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How exposure to markets can favor inequity-averse preferences

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  • Zubrickas, Robertas

Abstract

This paper shows how market exposure can support the evolution of non-individualistic preferences. In a group, one agent is randomly selected to divide an exogenous endowment. Endowment shares are used for either consumption or market exchange with external merchants. As a more equal endowment distribution attenuates the scope of merchants’ price discrimination, we argue that inequity-averse preferences may lead to a higher utility of consumption and so survive evolutionary pressures. This effect arises from an opportunity to create and extract information rents. We offer a new explanation to the empirical finding that a society's exposure to markets has a positive effect on its members’ sociality.

Suggested Citation

  • Zubrickas, Robertas, 2012. "How exposure to markets can favor inequity-averse preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 174-181.
  • Handle: RePEc:eee:jeborg:v:84:y:2012:i:1:p:174-181
    DOI: 10.1016/j.jebo.2012.07.008
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    References listed on IDEAS

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    More about this item

    Keywords

    Evolution of preferences; Market integration; Inequity aversion; Screening; Cross-societal differences;

    JEL classification:

    • A10 - General Economics and Teaching - - General Economics - - - General
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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