Pay it forward: Theory and experiment

We theoretically and experimentally investigate psychological motivations behind pay-it-forward behavior. We construct a psychological game-theoretic model that incorporates altruism, inequity aversion, and indirect reciprocity following Rabin (1993), Fehr and Schmidt (1999), and Dufwenberg and Kirchsteiger (2004). We test this model using games in which players choose to give to strangers, potentially after receiving a gift from an unrelated benefactor. Our experiment reveals that altruism and indirect reciprocity spur people to pay kind actions forward, informing how kindness begets further kindness. However, inequity aversion hinders giving even when giving will allow one's kindness to be paid forward. Our paper informs how kind behaviors get passed on among parties that never directly interact, which has implications for the formation of social norms and behavioral conduct within workplaces, neighborhoods, and communities.