Altruism

Inequality Aversion

Spite and Envy as Social Preferences

An individual is offered two ways to split a bonus between themselves and a colleague. In Option 1, the individual gets $100 and the colleague gets $20. In Option 2, both the individual and the colleague get $80. The individual chooses Option 2. This decision to accept a lower personal payoff in favor of a perfectly even distribution is the clearest demonstration of which type of social preference?

Analyzing a Competitive Decision

Match each scenario with the type of social preference it best illustrates.

Distinguishing Motivations for Fairness

An individual is given the choice between two outcomes. Outcome A: they receive $10 and another person receives $18. Outcome B: they receive $9 and the other person receives $9. If the individual chooses Outcome B, this action exclusively demonstrates that their utility is negatively affected by the well-being of others.

Comparing Social Preference Models

Interpreting Choices to Identify Social Preferences

An individual's satisfaction from an outcome is represented by the utility function U(x_i, x_j) = x_i - 0.5 * x_j, where x_i is the individual's own monetary payoff and x_j is another person's monetary payoff. Based on this function, what type of social preference does this individual exhibit?

Illustrating Altruistic Preferences

Designing an Employee Bonus System