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How Exposure to Markets Can Favor Inequity-Averse Preferences

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  • Robertas Zubrickas

Abstract

This paper shows how market exposure can support the evolution of non-individualistic preferences. In a group, one agent is randomly selected to divide an exogenous endowment. Endowment shares are used for either consumption or market exchange with external merchants. As a more equal endowment distribution attenuates the scope of merchants’ price discrimination, we argue that inequity-averse preferences may lead to a higher utility of consumption and so survive evolutionary pressures. This effect arises from an opportunity to create and extract information rents. We offer a new explanation to the empirical finding that a society's exposure to markets has a positive effect on its members’ sociality.

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Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 814577000000000130.

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Date of creation: 16 Feb 2009
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Handle: RePEc:cla:levarc:814577000000000130

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