Identification of Other-Regarding Preferences: Evidence from a Common Pool Resource Game in Colombia

Abstract

Intrinsic motivation is shaped by attitudes towards others. In spite of their potential relevance for policy design, identifying individual preference types beyond population distributions remains a challenge. We use data from a common pool resource (CPR) game in the field (935 individuals, 25% students and 75% real CPR users) to identify individual types through a structural, latent class logistic model including preferences for altruism, reciprocity and equity. Type determinants include sociodemographic and attitudinal characteristics of the participant. We expose different types to various incentives (economic and non-economic) to shed light on the interaction between intrinsic and extrinsic motives.

A competing explanation to social preferences is errors leading to random behavior, especially among CPR users who lack formal education. The rationality parameter estimated from a quantal response equilibrium model reveals little difference between university students and villagers. The evidence against cognitive differences provides further support for the role of heterogeneity in preferences.

Keywords: Common-pool resources, social preferences, laboratory and field experiments, explicit incentives, inequity aversion, latent heterogeneity, finite mixture models

JEL Classification: Q2, C51, C23, C93, D64, H39, H41