Empirical evidence on interdependent preferences: nature or nurture?

Abstract

This paper discusses empirical evidence for interdependent preferences from the point of view of the neurosciences, of heritability studies, and of cross‐cultural and developmental psychology: it shows how interdependent preferences are determined to a significant degree by environmental factors. This result has meaningful implications for economic theory, policy and experimentation. A theory of interdependent preferences should also be a theory of their endogenous determination. Normative analyses ignore the endogeneity of interdependent preferences at their own peril. Caution is required in experimental analyses attempting to measure the distribution of interdependent preferences in the population.

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