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Equity versus Efficiency? Evidence from Three-Person Generosity Experiments

  • Werner Güth

    ()

    (Strategic Interaction Group, Max Planck Institute of Economics, Kahlaische Straße 10, 07745 Jena, Germany)

  • Kerstin Pull

    (Human Resource Management and Organization, Eberhard Karls Universität Tübingen, Nauklerstraße 47, 72074 Tübingen, Germany)

  • Manfred Stadler

    (Economic Theory, Eberhard Karls Universität Tübingen, Mohlstraße 36, 72074 Tübingen, Germany)

  • Agnes Stribeck

    (Human Resource Management and Organization, Eberhard Karls Universität Tübingen, Nauklerstraße 47, 72074 Tübingen, Germany)

In two-person generosity games, the proposer’s agreement payoff is exogenously given, whereas that of the responder is endogenously determined by the proposer’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 proposer’s agreement payoff is larger, equal, or smaller than the other exogenously given agreement payoff.

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Article provided by MDPI, Open Access Journal in its journal Games.

Volume (Year): 1 (2010)
Issue (Month): 2 (April)
Pages: 89-102

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Handle: RePEc:gam:jgames:v:1:y:2010:i:2:p:89-102:d:8056
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  1. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory Of Fairness, Competition, And Cooperation," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 817-868, August.
  2. G. Bolton, 2010. "A comparative model of bargaining: theory and evidence," Levine's Working Paper Archive 263, David K. Levine.
  3. Gantner, Anita & Guth, Werner & Konigstein, Manfred, 2001. "Equitable choices in bargaining games with joint production," Journal of Economic Behavior & Organization, Elsevier, vol. 46(2), pages 209-225, October.
  4. 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.
  5. Werner Güth & M. Vittoria Levati & Matteo Ploner, 2009. "Making the World a better Place: Experimental evidence from the generosity Game," Jena Economic Research Papers 2009-071, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
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