On the context dependence of agents' social preferences

There is increasing evidence that agents display social preferences in addition to the traditional preferences over monetary outcomes, such as concerns for status, ethical standards and fairness and that these social preferences depend on the contextual features of the decision-making environment. This dissertation explores the features of decision contexts that affect social preferences and the impact that such context dependence has on the evolution of institutions.;The first essay explores the context dependence of status concerns between workers in a firm. Using a simple linear principal-agent moral hazard model with one principal and two agents, we find that status concerns are shaped by the relative strengths and weaknesses of the workers in the firm; the "weaker" agent displays stronger concerns for status than does a "stronger" agent. Finally, and surprisingly, a firm's profit is reduced (relative to the benchmark moral-hazard model) by workers who exhibit such "endogenous" relative concerns.;In the second essay (joint with Michael T. Rauh), we develop a new behavioral theory of the firm based on the endogenous development of a work ethic by workers in two institutions - the firm and the market. We find that the market is primarily an incentive system whereas the firm is purely a socialization device that relies exclusively on intrinsic motivation. The firm is more efficient than the market when subjective risk is "high'' because it fosters intrinsic motivation and economizes on risk.;The third essay experimentally tests the prediction that agents' social concerns are influenced by their relative characteristics using a modified dictator game. Prior to making decisions, dictators are provided with an objective measure of player characteristics for themselves and all recipients - a test score. We find that dictators' allocations vary inversely with score differences (own score - recipient score). Since giving in dictator games is seen as evidence of social concerns, we conclude that social concerns are indeed influenced by observable relative player characteristics.