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How Exposure to Markets Can Favor Inequity-Averse Preferences

  • Robertas Zubrickas

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.

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Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 814577000000000130.

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Date of creation: 16 Feb 2009
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Handle: RePEc:cla:levarc:814577000000000130
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  5. Oechssler, Jorg & Riedel, Frank, 2002. "On the Dynamic Foundation of Evolutionary Stability in Continuous Models," Journal of Economic Theory, Elsevier, vol. 107(2), pages 223-252, December.
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  15. Ely, Jeffrey C. & Yilankaya, Okan, 2001. "Nash Equilibrium and the Evolution of Preferences," Journal of Economic Theory, Elsevier, vol. 97(2), pages 255-272, April.
  16. Ernst Fehr & Joseph Henrich & Robert Boyd, 2003. "In Search of Homo Economicus: Behavioral Experiments in 15 Small- Scale Societies," Microeconomics 0305009, EconWPA.
  17. Werner Güth & Stefan Napel, . "Inequality Aversion in a Variety of Games - An Indirect Evolutionary Analysis -," Papers on Strategic Interaction 2002-23, Max Planck Institute of Economics, Strategic Interaction Group.
  18. Samuel Bowles, 1998. "Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 75-111, March.
  19. Eshel, Ilan & Samuelson, Larry & Shaked, Avner, 1998. "Altruists, Egoists, and Hooligans in a Local Interaction Model," American Economic Review, American Economic Association, vol. 88(1), pages 157-79, March.
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