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Piece of cake? Allocating rewards to third parties when fairness is costly

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  • Johansson, Lars-Olof
  • Svedsäter, Henrik
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    Abstract

    Reactions to third-party inequality were investigated in three experiments. In Experiment 1, 52 undergraduates allocated money between themselves and two others. Preferences for equal and unequal distributions were also rated. The results show that people are averse to inequalities between themselves and others, and to inequalities between others. Post-experimental ratings indicate that egocentric equality, third-party equality, and max-min preferences are important motives. The findings were replicated in Experiment 2, where 74 undergraduates allocated compensation for a previously conducted task, and in Experiment 3, where 112 participants rated preferences. In these experiments random determination of rewards to third parties altered participants' behavior and preferences. The results indicated that random determination decreases the importance of all fairness motives while increasing the importance of monetary payoff. While people still care about economic equality under these conditions, contextual factors, such as perceived responsibility for unfair outcomes, seem to alter the impact of fairness.

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    File URL: http://www.sciencedirect.com/science/article/B6WP2-4W0SS7Y-1/2/1f0e1f9f24c0dc0a1924f4c1f3c5f617
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    Bibliographic Info

    Article provided by Elsevier in its journal Organizational Behavior and Human Decision Processes.

    Volume (Year): 109 (2009)
    Issue (Month): 2 (July)
    Pages: 107-119

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    Handle: RePEc:eee:jobhdp:v:109:y:2009:i:2:p:107-119

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    Web page: http://www.elsevier.com/locate/obhdp

    Related research

    Keywords: Economic fairness Inequality aversion Third-party fairness Max-min preferences Diffusion of personal responsibility;

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    1. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
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    7. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers 92-199, University of California at Berkeley.
    8. Roth, Alvin E. & Vesna Prasnikar & Masahiro Okuno-Fujiwara & Shmuel Zamir, 1991. "Bargaining and Market Behavior in Jerusalem, Ljubljana, Pittsburgh, and Tokyo: An Experimental Study," American Economic Review, American Economic Association, vol. 81(5), pages 1068-95, December.
    9. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-58, December.
    10. Kahneman, Daniel & Knetsch, Jack L., 1992. "Valuing public goods: The purchase of moral satisfaction," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 57-70, January.
    11. Johansson, Lars-Olof & Gustafsson, Mathias & Olsson, Lars & Garling, Tommy, 2007. "Weighing third-party fairness, efficiency, and self-interest in resource allocation decisions," Journal of Economic Psychology, Elsevier, vol. 28(1), pages 53-68, January.
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