On Inequity Aversion
In close interaction, group allocations are often fair due to our desire to be treated fairly and to act fairly. When this desire conflicts with other strong motivations a typical reaction is to trade off fairness against these other concerns. Inequ(al)ity aversion allows capturing such trade off considerations in various ways (Bolton, 1991, Bolton and Ockenfels, 1998 and 2000, Fehr and Schmidt, 1999, are examples). Such trade off analysis measures how far one deviates from fairness what requires a unique fairness benchmark. More often than not there exist, however, multiple standards. In our view, this should not discourage using inequ(al)ity aversion altogether but limit it to where its prerequisites are granted.
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- Ernst Fehr & Klaus M. Schmidt, 1999.
"A Theory of Fairness, Competition, and Cooperation,"
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- Fehr, Ernst & Schmidt, Klaus M., 1999. "A theory of fairness, competition, and cooperation," Munich Reprints in Economics 20650, University of Munich, Department of Economics.
- Fehr, Ernst & Schmidt, Klaus M., 1998. "A Theory of Fairness, Competition and Cooperation," CEPR Discussion Papers 1812, C.E.P.R. Discussion Papers.
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- Bolton, Gary E, 1991. "A Comparative Model of Bargaining: Theory and Evidence," American Economic Review, American Economic Association, vol. 81(5), pages 1096-1136, December.
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- Avner Shaked, 2005. "The Rhetoric of Inequity Aversion," NajEcon Working Paper Reviews 666156000000000612, www.najecon.org.
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- Avner Shaked, 2005. "The Rhetoric of Inequity Aversion," Levine's Bibliography 666156000000000570, UCLA Department of Economics.
- Werner G¸th & Radosveta Ivanova-Stenzel & Manfred K–nigstein & Martin Strobel, 2003. "Learning to bid - an experimental study of bid function adjustments in auctions and fair division games," Economic Journal, Royal Economic Society, vol. 113(487), pages 477-494, 04.
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- Ernst Fehr & Klaus Schmidt, 2005. "The Rhetoric of Inequity Aversion- A Reply," NajEcon Working Paper Reviews 666156000000000616, www.najecon.org.
- Ernst Fehr & Klaus M. Schmidt, 2005. "The Rhetoric of Inequity Aversion – Reply," Levine's Bibliography 666156000000000574, UCLA Department of Economics.
- Hermann Brandstõtter & Werner G³th & Hartmut Kliemt, 2003. "The Bounds of Rationality: Philosophical, Psychological and Economic Aspects of Choice Making," Homo Oeconomicus, Institute of SocioEconomics, vol. 20, pages 303-356.
- Kliemt, Hartmut, 1986. "The veil of insignificance," European Journal of Political Economy, Elsevier, vol. 2(3), pages 333-344.
- Guth, Werner & Huck, Steffen & Ockenfels, Peter, 1996. "Two-Level Ultimatum Bargaining with Incomplete Information: An Experimental Study," Economic Journal, Royal Economic Society, vol. 106(436), pages 593-604, May.
- Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December. Full references (including those not matched with items on IDEAS)
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