Social Utility and Decision Making in Interpersonal Contexts

TLDR: This article found that the typical utility function is steeply increasing and convex for disadvantageous inequality and weakly declining and a convex utility function for advantageous inequality in two-person ultimatum games and that disputants are concerned not only with the outcomes they receive, but also with their opponents' outcomes.

Abstract: Three studies examined preferences for outcomes to self and a codisputant. Studies I and 2 estimated social utility functions from judgments of satisfaction with alternative outcomes. Comparing functional forms, we found that a utility function, including terms for own payoff and for positive and negative discrepancies between the parties' payoffs (advantageous and disadvantageous inequality), provides a close fit to the data. The typical utility function is steeply increasing and convex for disadvantageous inequality and weakly declining and convex for advantageous inequality. We manipulated dispute type (personal, business) and disputant relationship (positive, neutral, or negative) and found that both strongly influence preferences for advantageous but not disadvantageous inequality. A third study contrasted implications of the social utility functions with predictions of individual utility theories. People care about the outcomes of others. We sacrifice our own interests to help loved ones or harm adversaries. Participants withdraw from profitable participation in a laboratory experiment if they perceive inequity in remuneration (Schmitt & Marweli, 1972). Players in two-person ultimatum games (in which one player proposes a distribution of a fixed amount of money that the other has the option of either accepting or rejecting) frequently reject a positive but inequitable offer even though the alternative is no gain at all (Guth, Schmittberger, & Schwarze, 1982). Negotiations between parties often collapse when one party becomes incensed with the other and attempts to "maximize his opponent's displeasure rather than his own satisfaction" (scigel & Fouraker, 1960, p. 100). In general, disputants are concerned not only with the outcomes they receive, but also with the outcomes of their opponents (Pruitt & Rubin, 1986).