Social preferences and strategic uncertainty: an experiment on markets and contracts

Antonio Cabrales; Raffaele Miniaci; Marco Piovesan; Giovanni Ponti

doi:10.1257/aer.100.5.2261

Social preferences and strategic uncertainty: an experiment on markets and contracts

Antonio Cabrales, Raffaele Miniaci, Marco Piovesan, Giovanni Ponti

37 Citations (Scopus)

Abstract

This paper reports a three-phase experiment on a stylized labor market. In the first two phases, agents face simple games, which we use to estimate subjects' social and reciprocity concerns. In the last phase, four principals compete by offering agents a contract from a fixed menu. Then, agents "choose to work" for a principal by selecting one of the available contracts. We find that (i) (heterogeneous) social preferences are significant determinants of choices, (ii) for both principals and agents, strategic uncertainty aversion is a stronger determinant of choices than fairness, and (iii) agents display a marked propensity to work for principals with similar distributional concerns.

Original language	English
Journal	American Economic Review (Print Edition)
Volume	100
Issue number	5
Pages (from-to)	2261–2278
Number of pages	18
ISSN	0002-8282
DOIs	https://doi.org/10.1257/aer.100.5.2261
Publication status	Published - Dec 2010

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10.1257/aer.100.5.2261

Cite this

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title = "Social preferences and strategic uncertainty: an experiment on markets and contracts",

abstract = "This paper reports a three-phase experiment on a stylized labor market. In the first two phases, agents face simple games, which we use to estimate subjects' social and reciprocity concerns. In the last phase, four principals compete by offering agents a contract from a fixed menu. Then, agents {"}choose to work{"} for a principal by selecting one of the available contracts. We find that (i) (heterogeneous) social preferences are significant determinants of choices, (ii) for both principals and agents, strategic uncertainty aversion is a stronger determinant of choices than fairness, and (iii) agents display a marked propensity to work for principals with similar distributional concerns.",

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AU - Miniaci, Raffaele

AU - Piovesan, Marco

AU - Ponti, Giovanni

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N2 - This paper reports a three-phase experiment on a stylized labor market. In the first two phases, agents face simple games, which we use to estimate subjects' social and reciprocity concerns. In the last phase, four principals compete by offering agents a contract from a fixed menu. Then, agents "choose to work" for a principal by selecting one of the available contracts. We find that (i) (heterogeneous) social preferences are significant determinants of choices, (ii) for both principals and agents, strategic uncertainty aversion is a stronger determinant of choices than fairness, and (iii) agents display a marked propensity to work for principals with similar distributional concerns.

AB - This paper reports a three-phase experiment on a stylized labor market. In the first two phases, agents face simple games, which we use to estimate subjects' social and reciprocity concerns. In the last phase, four principals compete by offering agents a contract from a fixed menu. Then, agents "choose to work" for a principal by selecting one of the available contracts. We find that (i) (heterogeneous) social preferences are significant determinants of choices, (ii) for both principals and agents, strategic uncertainty aversion is a stronger determinant of choices than fairness, and (iii) agents display a marked propensity to work for principals with similar distributional concerns.

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