Impure Altruism or Inequality Aversion?: An Experimental Investigation Based on Income Effects

We investigate the consequences of a pure income effect on the altruistic behavior of donors. Inequality aversion theories predict either no effect or a decrease in giving, whereas impure altruism theory predicts an increase in giving with an increase in the common income of donor and receiver. Theoretical predictions being contradictory, we run a dictator game in which we vary the common show-up fee of both the dictator and the recipient, while keeping an extra amount to be shared the same. The results are in line with the prediction of the impure altruism theory.