ESSAYS ON SOCIAL PREFERENCES

Abstract

This thesis consists of three chapters. The first chapter studies how spite and joy-of-winning contribute to overbidding in the second-price auction under stranger, partner, and group matching conditions. Using experimental data on bidding behaviour and revealed willingness-to-pay to affect others' payoffs, we find that spite influences bidding in auctions where bidders interact repeatedly. The second chapter examines optimal auction design with asymmetric spite among bidders. We show how the revenue-maximizing allocation rule depends on the spite externalities, and characterize the payment scheme that supports the optimal allocation. The third chapter studies how group decision-making affects social preferences in two-person dictator games and sequential games of payoff allocations. We find that making joint decisions has a positive effect on social preferences towards ingroup members, independently of whether the decision leads to a positive or negative outcome, and that group decision-making leads to a generalised feeling of goodwill towards outgroup members.