The effect of perceived similarity and social proximity on the formation of prosocial preferences

Homophily, the tendency of interacting with similar others, has been found to be an important determinant of the existence and stability of social groups, whereas social relationships within these groups vary in the degree of social proximity. In this paper, I investigate how perceived similarity affects social proximity and care towards a partner and altruistic giving. In a between-subjects design, subjects are matched with either a similar or a dissimilar partner and play a dictator game. Similarity is induced via objective similarities on pre-elicited personality profiles based on Big-Five personality traits. I show that perceiving someone as more similar increases giving in a dictator game. A mediation analysis shows that social proximity and care towards the partner mediate the treatment effect. That is, subjects in the similar treatment feel a higher degree of social proximity to their partner, leading to a higher degree of care towards the latter and therefore, give more in the dictator game.