Equity versus Efficiency? Evidence from Three-Person Generosity Experiments
In two-person generosity games, the proposerâ€™s agreement payoff is exogenously given, whereas that of the responder is endogenously determined by the proposerâ€™s choice of the pie size. In three-person generosity games, equal agreement payoffs for two of the players are either exogenously excluded or imposed. We predict that the latter crowds out - or at least weakens - efficiency seeking. Our treatments rely on a 2x3 factorial design, differing in whether the responder or the third (dummy) player is the residual claimant and whether the proposerâ€™s agreement payoff is larger, equal, or smaller than the other exogenously given agreement payoff.
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