Modeling Other-Regarding Preferences and an Experimental Test
Behavior inconsistent with self-interest has been observed in many contexts. We argue that models designed to cope with these anomalies are inadequate to deal with a variety of social values. Our extension of the Fehr & Schmidt `inequity aversion' model is applied to results from dictator experiments in which the money to be divided is generated by the efforts of paired individuals in either one or two rooms. This production leads to sharing behavior qualitatively different from that found in other dictator experiments. The pattern of sharing can be explained by entitlements, equity, and the credibility of the experiment.
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