Endogenous Preferences and Social-Dilemma Institutions

There is robust experimental evidence that some people have selfish preferences, and others have social, or other-regarding, preferences. This paper seeks to explain why there is such preference heterogeneity. In our approach preferences are endogenous to the economy's institutional setup. We consider institutions of the social-dilemma type. Our main result characterizes the endogenous preferences: There is, under a wide set of institutional setups, a unique endogenous preference distribution, where reciprocal, altruistic, and selfish preferences coexist. These results may contribute to understanding how institutions affect preferences.