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Equality, Equity and Incentives: An Experiment

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  • Balafoutas, Loukas

    ()
    (University of Innsbruck)

  • Kocher, Martin G.

    ()
    (University of Munich)

  • Putterman, Louis

    ()
    (Brown University)

  • Sutter, Matthias

    ()
    (European University Institute)

Abstract

We devise a new experimental game by nesting a voluntary contributions mechanism in a broader spectrum of incentive schemes. With it, we study tensions between egalitarianism, equity concerns, self-interest, and the need for incentives. In a 2x2 design, subjects either vote on or exogenously encounter incentive settings while assigned unequal incomes that are either task-determined or random. We find subjects’ voting to be mainly self-interested but also influenced by egalitarian and equity concerns, which sometimes cut in opposite directions. Contributions, which seem mainly determined by boundedly rational responses to incentives, are influenced by egalitarian, equity and strategic considerations.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5204.

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Length: 61 pages
Date of creation: Sep 2010
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Handle: RePEc:iza:izadps:dp5204

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Keywords: experiment; incentives; voluntary contribution mechanism; efficiency; equality;

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Cited by:
  1. Ku, Hyejin & Salmon, Timothy C., 2013. "Procedural fairness and the tolerance for income inequality," European Economic Review, Elsevier, vol. 64(C), pages 111-128.
  2. R. Kline & F. Galeotti & R. Orsini, 2014. "When Foul Play Seems Fair: Dishonesty as a Response to Violations of Just Deserts," Working Papers wp920, Dipartimento Scienze Economiche, Universita' di Bologna.
  3. Großer, Jens & Reuben, Ernesto, 2009. "Redistributive Politics and Market Efficiency: An Experimental Study," IZA Discussion Papers 4549, Institute for the Study of Labor (IZA).
  4. Annarita COLASANTE & Alberto RUSSO, 2014. "The Impact of Inequality on Cooperation: An Experimental Study," Working Papers 401, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  5. Oechssler, Jörg, 2011. "Finitely repeated games with social preferences," Working Papers 0515, University of Heidelberg, Department of Economics.
  6. Neil Buckley & Katherine Cuff & Jeremiah Hurley & Stuart Mestelman & Stephanie Thomas & David Cameron, 2013. "Support for Public Provision with Top-Up and Opt-Out: A Controlled Laboratory Experiment," Department of Economics Working Papers 2013-15, McMaster University.
  7. Weng, Qian & Carlsson, Fredrik, 2013. "Cooperation in teams: the role of identity, punishment and endowment distribution," Working Papers in Economics 551, University of Gothenburg, Department of Economics.

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