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Equality, equity, and incentives: An experiment

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  • Loukas Balafoutas

    (Department of Economics, University of Innsbruck)

  • Martin G. Kocher

    (School of Economics, University of East Anglia)

  • Louis Putterman

    (Department of Economics, Brown University)

  • Matthias Sutter

    (Department of Economics, University of Innsbruck; Department of Economics, Gothenburg University)

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 School of Economics, University of East Anglia, Norwich, UK. in its series Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) with number 10-13.

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Date of creation: 01 Sep 2010
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Handle: RePEc:uea:wcbess:10-13

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

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Cited by:
  1. Jörg Oechssler, 2013. "Finitely repeated games with social preferences," Experimental Economics, Springer, vol. 16(2), pages 222-231, June.
  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. Jens Großer & Ernesto Reuben, 2009. "Redistributive Politics and Market Efficiency: An Experimental Study," Working Paper Series in Economics 44, University of Cologne, Department of Economics.
  4. 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.
  5. Ku, Hyejin & Salmon, Timothy C., 2013. "Procedural fairness and the tolerance for income inequality," European Economic Review, Elsevier, vol. 64(C), pages 111-128.
  6. 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.
  7. 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.

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