Project Title: Altruism and Spite in Games Project Abstract Altruism and spite are common both in everyday life and in experimental economic settings. This research develops simple models of preferences that can give a quantitative explanation of altruism and spite, and explores the consequences of these preferences in economic theory and practice. There are many models that can explain the qualitative features of altruism and spite in economics experiments; essentially what is observed is that there is heterogeneity, with some individuals acting altruistically and other spitefully. Moreover, we observe more altruism and spite as their cost is diminished. However, not all models can explain the quantitative features observed in experiments: in particular the simplest model of linear utility cannot explain the results from ultimatum game experiments, as the population receiving offers appears more spiteful than the population making offers. Our findings indicate that a simple linear model of signaling with heterogeneous players in which the degree of altruism depends on how altruistic other players are perceived to be can quantitatively explain a variety of experiments. This research develops models that can explain experimental data, and uses these models to understand how altruism and spite impact on economic settings. I consider issues such as welfare reform and charitable giving, discrimination, business organization and criminal behavior. * One substitute that has been proposed for welfare is charitable giving with government matching funds. If `warm glow` effects predominate, then donors may care little for the impact of their donations, and a privatized system need not be more efficient than a public welfare system. * A key question in the study of discrimination is the type of institutional arrangements that may encourage or discourage spiteful behavior. * The role of institutions in encouraging or discouraging spite and altruism is also key in the study of business organizations. Historically this literature has focused largely on the exchange of information, and not questions of employee morale. Which institutional arrangements make employee sabotage more or less likely? Which arrangements encourage employees to internalize the goals of the firm? * In the study of criminal behavior, the issue of respect for the law is important in explaining differences between countries. The equilibrium degree of altruism and spite is potentially an important variable in explaining these differences.
