Social Image and the 50–50 Norm: A Theoretical and Experimental Analysis of Audience Effects

Authors

  • James Andreoni,

    1. Dept. of Economics, University of California at San Diego, 9500 Gillman Drive, La Jolla, CA 92093, U.S.A. and NBER; andreoni@ucsd.edu
    Search for more papers by this author
  • B. Douglas Bernheim

    1. Dept. of Economics, Stanford University, Stanford, CA 94305-6072, U.S.A. and NBER; bernheim@stanford.edu
    Search for more papers by this author
    • We are indebted to the following people for helpful comments: Iris Bohnet, Colin Camerer, Navin Kartik, Antonio Rangel, three anonymous referees, and seminar participants at the California Institute of Technology, NYU, and Stanford University's SITE Workshop in Psychology and Economics. We acknowledge financial support from the National Science Foundation through grant numbers SES-0551296 (Andreoni) and SES-0452300 (Bernheim).


Abstract

A norm of 50–50 division appears to have considerable force in a wide range of economic environments, both in the real world and in the laboratory. Even in settings where one party unilaterally determines the allocation of a prize (the dictator game), many subjects voluntarily cede exactly half to another individual. The hypothesis that people care about fairness does not by itself account for key experimental patterns. We consider an alternative explanation, which adds the hypothesis that people like to be perceived as fair. The properties of equilibria for the resulting signaling game correspond closely to laboratory observations. The theory has additional testable implications, the validity of which we confirm through new experiments.

Ancillary