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Many recent studies have revealed an economically and socially important paradox: people sometimes behave morally in certain situations but then behave immorally (or less morally) under conditions that differ for reasons that seem morally irrelevant. These patterns are inconsistent with both theories of rational self-interest as well as with theories that incorporate stable social preferences. This paper introduces a parsimonious and tractable theory of moral salience and conditional altruism that is consistent with anomalies involving uncertainty, exit options, the ability to take from others, and the possibility to destroy or create earnings of others. The proposed framework is general enough to accommodate classic social preference theories as well as approaches based on self-deception, moral reference points, and social image. In addition, the theory is specific enough to be empirically refutable. The paper also reports an out-of-sample test of one anomaly that corroborates the assumptions and implications of the theory.

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