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On the Context-Dependency of Inequality Aversion - Experimental Evidence and a Stylized Model -

Author

Listed:
  • Agnes Bäker

    (University of Tübingen, Faculty of Economics and Social Sciences, Germany)

  • Werner Güth

    (Max Planck Institute of Economics, Strategic Interaction Groupm Jena)

  • Kerstin Pull

    (University of Tübingen, Faculty of Economics and Social Sciences, Germany)

  • Manfred Stadler

    (University of Tübingen, Faculty of Economics and Social Sciences, Germany)

Abstract

We consider three-person envy games with a proposer, a responder, and a dummy player. In this class of games, the proposer, rather than allocating a constant pie, chooses the pie size which the responder can then accept or reject while the dummy player can only refuse his own share. While the agreement payoffs for the responder and the dummy are exogenously given, the proposer acts as the residual claimant who - in case of responder acceptance - receives whatever is left after the two exogenously given agreement payoffs have been deducted from the pie. Consistent with earlier findings from three-person generosity games, we find inequality aversion to be strongly context-dependent and affected by the (in)equality of exogenously given agreement payoffs. Motivated by these findings, we present a stylized model on context-dependent inequality aversion that accounts for the observed effects.

Suggested Citation

  • Agnes Bäker & Werner Güth & Kerstin Pull & Manfred Stadler, 2012. "On the Context-Dependency of Inequality Aversion - Experimental Evidence and a Stylized Model -," Jena Economics Research Papers 2012-023, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2012-023
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    File URL: https://oweb.b67.uni-jena.de/Papers/jerp2012/wp_2012_023.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Experimental economics; envy game;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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