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Nice to You, Nicer to Me: Does Self-Serving Generosity Diminish the Reciprocal Response?

Woods, Daniel and Servátka, Maroš (2016): Nice to You, Nicer to Me: Does Self-Serving Generosity Diminish the Reciprocal Response?

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We propose a conjecture that self-serving but generous actions diminish the positively reciprocal response, compared to selfless generous actions. We embed our conjecture in Cox, Friedman & Sadiraj’s (2008) model of Revealed Altruism. According to Revealed Altruism reciprocal responses are influenced by a ‘more generous than’ (MGT) ordering. The MGT ordering is defined by two conditions. Condition A states that an action that increases one’s opportunity set is MGT an action that decreases, does not change, or increases the opportunity set by less. Condition B states that the action cannot increase the ‘giver’s’ opportunity set by more than the ‘recipient’s’ opportunity set. We focus on Condition B, and classify actions that satisfy Condition B as selfless generous actions, and actions that violate Condition B as self-serving generous actions. We hypothesize that selfless generous actions are MGT self-serving generous actions, and that self-serving generous actions will result in a diminished reciprocal response. We test this conjecture using two novel experimental designs and find evidence that subjects perceive self-serving generous actions as being less generous than selfless generous actions, but no empirical support for our conjecture on the diminished reciprocal response, suggesting a refinement for the MGT ordering that does not include Condition B.

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