Advanced Search
MyIDEAS: Login to save this paper or follow this series

The Behavioral Tradeoff between Efficiency and Equity when a Majority Rules

Contents:

Author Info

  • Gary E. Bolton
  • Axel Ockenfels

Abstract

Voting is a natural context to investigate how democratic societies balance claims of economic efficiency against claims of distributive equity. We examine data from a series of simple experimental voting games; in each, voters are confronted with two distributional policies, one that promotes efficiency versus one that promotes equity. We find that as a social good, equity has more attraction than efficiency by about a two-to-one margin, even though those who deviate for efficiency pay on average less for it than those who deviate for equity. Strikingly, nearly half those who do not benefit (nor lose) from the Pareto choice vote against it; yet the same choice finds wide support when a fair random draw determines who captures the gain.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: ftp://papers.econ.mpg.de/esi/discussionpapers/2003-12.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Max Planck Institute of Economics, Strategic Interaction Group in its series Papers on Strategic Interaction with number 2003-12.

as in new window
Length: 21 pages
Date of creation: Jan 2004
Date of revision:
Handle: RePEc:esi:discus:2003-12

Contact details of provider:
Postal: Kahlaische Strasse 10, D-07745 Jena
Phone: +49-3641-68 65
Fax: +49-3641-68 69 90
Web page: http://www.econ.mpg.de/
More information through EDIRC

Order Information:
Email:
Web: http://www.econ.mpg.de/english/research/ESI/discuss.php

Related research

Keywords:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Urs Fischbacher & Simon Gaechter & Ernst Fehr, . "Are People Conditionally Cooperative? Evidence from a Public Goods Experiment," IEW - Working Papers 016, Institute for Empirical Research in Economics - University of Zurich.
  2. Gary Charness & Matthew Rabin, 2003. "Understanding Social Preferences with Simple Tests," General Economics and Teaching 0303002, EconWPA.
  3. 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.
  4. Bolton, Gary E, 1991. "A Comparative Model of Bargaining: Theory and Evidence," American Economic Review, American Economic Association, vol. 81(5), pages 1096-136, December.
  5. Güth, Werner & Kliemt, Hartmut & Ockenfels, Axel, 2000. "Fairness versus efficiency: An experimental study of (mutual) gift giving," SFB 373 Discussion Papers 2001,6, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  6. Tyran, Jean-Robert & Sausgruber, Rupert, 2006. "A little fairness may induce a lot of redistribution in democracy," European Economic Review, Elsevier, vol. 50(2), pages 469-485, February.
  7. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
  8. 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.
  9. 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.
  10. David M. Cutler, 2002. "Equality, Efficiency, and Market Fundamentals: The Dynamics of International Medical-Care Reform," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 881-906, September.
  11. Fishburn, Peter C & Rubinstein, Ariel, 1982. "Time Preference," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 23(3), pages 677-94, October.
  12. Akira Okada & Arno Riedl, 1999. "Inefficiency and Social Exclusion in a Coalition Formation Game: Experimental Evidence," Tinbergen Institute Discussion Papers 99-044/1, Tinbergen Institute.
  13. Fehr, Ernst & Kirchsteiger, George & Riedl, Arno, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," The Quarterly Journal of Economics, MIT Press, vol. 108(2), pages 437-59, May.
  14. Adam Rose & Brandt Stevens, 1998. "A Dynamic Analysis of Fairness in Global Warming Policy: Kyoto, Buenos Aires, and Beyond," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 329-362, November.
  15. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-41, September.
  16. Kritikos, Alexander & Bolle, Friedel, 2001. "Distributional concerns: equity- or efficiency-oriented?," Economics Letters, Elsevier, vol. 73(3), pages 333-338, December.
  17. Oberholzer-Gee, Felix & Bohnet, Iris & Frey, Bruno S, 1997. " Fairness and Competence in Democratic Decisions," Public Choice, Springer, vol. 91(1), pages 89-105, April.
  18. Gary E Bolton & Jordi Brandts & Axel Ockenfels, 2005. "Fair Procedures: Evidence from Games Involving Lotteries," Economic Journal, Royal Economic Society, vol. 115(506), pages 1054-1076, October.
  19. Bruno S. Frey & Alois Stutzer, 2001. "Beyond Bentham – Measuring Procedural Utility," CESifo Working Paper Series 492, CESifo Group Munich.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:esi:discus:2003-12. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Karin Richter).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.