IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

An Experimental Comparison of the Fairness Models by Bolton and Ockenfels and by Fehr and Schmidt

  • Dirk Engelmann

    (Humboldt-Universitaet zu Berlin)

  • Martin Strobel

    (Humboldt-Universitaet zu Berlin)

We present an experiment to compare the two fairness theories by Bolton and Ockenfels [ERC] and by Fehr and Schmidt [F&S]. If one wants to compare their predictive power, most of the experiments that are interpreted retrospectively are not helpful, since both theories make equal or very similar predictions. Both models rely on inequality aversion. The fundamental difference between them is that ERC assumes that subjects like the average payoff to be as close as possible to their own payoff while F&S assumes that subjects dislike a payoff difference to any other individual. To obtain explicitly opposite predictions by the two theories we chose a game that focuses on their fundamental difference. A person received a fixed payoff and chose between three different allocations of money between a person who received in all allocations more than her and a person who always received less. The allocations with an average payoff for the other two persons closer to her's, had both individual payoffs more distant from her's. ERC predicts that she chooses the allocation that is most unequal between the other two persons. The choice of the opposite allocation is predicted by F&S. Subjects knew that their decision could never influence their own payoff. To prevent interference of preferences for efficiency with our objective, we designed two treatments, one where following the ERC prediction leads to a maximization of total payoff, one where maximization of total payoff is in line with the F&S prediction. In the second treatment the results clearly confirm the F&S prediction. In the first treatment subjects chose in about equal proportions the two extreme allocations. Hence the performance of F&S is much better than that of ERC, although both theories ignore the importance that subjects assign to efficiency.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://fmwww.bc.edu/RePEc/es2000/1229.pdf
File Function: main text
Download Restriction: no

Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1229.

as
in new window

Length:
Date of creation: 01 Aug 2000
Date of revision:
Handle: RePEc:ecm:wc2000:1229
Contact details of provider: Phone: 1 212 998 3820
Fax: 1 212 995 4487
Web page: http://www.econometricsociety.org/pastmeetings.asp
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Fehr, Ernst & Schmidt, Klaus M., 1999. "A theory of fairness, competition, and cooperation," Munich Reprints in Economics 20650, University of Munich, Department of Economics.
  2. 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.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ecm:wc2000:1229. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.