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Theory and Decision

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07.06.2016

How does socio-economic environment influence the distribution of altruism?

verfasst von: Hideaki Goto

Erschienen in: Theory and Decision | Ausgabe 1/2017

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Abstract

This paper analyzes how socio-economic environment affects the extent of individual altruism and its distribution within a society. We show that if the socio-economic institution that structures interactions between individuals can be represented by a supermodular game, individuals tend to become more homogeneous in terms of altruism as spillover effects increase. This implies that people living close to one another and engaging in joint production, such as irrigation agriculture in a rural village, are more likely to exhibit similar levels of altruism than those living apart and engaging in more or less independent work.

Vorheriger Artikel Modelling curiosity in decision-making

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See Bisin and Verdier (2010) for a survey of the literature.

In fact, these findings are consistent with a wealth of evidence accumulated in behavioral genetics, which is summarized as “three laws of behavior genetics” (Turkheimer 2000): (i) genes affect all human behavioral traits; (ii) the effect of being raised in the same family is relatively small, if any; (iii) a substantial portion of the variation in complex human behavioral traits is accounted for by the effects of unique environments, or experiences specific to each individual.

In the economics literature it has been shown that, even if individuals are rational, conformity arises when it is optimal for them to follow others due to lack of information (Banerjee 1992; Bikhchandani et al. 1992), or when individuals care about status in a group (Bernheim 1994).

To focus on the effect of socio-economic environment, we take the effects of genes and family members on altruism as exogenously given. Initial altruism could be interpreted as representing those effects.

One-sided derivatives are assumed to exist at $x_\mathrm{min}$ and $x_\mathrm{max}$.

Throughout the paper, subscripts denote partial derivatives with respect to the corresponding variables.

Alger (2010) and Levine (1998), for example, use (1) or a similar utility function.

We focus on altruistic individuals because altruism is observed even among infants as young as 14–18 months old (Warneken and Tomasello 2009. See also Harbaugh and Krause 2000). Moreover, the rate of altruistic individuals increases sharply with age. In contrast, spite continues to decrease rapidly from early childhood (Fehr et al. 2013). Therefore, we assume that individuals are already (weakly) altruistic at the time when they start interacting with people outside their families.

This assumption should be particularly plausible when individuals interact with people outside their families, including strangers.

Moreover, from $\pi _{11} < 0$ and $\pi _{22} < 0$, the utility function $U_i$ is strictly concave with respect to $x_i$ and hence the solution is unique. The author is grateful to an anonymous referee for pointing these out. We assume interior solutions throughout.

As stated in Sect. 2.3, however, individuals do not know the fact that self-fulfilling expectations are shared by all individuals in the society.

A monotone pure strategy is a pure strategy that is increasing in type, which is the degree of altruism in our case.

Under the assumption on the values of a and k stated below, the minimum and the maximum equilibrium actions, $x_\mathrm{min}^*$ and $x_\mathrm{max}^*$, satisfy this inequality.

Since $a^2k>0$, the numerator is positive. Besides, $(1+a^2k)\ln (1+a^2k) - a^2k > 0$ for $a^2k>0$. Since $ak<1$, it follows that $1+a^2k < 1+a$. Hence the denominator is also positive: $0< (1+a^2k)\ln (1+a^2k) - a^2k < (1+a)\ln (1+a^2k) - a^2k$.

Precisely, $\pi _1 = \hat{\pi }_1$; $\pi _{11} = \hat{\pi }_{11}$; $\pi _{22} = \hat{\pi }_{22}$; $\pi _{12} = \hat{\pi }_{12}$; $\pi _{111} = \hat{\pi }_{111}$; $\pi _{112} = \hat{\pi }_{112}$; $\pi _{221} = \hat{\pi }_{221}$; $\pi _{222} = \hat{\pi }_{222}$.

We regard smaller negative spillovers as greater than larger negative spillovers.

I am grateful to an anonymous referee for pointing this possibility out.

By rescaling $\lambda _i$, we could also consider the case in which each individual cares about the average material payoff of the other players,

$$\begin{aligned} U_i^N(x_i,\varvec{x}_{-i},\lambda _i) = \pi (x_i,\varvec{x}_{-i}) + \lambda _i'\bar{\pi }(x_i,\varvec{x}_{-i}), \end{aligned}$$

where $\bar{\pi }(x_i,\varvec{x}_{-i}) \equiv \sum _{j \ne i}\pi (x_j,\varvec{x}_{-j})/(N-1)$ and $\lambda _i' = (N-1)\lambda _i$.

Mason and Valentinyi (2010) first derived these assumptions for N-player Bayesian games.

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Titel: How does socio-economic environment influence the distribution of altruism?
verfasst von: Hideaki Goto
Publikationsdatum: 07.06.2016
Verlag: Springer US
Erschienen in: Theory and Decision / Ausgabe 1/2017
Print ISSN: 0040-5833
Elektronische ISSN: 1573-7187
DOI: https://doi.org/10.1007/s11238-016-9558-8

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