Inequity Aversion May Increase Inequity
Inequity aversion models have been used to explain equitable payoff divisions in bargaining games. I show that inequity aversion can actually "increase" the asymmetry of payoff division if unanimity is not required. This is because responders may be willing to accept a lower share rather than risk being left out. Inequity aversion may also affect comparative statics: the advantage of being the proposer can "decrease" as players become more impatient. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.
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Volume (Year): 117 (2007)
Issue (Month): 519 (03)
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