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Modeling Inequity Aversion in a Dictator Game with Production

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  • Luis José Blas Moreno Garrido

    ()
    (Dpto. Fundamentos del Análisis Económico)

  • Ismael Rodríguez Lara

    (Universidad de Alicante)

Abstract

We expand upon the previous models of inequity aversion of Fehr and Schmidt (1999) and Frohlich, Oppenheimer and Kurki (2004), which assume that dictators get disutility if the final allocation of the surplus deviates from the equal split (egalitarian principle) or from the subjects’ production (libertarian principle). In our model, dictators may also account for the way in which the surplus was generated. More precisely, our model incorporates the idea of the liberal egalitarian ethics into the analysis, making it possible for dictators to divide the surplus according to the accountability principle, which states that subjects should only be rewarded for factors under their control. This fairness ideal does not hold subjects responsible for factors beyond their control in the production of the surplus, an idea that is absent in the models of inequity aversion cited above.

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Bibliographic Info

Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2012-04.

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Length: 19 pages
Date of creation: Feb 2012
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2012-04

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Keywords: social preferences; inequity aversion; inequality aversion; egalitarian principle; libertarian principle; accountability principle.;

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  1. Fehr, Ernst & Schmidt, Klaus M., 1998. "A Theory of Fairness, Competition and Cooperation," CEPR Discussion Papers 1812, C.E.P.R. Discussion Papers.
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Cited by:
  1. Moreno-Garrido, Luis José Blas, 2013. "Relative Injustice Aversion," QM&ET Working Papers 13-4, Universidad de Alicante, Departamento de Métodos Cuantitativos y Teoría Económica.

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