Giving and Taking in the Lab: The Impact of Context on Preferences for Altruism and Equity

Dictator games measure individual willingness to sacrifice one’s own payoff to increase that of a stranger, but the revealed distributional preferences identified in such settings may depend on the context in which the dictator makes her choice. This paper explores the impact changing the context of a dictator game on both levels of individual generosity and the willingness to sacrifice efficiency to enhance equity or maintain a preferred level of inequality. I explore individual-level responses to changes in the price of giving, which determines the efficiency cost of inequality, in two contexts — one in which dictators divide their own earnings, and one in which they divide funds earned by others. I find that changing the source of a dictator’s budget impacts her decisions, but only because it affects the weight that she places on the other player’s payoff relative to her own. Changing the context has no impact on the responseto price changes, and thus does not shift players toward Rawlsian egalitarianism or utilitarianism.