Does allocative fairness matter? experimental evidence from India

Fairness is impartial selection when allocating scarce goods or resources. Previous studies indicate that people consider auctions and random allocations less fair than alternate mechanisms. However, these studies are based on survey research in industrialized countries. It is unclear if fairness preferences are generalizable or if these preferences lead to a change in peoples’ behavior. This paper addresses these gaps through two field studies in rural India. In the first study, 94 of 206 subjects received contracts to collect tree leaves in return for INR100 each. Participants were selected through four different allocation mechanisms - random allocation, deliberation among subjects, selection by criteria, and lowest bids in auctions. Participants selected through deliberation and criteria-based allocations collect significantly more leaves than those selected through auctions or random allocations. In the second study, a separate set of 124 subjects compared the fairness of these four allocation mechanisms, yielding 744 observations. Deliberation and criteria are ranked fairer than auctions or random allocations. The comparisons are robust to transitivity with an 86.3 percent coefficient of consistency. The close matching between experimental and survey results indicates that people provide significantly more effort when selected through allocation mechanisms that are considered fair. The study results also indicate how auctions are not always efficient.