ABSTRACT
I n 2007 American charitable donations were 2.8% of gross domestic product (GDP).* One of the first lessons economics students are taught is that people live in a world of scarcity, where unlimited wants will always exceed limited means. That individuals give away significant resources, rather than consuming, contradicts one of the most basic axioms of neoclassical economics. In the face of this divergence between theory and empirical evidence, various theories of prosocial behavior have been developed, such as impure altruism (Andreoni, 1990), fairness equilibria (Rabin, 1993), conditional cooperation (Fischbacher, Gachter, & Fehr, 2001) and inequity aversion (Fehr & Schmidt, 1999).
