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When equality trumps reciprocity

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  • Xiao, Erte
  • Bicchieri, Cristina

Abstract

Inequity aversion and reciprocity have been identified as two primary motives underlying human decision-making. However, because income and wealth inequalities exist to some degree in all societies, these two key motives can point to different decisions. In particular, when a beneficiary is less wealthy than the benefactor, a reciprocal action can lead to greater inequality. In this paper, we report data from a trust game variant where trustees' responses to kind intentions generate inequality in favor of investors. In relation to a standard trust game treatment where trustees' responses reduce inequality, the proportion of non-reciprocating decisions is twice as large when reciprocity promotes inequality. Moreover, we find that investors expect that this will be the case. Overall, we find that a majority (more than half) of trustees do not reciprocate when reciprocity increases inequality that favors investors. Our results call attention to the potential importance of inequality in principal-agent relationships and have important implications for policies aimed at promoting trust and cooperation.

Suggested Citation

  • Xiao, Erte & Bicchieri, Cristina, 2010. "When equality trumps reciprocity," Journal of Economic Psychology, Elsevier, vol. 31(3), pages 456-470, June.
  • Handle: RePEc:eee:joepsy:v:31:y:2010:i:3:p:456-470
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    Cited by:

    1. Houser, Daniel & Xiao, Erte, 2010. "Inequality-seeking punishment," Economics Letters, Elsevier, vol. 109(1), pages 20-23, October.
    2. Calabuig, Vicente & Fatas, Enrique & Olcina, Gonzalo & Rodriguez-Lara, Ismael, 2016. "Carry a big stick, or no stick at all," Journal of Economic Psychology, Elsevier, vol. 57(C), pages 153-171.
    3. Simon Gächter & Daniele Nosenzo & Martin Sefton, 2013. "Peer Effects In Pro-Social Behavior: Social Norms Or Social Preferences?," Journal of the European Economic Association, European Economic Association, vol. 11(3), pages 548-573, June.
    4. Judd Kessler, 2013. "When will there be Gift Exchange? Addressing the Lab-Field Debate with Laboratory Gift Exchange Experiments," CESifo Working Paper Series 4161, CESifo Group Munich.
    5. Pelligra, Vittorio & Reggiani, Tommaso G. & Zizzo, Daniel John, 2016. "Responding to (Un)Reasonable Requests," IZA Discussion Papers 10189, Institute for the Study of Labor (IZA).
    6. Lynn, Michael, 2015. "Service gratuities and tipping: A motivational framework," Journal of Economic Psychology, Elsevier, vol. 46(C), pages 74-88.
    7. Bonein, Aurélie & Serra, Daniel, 2009. "Gender pairing bias in trustworthiness," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 779-789, October.
    8. Schniter, Eric & Sheremeta, Roman & Shields, Timothy, 2015. "The Problem with All-or-nothing Trust Games: What Others Choose Not to Do Matters In Trust-based Exchange," MPRA Paper 68561, University Library of Munich, Germany.
    9. repec:spr:soinre:v:132:y:2017:i:1:d:10.1007_s11205-016-1266-9 is not listed on IDEAS
    10. Cristina Bicchieri & Peter McNally, 2016. "Shrieking Sirens. Schemata, Scripts, and Social Norms: How Change Occurs," PPE Working Papers 0005, Philosophy, Politics and Economics, University of Pennsylvania.
    11. Mengjie Wang, 2017. "Does strategy fairness make inequality more acceptable?," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 17-08, School of Economics, University of East Anglia, Norwich, UK..
    12. Daniel Houser & Erte Xiao, 2015. "House money effects on trust and reciprocity," Public Choice, Springer, vol. 163(1), pages 187-199, April.
    13. Billur Aksoy & Haley Harwell & Ada Kovaliukaite & Catherine Eckel, 2017. "Measuring Trust: A Reinvestigation," Working Papers 20170119-001, Texas A&M University, Department of Economics.
    14. Rodriguez-lara, Ismael, 2015. "Equal distribution or equal payoffs? Reciprocity and inequality aversion in the investment game," MPRA Paper 63313, University Library of Munich, Germany.

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