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Intuitive Economists in a Social Environment: A Reexamination of the Effect of Interaction Outcomes on Interdependent Behavior

Tel Aviv University, nehemia{at}post.tau.ac.il

Arie Nadler

Tel Aviv University

This study examined the proposition that interdependent behavior is related to two independent utility functions. Nonsocial utility is a measure of the intrinsic worth of rewards, which is unrelated to the circumstances of their attainment. Hence, it primarily affects individualistic choices. Social utility expresses the effect of interaction outcomes on the recipient's self-esteem, and, therefore, it underlies competitiveness. Social comparison models suggest that social utility is sensitive to the proximity between interacting parties. Three Maximizing Difference Game experiments showed that, given low nonsocial utility outcomes, high social proximity increased participants' attention to the outcomes of the other player as well as the frequency of competitive choices. High nonsocial utility outcomes strengthened individualistic behavior, and reversed the effect of proximity on competitiveness. This reversal was attributed to normative concerns that were predicted to become salient when the social and nonsocial utilities of interaction outcomes are both high.

Key Words: competition • cooperation • interdependence

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