our lab, we study the interplay between the intuitive emotional system (System 1) and the deliberative rational system (System 2) in social preferences such as trust, honesty, reciprocity, and cooperation. Most previous research on the role of cognitive resources in individual decision making showed that when people are less able to use self-control, they are less rational and more prone to biases in decision making. Findings are less clear regarding decisions in social contexts. Using knowledge from psychology about automaticity, self-control, emotion regulation, and paradigms from behavioral economics, such as the ultimatum game, the trust game, and the prisoner's dilemma, we examine the automaticity of social preferences such as reciprocity, trust, and altruism. We also discuss the changes in social preferences with age and with learning.