Social decision making.

Abstract

Behavioral data from two different experiments conducted at the University of Minnesota is used to uncover the aspects of social decision making. These experiments focus on situations where individual decision might affect the payoffs of other parties. In particular, the first experiment includes a treatment where subjects choose in groups and member decisions may bind the whole group, whereas the second experiment includes a treatment one subject makes choices on behalf of another who in turn assigns rewards to choice making subject. Besides these treatments, both experiments include a treatment where subjects decide for themselves alone. I expect the behavior to be moderated by prevailing social norms in these decision making environments. I start with introducing the research explained in this thesis and then give important examples from the past literature in social psychology and economics. I show that the social norms become salient as a result of several factors including subject's beliefs about the preferences of others, subject's perception about the appropriate behavior in social decisions and subject's expectations about the possible evaluations to be made by others after choices and outcomes are realized. I test the effect of these factors on social decisions and contrast them with choices made alone. In addition to the statistical analysis, theoretical predictions for certain social decision making environments are formulated and tested using the experimental data. The findings and their implications for social arrangements are discussed.