Estimating a Parsimonious Model of Inequality Aversion in Stackelberg Duopoly Experiments
In the Stackelberg duopoly experiments in Huck "et al." (2001) , nearly half of the followers' behaviours are inconsistent with conventional prediction. We use a test in which the conventional self-interested model is nested as a special case of an inequality aversion model. Maximum likelihood methods applied to the Huck "et al." (2001) data set reject the self-interested model. We find that almost 40% of the players have disadvantageous inequality aversion that is statistically different from zero and economically significant, but advantageous inequality aversion is relatively unimportant. These estimates provide support for a more parsimonious model with no advantageous inequality aversion. Copyright (c) Blackwell Publishing Ltd and the Department of Economics, University of Oxford, 2010.
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Volume (Year): 72 (2010)
Issue (Month): 5 (October)
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