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In most laboratory experiments concerning prosocial behavior subjects are fully informed how their decision influences the payoff of other players. Outside the laboratory, however, individuals typically have to decide without such detailed knowledge. To assess the effect of information asymmetries on prosocial behavior, we conduct a laboratory experiment with a simple non-strategic interaction. A dictator has only limited knowledge about the benefits his prosocial action generates for a recipient. We observe subjects with heterogenous social preferences. While under symmetric information only individuals with the same type of preferences transfer, under asymmetric information different types transfer at the same time. As a consequence and the main finding of our experiment, uninformed dictators behave more prosocially than informed dictators.

To understand economic growth, this paper looks at transaction costs and how they affect how much money people make. It shows transaction costs, market failure, and economic underdevelopment. Many people think that the problems with development are because markets can't do their job of allocating resources. Some people don't believe that the market doesn't work and blame the government instead. If you look at the people who say that market failure is the root of economic backwardness, very few, if any, look at transaction costs and how they are linked to market failure. People who read this paper want to connect development economics with transaction cost theory and new institutional analysis.