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How not to extend models of inequality aversion

  • Engelmann, Dirk

Several authors have made attempts to improve the explanatory power of models of inequality aversion, in particular the one by Fehr and Schmidt (1999), by adding concerns for total surplus or efficiency. In this note, I point out that these attempts are misguided because they are equivalent to a much simpler change, not requiring an additional parameter, unless we simultaneously consider games with different numbers of players. In the latter case, however, such an approach yields implausible predictions.

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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 81 (2012)
Issue (Month): 2 ()
Pages: 599-605

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Handle: RePEc:eee:jeborg:v:81:y:2012:i:2:p:599-605
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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  1. Cox, James C. & Friedman, Daniel & Sadiraj, Vjollca, 2009. "Revealed Altruism," Santa Cruz Department of Economics, Working Paper Series qt6rb5t4mc, Department of Economics, UC Santa Cruz.
  2. Kritikos, Alexander & Bolle, Friedel, 2001. "Distributional concerns: equity- or efficiency-oriented?," Economics Letters, Elsevier, vol. 73(3), pages 333-338, December.
  3. Charness, Gary & Rabin, Matthew, 2001. "Understanding Social Preferences with Simple Tests," Department of Economics, Working Paper Series qt4qz9k8vg, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  4. Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers 004, Institute for Empirical Research in Economics - University of Zurich.
  5. 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.
  6. 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.
  7. Blanco, Mariana & Engelmann, Dirk & Normann, Hans Theo, 2011. "A within-subject analysis of other-regarding preferences," Games and Economic Behavior, Elsevier, vol. 72(2), pages 321-338, June.
  8. Ellison Brenna & Lusk Jayson L & Briggeman Brian, 2010. "Other-Regarding Behavior and Taxpayer Preferences for Farm Policy," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-29, October.
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