What Do We Expect from our Friends?

• Main Authors: Leider, Stephen, Mobius, Markus M., Rosenblat, Tanya S., DO, Quoc-Anh
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2009
• Subjects: Behavioral Economics; Social Media
• Online Access: https://ink.library.smu.edu.sg/soe_research/528; https://ink.library.smu.edu.sg/context/soe_research/article/1527/viewcontent/ExpectFriends.pdf
• Institution: Singapore Management University

We conduct a field experiment in a large real-world social network to examine how subjects expect to be treated by their friends and by strangers who make allocation decisions in modified dictator games. While recipients’ beliefs accurately account for the extent to which friends will choose more generous allocations than strangers (i.e. directed altruism), recipients are not able to anticipate individual differences in the baseline altruism of allocators (measured by giving to an unnamed recipient, which is predictive of generosity towards named recipients). Recipients who are direct friends with the allocator, or even recipients with many common friends, are no more accurate in recognizing intrinsically altruistic allocators. Recipient beliefs are significantly less accurate than the predictions of an econometrician who knows the allocator’s demographic characteristics and social distance, suggesting recipients do not have information on unobservable characteristics of the allocator.