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Social preferences are a type of preference studied in behavioral and experimental economics and social psychology, including interpersonal altruism, fairness, reciprocity, and inequity aversion.

A person exhibits social preferences if this person not only cares about his/her own material payoff, but also the reference group's payoff or/and the intention that leads to the payoff.

Experimental evidences
Many initial evidences of social preferences come from lab experiments. In these lab experiments, subjects play various economic games, and researchers find their behavior robustly and systematically deviate from the prediction from self-interest hypothesis, but can be explained by social preferences including altruism, inequity aversion and reciprocity.

Ultimatum game is one of the first experiments that shows self-interest hypothesis fails to predict people's behavior. In this game, the first mover proposes a split of a fixed amount, and the second mover decides to accept or reject the offer. If the second mover accepts the offer, the final payoff is exactly determined by the offer. However, if the second mover rejects the offer, both subjects will receive zero payoff. Contrary to the self-interest prediction that first mover will propose zero amount and the second mover will accept the offer, experimenters find proposers will typically offer 25%-50% of the fixed amount, and responders tend to reject the offer when the split is below 20%.

A relevant game is dictator game, where one subject proposes the split of a fixed amount and the other subject is only allowed to accept the offer. The dictator game helps to isolate pure altruism from the strategic concern of the first mover (i.e. the first mover proposes a larger share to second mover to avoid rejection) in the ultimatum game. In this game, the average share decreases to 20% of the fixed amount, however, more than 60% still propose a positive offer.

Two other games, trust game (also called investment game) and gift-exchange game provide evidence for reciprocal preference. In the trust game, a first mover is endowed with a fixed amount c, and decides the amount of money b to pass on to the second mover. This amount is multiplied by a factor of k when it reaches second mover, and then second mover decides how much of this amount (kb) is returned to the first mover. While self-interest model predicts no transfer and no return, experimenters show that first mover typically transfer roughly 50% of endowment and responder's return increases with the transfer. In gift exchange game, the first mover propose some offer to the second mover and ask for certain effort level from second mover, and the second mover decides his/her effort that is costly but can increase first mover's payoff. Also contrary to the self-interest prediction, first mover's offer level in experiments is usually greater than zero, and effort level increases with offer.

Prisoner's dilemma and its generalized game, public goods game also provide indirect evidence for social preference. Typical finding is that there is conditional cooperation.

Field evidences
Kahneman, Knetsch and Thaler (1986) find that the concern for fairness constrains firm's profit seeking behavior (e.g. raise price after an increase in demand). There are also evidences that perceived fairness of the tax system and law can affect tax compliance and law enforcement.

In addition, many researchers also conduct field experiment to examine relative pay concern and reciprocity in work settings. For example, in Gneezy and List (2006)'s field experiments, where subjects are hired for the typing job and for door-to-door fund raising, they find larger effort level in group with higher wage, but this positive reciprocity is short lived. Researchers have also found that positive reciprocity is smaller than negative reciprocity. Kube, Marechal and Puppe (2013) hire job applicants to catalog books for 6 hours with a pronounced wage, but applicants are later informed with wage increase or wage cut. They find decrease in effort in wage cut group is larger than increase in effort than wage increase group. However, positive reciprocity does not extend to other activities (volunteering to work for one more hour). Breza, Kaur, Shamdasani (2018) also find decrease in worker's effort when they experience wage cut, but this effort level change is affected by the perceived justification for wage cut.

Economic models of social preferences
Existing models of social preferences can be divided to two types: distributive preferences and reciprocal preferences. Distributive preferences are the perferences over the distribution and total magnitude of the payoff among the reference groups, including altruism and spitefulness, fairness and inequity aversion, and efficiency concern, while reciprocal preferences reflect individual's concern of the intention of other's behavior and the motivation to reciprocate positively or negatively depending on the kindness and fairness of other's behavior.

Pure altruism, warm glow and spitefulness
Pure altruism represents individual's concern on other's well-being. In economic models, a person exhibits altruistic preference if this person's utility increases with other's payoff. Another related model is impure altruism, or warm-glow, where individuals feel good (i.e gain a "warm-glow" utility) from doing something good without caring other's payoff.

Spitefulness or envy preference is the opposite of altruism, which means that individual's utility decreases with other's payoff.

Fairness and inequity aversion
Fairness and inequity aversion models capture agent's concern on fair distribution of payoffs across agents and especially the aversion to payoff differences.

In Fehr and Schmidt (1999)'s model, agent compares his payoff to each other opponents in the group. However, agent's utility decreases with both positive and negative payoff differences between self and each other opponent in the reference group. Moreover, agents dislike payoff disadvantage more than payoff advantage.Hence, agent presents altruistic behavior towards others when agent is better off than others, and presents spiteful behavior when agent is worse off than others.

Bolton and Ockenfels (1999) derive a similar model of inequity aversion with a more general functional form, where agents care about fair share but are only concerned about the average payoff of the reference group, rather than each individual's payoff in the group.

Efficiency concern and quasi-maximin preferences
Charness and Rabin (2002) find that in some cases, agents prefer more efficient outcomes (i.e. outcome with larger social welfare) than more equal outcomes. In their model, agents' utility is a convex combination of own's material payoff and the social welfare. They assume agents have quasi-maximin preferences, meaning that agents' care on social welfare include both the minimum payoff among agents as well as the total payoff for all individuals. However, agent will care less about others' payoff if other is better off than this individual.

Reciprocity
Agents has motivation to reciprocate towards both kind and unfair behavior. Rabin (1993)'s model is one of the earliest model that studies reciprocal behavior. In this model, agent's payoff depends on the other opponent, and agent forms belief of the other opponent's kindness, which is based on the difference between the actual payoff that agent receives and the fair payoff. Individuals will reciprocate positively if he perceives the other individual's behavior as kind and fair and respond negatively if he perceives unfair behavior.

Researchers further generalize Rabin (1993)'s model by studying repeated interactions in N-person extensive form games, and also by including inequity aversion into agent's preference. Charness and Rabin (2002) also augment their maximin preference with reciprocity concern, where subjects which depends on the degree of deviation from self-interest behavior.

Economic applications
Researchers have argued that the failure of recognizing social preference will lead to biased understanding of many important economic behavior.

Understanding cooperation
Research on social preferences show that reciprocal and inequity averse individuals can cooperate if they are sure that others will cooperate too and can punish the free riders. This has implication for designing proper social mechanism to solve the free-riding problem.

Economic incentive
Lab and field experiments have provide supportive evidences for the fair wage-effort hypothesis. Accounting agent's social preference help firm to solve agency problem s. Moreover, research on social preference has helped understanding the crowding-out effect of monetary incentives

Social policies
The study of social preference can affect the determination the social policies. For example, the reciprocal preferences can affect people's evaluation of different policies towards the poor depending on each individual's belief that whether the poor are deserving or undeserving.