Abstract. Considerable experimental evidence indicates that reciprocity and inequality aversion are important motivations to understand deviations from self-interested behavior, and in particular costly punishment and reward. We use a within-subject experimental design to evaluate the share of subjects whose second-party reward and punishment choices are best accounted for by pure reciprocity, pure inequality aversion, a mixture of these two motives, or other motivations like altruism or competitiveness. We find that the largest fraction of punishment and rewards is motivated by a mixture of both inequality aversion and reciprocity, while smaller fractions are primarily motivated by pure inequality aversion and pure reciprocity. These findings provide new insights into the literature on other-regarding preferences and may help to organize some results in the experimental literature on second-party punishment and reward.
Keywords: Heterogeneity; Inequality aversion; Monetary punishment/reward; Reciprocity