Sorting in Experiments with Application to Social Preferences

Sorting in Experiments with Application to Social Preferences

By
Edward Lazear, Ulrike Malmendier, Roberto A. Weber
American Economic Association. January
2012, Vol. 4, Issue 1, Pages 136-163

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.