Essays on the Behavioral Economics of Social Preferences and Bounded Rationality

Humans sometimes behave very selfishly, yet in other cases they prefer to help others. These “social preferences” in turn play a key role in many economic phenomena ranging from financial fraud to charitable donations. This dissertation presents a series of lab- and field-experiments about the drivers of social preferences, with a particular focus on bounded rationality, culture and beliefs. These experiments are conducted in a diverse set of populations, ranging from bank employees to entrepreneurs in a developing country to professionals in charitable organizations. The results indicate that humans differ considerably in their prosociality. Furthermore, well-intended “nudges” such as a group-level ethics training can be ineffective or even cause more selfish behavior. In addition, it is shown that people have a tendency to interpret information such to justify their selfish tendencies. However, the results also indicate that small changes to the manner in which information is presented can cause people to make better choices for themselves, and for others. As such, these studies support the notion that there is great value in putting assumptions about preferences and behaviors in the economic domain to the experimental test.

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