How not to extend models of inequality aversion
AbstractSeveral authors have made attempts to improve the explanatory power of models of inequality aversion, in particular the one by Fehr and Schmidt (1999), by adding concerns for total surplus or efficiency. In this note, I point out that these attempts are misguided because they are equivalent to a much simpler change, not requiring an additional parameter, unless we simultaneously consider games with different numbers of players. In the latter case, however, such an approach yields implausible predictions.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Behavior & Organization.
Volume (Year): 81 (2012)
Issue (Month): 2 ()
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Inequality aversion; Efficiency; Social preferences;
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