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A stress test of fairness measures in models of social utility

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  • Gary E. Bolton
  • Axel Ockenfels

Abstract

Current social utility models posit fairness as a motive for certain types of strategic behavior. The models differ, however, with respect to how fairness is measured. Distribution models measure fairness in terms of relative payoff comparisons. Reciprocal-kindness models measure fairness in terms of gifts given and gifts received. Reference points play an important role in both measures, but the reference points in reciprocal-kindness models are conditioned on the actions available to players, whereas those in distributive models are not. Data from an ultimatum game experiment that stress tests the kindness measure is consistent with the distributive measure. Data from an experiment that stress tests the distributive measure is inconsistent with the distributive measure, but moves in the direction opposite that implied by the kindness measure. A measure that combines relative payoff comparisons with a reference point conditioned on feasible actions provides a first approximation to our data. Copyright Springer-Verlag Berlin/Heidelberg 2005

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Bibliographic Info

Paper provided by Max Planck Institute of Economics, Strategic Interaction Group in its series Papers on Strategic Interaction with number 2002-29.

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Length: 34 pages
Date of creation: Aug 2002
Date of revision:
Handle: RePEc:esi:discus:2002-29

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References

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