Tastes, castes, and culture: The influence of society on preferences



(Kahneman and Tversky 1979), the “anchor” (Ariely, Loewenstein, and Prelec 2003), and the
salience of an aspect of one’s social identity (Hoff and Pandey 2006, 2011; LeBoeuf, Shafir and
Bayuk 2010; Benjamin, Choi, and Strickland 2010).5

A striking example of the power of anchors to shape preferences is the study of Ariely,
Loewenstein, and Prelec. This study elicits the willingness to pay (WTP) for various
consumption items (a cordless keyboard, a bottle of wine, Belgian chocolates, etc.). For each
item, the subjects are asked whether they are willing to pay more or less than a price based on the
last two digits of their social security number. For example, if these digits are 53, the “anchor”
price would be $53. After this anchoring question, the experiment elicits WTP in an incentive-
compatible way. Subjects with social security numbers above the median display a considerably
higher WTP. One explanation for the malleability of subjects’ WTP is that they are not good at
predicting the pleasures and pains produced by a purchase. To address this concern, the study
includes a follow-up experiment in which consumers can experience the full extent of this
pleasure or pain just before the pricing decision. This experiment exposes subjects to an
annoying sound. Then subjects are asked, hypothetically, if they would be willing to listen to the
sound again in exchange for a given price. This price is the anchoring device. After this
anchoring question, the experiment elicits the subject’s willingness to accept money in exchange
for hearing the annoying sound in an incentive-compatible way. Again, a low anchor generates
substantially lower bids than a high anchor does.

Hoff and Pandey (2006, 2011) show that by changing what is salient to an individual,
slight changes in the social contexts in which individuals find themselves will elicit different
preferences regarding effort provision. In the traditional caste order, which still more or less
prevails in villages in north India, high-caste individuals are always socially superior to low-
caste individuals, and low-caste individuals are marked as “unclean” and forced to live and work

5 While framing and elicitation effects undeniably exist, their prevalence or importance may easily be misinterpreted
if beliefs about others and preferences cannot be separately measured. One example of this is given by the study of
Ross and Ward (1996) on the effects of framing in a repeated Prisoners’ Dilemma game. When framed as a “Wall
Street game,” the defection rate is much higher than when the PD is framed as a “community game.” This effect has
often been interpreted as a change in
social preferences due to framing, whereas it could easily be the result of a
change in
beliefs about other people’s cooperation. It is well-known that many subjects are conditional cooperators
(see
e.g. Fischbacher, Gachter and Fehr 2001), that is, they are more likely to cooperate if they believe that others
cooperate with high probability. In fact, recent work by Ellingsen
et al. (2011) shows that the Wall Street vs.
community game framing leaves cooperation choices unaffected if the belief effect is ruled out. Thus, the frame
appears to affect beliefs about others’ social preferences, rather than the preferences themselves.



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