Tastes for Desert and Placation: A Reference Point-Dependent Model of Social Preferences

Abstract

This paper proposes a reference-point dependent model of social behavior where individuals maximize a three-term utility function: a consumption utility term and two “social” terms. One social term captures a preference for desert (i.e., others getting what we think they deserve) and the other term a preference for the satisfaction of other’s expectations, or to placate them (i.e., them getting what we think they think they deserve). After motivating the modeling assumptions with findings from empirical moral philosophy and evolutionary psychology, I introduce the model and generate some simple comparative statics results, which I then test with experiments. I discuss how the model explains several paradoxes of empirical moral philosophy that are less explicable by current economic models of social preference focusing on outcomes and intentions.