Sorting in Experiments with Application to Social Preferences

Edward P. Lazear, Ulrike Malmendier, Roberto A. Weber

American Economic Journal Applied Economics · 2012 · 376 citations · 60 references

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Concepts

TL;DR

Individuals sort into and out of economic environments based on their preferences and in response to relative prices. We demonstrate the importance of such sorting for the measurement of social preferences, using two laboratory experiments. Allowing subjects to avoid sharing environments reduces sharing, revealing a type of individual who shares reluctantly and prefers to avoid sharing, while subsidizing sharing increases aggregate sharing but attracts those who share the least, resulting in weak overall effects. JEL codes: C91, D12, D64.

Abstract

Individuals sort into and out of economic environments based on their preferences and in response to relative prices. We demonstrate the importance of such sorting for the measurement of social preferences, using two laboratory experiments. First, allowing subjects to avoid environments in which sharing is possible significantly reduces sharing. This reveals the existence of a type of individual who shares reluctantly, preferring to avoid the opportunity to share. Second, after subsidizing the sharing environment, the aggregate amount shared increases, but less is shared, on average, by those who enter. Thus, subsidies intended to induce more sharing have weak effects since they attract those who share the least. (JEL C91, D12, D64)

References

60