Conference Agenda

In both families and states, pay-it-forward schemes --- where one cohort invests in the next (e.g., via education) with the expectation of future returns (e.g., via retirement support) --- play a crucial role. However, the upfront costs of such schemes and the uncertainty of future returns raise questions about the extent to which they can be sustained through private contributions. We investigate, through a theoretically motivated experiment, whether altruism, reciprocity, and self-interest can motivate forward investments. Specifically, we conduct a large-scale online experiment in which an overlapping sequence of players (representative generations) allocate an endowment between themselves and future, prior, or contemporary players. By varying both the action set and information available, we disentangle the mechanisms driving forward investments. We find that the ability to give back significantly increases willingness to give forward, even without information that would allow players to condition their actions on past behavior. This suggests that a preference for implicit reciprocity, rather than self-interested tit-for-tat strategies or explicit reciprocity, underlies this behavior.