Social discounting and the prisoner's dilemma game.

Altruistic behavior has been defined in economic terms as "…costly acts that confer economic benefits on other individuals" (Fehr & Fischbacher, 2003). In a prisoner's dilemma game, cooperation benefits the group but is costly to the individual (relative to defection), yet a significant number of players choose to cooperate. We propose that people do value rewards to others, albeit at a discounted rate (social discounting), in a manner similar to discounting of delayed rewards (delay discounting). Two experiments opposed the personal benefit from defection to the socially discounted benefit to others from cooperation. The benefit to others was determined from a social discount function relating the individual's subjective value of a reward to another person and the social distance between that individual and the other person. In Experiment 1, the cost of cooperating was held constant while its social benefit was varied in terms of the number of other players, each gaining a fixed, hypothetical amount of money. In Experiment 2, the cost of cooperating was again held constant while the social benefit of cooperating was varied by the hypothetical amount of money earned by a single other player. In both experiments, significantly more participants cooperated when the social benefit was higher.