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Inequality Aversion and Reciprocity in Moonlighting Games

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  • Dirk Engelmann

    (Department of Economics, University of Mannheim,L7, 3-5, 68131 Mannheim, Germany
    Centre for Experimental Economics, University of Copenhagen, Øster Farimagsgade 5, 1353 København K, Denmark
    Economics Institute of the Academy of Sciences of the Czech Republic, P.O. Box 882 Politickych veznu 7, 111 21 Praha 1, Czech Republic)

  • Martin Strobel

    ()
    (Department of Economics, Maastricht University, P.O. Box 616, 6200 MD Maastricht, The Netherlands)

Abstract

We study behavior in a moonlighting game with unequal initial endowments. In this game, predictions for second-mover behavior based on inequality aversion are in contrast to reciprocity. We find that inequality aversion explains only few observations. The comparison to a treatment with equal endowments supports the conclusion that behavior is better captured by intuitive notions of reciprocity than by inequality aversion. Extending the model by allowing for alternative reference points promises better performance, but leads to other problems. We conclude that the fact that inequality aversion often works as a good short-hand for reciprocity is driven by biased design choices.

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Bibliographic Info

Article provided by MDPI, Open Access Journal in its journal Games.

Volume (Year): 1 (2010)
Issue (Month): 4 (October)
Pages: 459-477

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Handle: RePEc:gam:jgames:v:1:y:2010:i:4:p:459-477:d:9946

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Related research

Keywords: reciprocity; inequality aversion; altruism; moonlighting game;

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  1. Cox, James C., 2004. "How to identify trust and reciprocity," Games and Economic Behavior, Elsevier, vol. 46(2), pages 260-281, February.
  2. Dufwenberg, Martin & Kirchsteiger, Georg, 2004. "A theory of sequential reciprocity," Games and Economic Behavior, Elsevier, vol. 47(2), pages 268-298, May.
  3. Falk, Armin & Fehr, Ernst & Fischbacher, Urs, 2008. "Testing theories of fairness--Intentions matter," Games and Economic Behavior, Elsevier, vol. 62(1), pages 287-303, January.
  4. Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers 004, Institute for Empirical Research in Economics - University of Zurich.
  5. Armin Falk & Urs Fischbacher, . "A Theory of Reciprocity," IEW - Working Papers 006, Institute for Empirical Research in Economics - University of Zurich.
  6. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences With Simple Tests," The Quarterly Journal of Economics, MIT Press, vol. 117(3), pages 817-869, August.
  7. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  8. Abbink, Klaus & Irlenbusch, Bernd & Renner, Elke, 2000. "The moonlighting game: An experimental study on reciprocity and retribution," Journal of Economic Behavior & Organization, Elsevier, vol. 42(2), pages 265-277, June.
  9. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
  10. Dirk Engelmann & Martin Strobel, 2004. "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments," American Economic Review, American Economic Association, vol. 94(4), pages 857-869, September.
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