NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Sorting, Prices, and Social Preferences

Edward Lazear, Ulrike Malmendier, Roberto Weber

NBER Working Paper No. 12041
Issued in February 2006, Revised in May 2011
NBER Program(s):Labor Studies, Public Economics

What impact do social preferences have in market-type settings where individuals can sort in response to relative prices? We show that sorting behavior can distinguish between individuals who like to share and those who share but prefer to avoid the sharing environment altogether. In four laboratory experiments, prices and social preferences interact to determine the composition of sharing environments: Costless sorting reduces the number of sharers, even after inducing positive reciprocity. Subsidized sharing increases entry, but mainly by the least generous sharers. Costly sharing reduces entry, but attracts those who share generously. We discuss implications for real-world giving with sorting.

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Document Object Identifier (DOI): 10.3386/w12041

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