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The Role of Equality and Efficiency in Social Preferences

Author

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  • Fehr, Ernst
  • Naef, Michael
  • Schmidt, Klaus M.

Abstract

Engelmann and Strobel (AER 2004) question the relevance of inequity aversion in simple dictator game experiments claiming that a combination of a preference for efficiency and a Rawlsian motive for helping the least well-off is more important than inequity aversion. We show that these results are partly based on a strong subject pool effect. The participants of the E&S experiments were undergraduate students of economics and business administration who self-selected into their field of study (economics) and learned in the first semester that efficiency is desirable. We show that for non-economists the preference for efficiency is much less pronounced. We also find a non-negligible gender effect indicating that women are more egalitarian than men. However, perhaps surprisingly, the dominance of equality over efficiency is unrelated to political attitudes.

Suggested Citation

  • Fehr, Ernst & Naef, Michael & Schmidt, Klaus M., 2005. "The Role of Equality and Efficiency in Social Preferences," CEPR Discussion Papers 5368, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:5368
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    References listed on IDEAS

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    1. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, Oxford University Press, vol. 117(3), pages 817-869.
    2. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 817-868.
    3. Ernst Fehr & Klaus M. Schmidt, "undated". "Theories of Fairness and Reciprocity - Evidence and Economic Applications," IEW - Working Papers 075, Institute for Empirical Research in Economics - University of Zurich.
    4. Fr Chette, Guillaume R. & Kagel, John H. & Lehrer, Steven F., 2003. "Bargaining in Legislatures: An Experimental Investigation of Open versus Closed Amendment Rules," American Political Science Review, Cambridge University Press, vol. 97(02), pages 221-232, May.
    5. 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.
    6. Dirk Engelmann & Martin Strobel, 2004. "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments," American Economic Review, American Economic Association, vol. 94(4), pages 857-869, September.
    7. Ernst Fehr & Klaus M. Schmidt, "undated". "The Role of Equality, Efficiency, and Rawlsian Motives in Social Preferences: A Reply to Engelmann and Strobel," IEW - Working Papers 179, Institute for Empirical Research in Economics - University of Zurich.
    8. Fehr, Ernst & Schmidt, Klaus M., 2001. "Theories of Fairness and Reciprocity," Discussion Papers in Economics 14, University of Munich, Department of Economics.
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    Citations

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    Cited by:

    1. Astri Drange Hole, 2013. "How do economists differ from others in distributive situations?," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 38, pages 1-4.
    2. Dorothea Herreiner & Clemens Puppe, 2009. "Envy Freeness in Experimental Fair Division Problems," Theory and Decision, Springer, vol. 67(1), pages 65-100, July.
    3. Schildberg-Hörisch, Hannah, 2010. "Is the veil of ignorance only a concept about risk? An experiment," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 1062-1066, December.
    4. Kemp, Simon & Bolle, Friedel, 2013. "Are egalitarian preferences based on envy?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 45(C), pages 57-63.
    5. Astri Drange Hole, 2008. "How do economists differ from others in distributive situations?," Labsi Experimental Economics Laboratory University of Siena 023, University of Siena.
    6. Ciriolo, Emanuele, 2007. "Inequity aversion and trustees' reciprocity in the trust game," European Journal of Political Economy, Elsevier, vol. 23(4), pages 1007-1024, December.
    7. Jieyao Ding, 2012. "A Portfolio of Dilemmas: Experimental Evidence on Choice Bracketing in a Mini-Trust Game," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2012_06, Max Planck Institute for Research on Collective Goods.
    8. Chmura, Thorsten & Kube, Sebastian & Pitz, Thomas & Puppe, Clemens, 2005. "Testing (beliefs about) social preferences: Evidence from an experimental coordination game," Economics Letters, Elsevier, vol. 88(2), pages 214-220, August.
    9. repec:noj:journl:v:38:y:2013:p:4 is not listed on IDEAS

    More about this item

    Keywords

    inequity aversion; preferences for efficiency; social preferences;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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