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Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments

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  • Engelmann,Dirk
  • Strobel,Martin

    (MERIT)

Abstract

We present simple one-shot distribution experiments comparing the relative im-portanceof efficiency, maximin preferences and inequality aversion, as well asthe relative performance of the fairness theories by Bolton and Ockenfels (2000)and Fehr and Schmidt (1999). While the Fehr and Schmidt model performsbetter in a direct comparison, this appears to be due to being in line with max-iminpreferences. More importantly, we find that the influence of both efficiencyand maximin preferences is stronger than that of inequality aversion. We discusspotential implications our results might have for the interpretation of otherexperiments.

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Bibliographic Info

Paper provided by Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT) in its series Research Memorandum with number 015.

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Date of creation: 2002
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Handle: RePEc:unm:umamer:2002015

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Keywords: economics of technology ;

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  1. 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.
  2. 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.
  3. Falk, Armin & Fischbacher, Urs, 2006. "A theory of reciprocity," Games and Economic Behavior, Elsevier, vol. 54(2), pages 293-315, February.
  4. Bolton Gary E. & Zwick Rami, 1995. "Anonymity versus Punishment in Ultimatum Bargaining," Games and Economic Behavior, Elsevier, vol. 10(1), pages 95-121, July.
  5. Ballinger, T Parker & Wilcox, Nathaniel T, 1997. "Decisions, Error and Heterogeneity," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 107(443), pages 1090-1105, July.
  6. Guth, Werner & Huck, Steffen & Muller, Wieland, 2001. "The Relevance of Equal Splits in Ultimatum Games," Games and Economic Behavior, Elsevier, vol. 37(1), pages 161-169, October.
  7. Georg Kirchsteiger & Martin Dufwenberg, 2004. "A theory of sequential reciprocity," ULB Institutional Repository 2013/5899, ULB -- Universite Libre de Bruxelles.
  8. M. Rabin, 2001. "Incorporating Fairness into Game Theory and Economics," Levine's Working Paper Archive 511, David K. Levine.
  9. James Andreoni, 2001. "Giving According to GARP," Theory workshop papers, UCLA Department of Economics 339, UCLA Department of Economics.
  10. Fehr, Ernst & Schmidt, Klaus M., 1998. "A Theory of Fairness, Competition and Cooperation," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1812, C.E.P.R. Discussion Papers.
  11. John Kagel & Katherine Wolfe, 2001. "Tests of Fairness Models Based on Equity Considerations in a Three-Person Ultimatum Game," Experimental Economics, Springer, Springer, vol. 4(3), pages 203-219, December.
  12. Cox, James C., 2004. "How to identify trust and reciprocity," Games and Economic Behavior, Elsevier, vol. 46(2), pages 260-281, February.
  13. Brit Grosskopf, 2000. "Relative Payoffs and Happiness: An Experimental Study," Econometric Society World Congress 2000 Contributed Papers 1263, Econometric Society.
  14. Kritikos, Alexander & Bolle, Friedel, 2001. "Distributional concerns: equity- or efficiency-oriented?," Economics Letters, Elsevier, vol. 73(3), pages 333-338, December.
  15. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
  16. Blount, Sally, 1995. "When Social Outcomes Aren't Fair: The Effect of Causal Attributions on Preferences," Organizational Behavior and Human Decision Processes, Elsevier, Elsevier, vol. 63(2), pages 131-144, August.
  17. Gary Bolton, 1998. "Bargaining and Dilemma Games: From Laboratory Data Towards Theoretical Synthesis," Experimental Economics, Springer, Springer, vol. 1(3), pages 257-281, December.
  18. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, Econometric Society, vol. 70(2), pages 737-753, March.
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