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What drives failure to maximize payoffs in the lab? A test of the inequality aversion hypothesis

In experiments based on the Beard and Beil (1994) game, second movers very often fail to select the decision that maximizes both players payoff. This note reports on a new experimental treatment, in which we neutralize the potential effect of inequality aversion on the likelihood of this behavior. We show this behavior is robust to this change, even after allowing for repetition-based learning.

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File URL: ftp://mse.univ-paris1.fr/pub/mse/CES2011/11036.pdf
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Paper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 11036.

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Length: 10 pages
Date of creation: Jun 2011
Date of revision:
Handle: RePEc:mse:cesdoc:11036
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  1. Charness, Gary & Grosskopf, Brit, 2001. "Relative payoffs and happiness: an experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 45(3), pages 301-328, July.
  2. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2007. "Bootstrap-Based Improvements for Inference with Clustered Errors," NBER Technical Working Papers 0344, National Bureau of Economic Research, Inc.
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  7. David J Cooper & John B Van Huyck, 2002. "Evidence on the Equivalence of the Stratetic and Extensive Form Representation of Games," Levine's Working Paper Archive 234936000000000001, David K. Levine.
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  9. 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.
  10. Nicolas Jacquemet & Robert-Vincent Joule & Stephane Luchini & Jason Shogren, 2009. "Earned wealth, engaged bidders? Evidence from a second price auction," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00429894, HAL.
  11. T. Randolph Beard & Richard O. Beil, 1994. "Do People Rely on the Self-Interested Maximization of Others? An Experimental Test," Management Science, INFORMS, vol. 40(2), pages 252-262, February.
  12. Fehr, Ernst & Naef, Michael & Schmidt, Klaus M., 2006. "Inequality aversion, efficiency, and maximin preferences in simple distribution experiments: Comment," Munich Reprints in Economics 20639, University of Munich, Department of Economics.
  13. Kritikos, Alexander & Bolle, Friedel, 2001. "Distributional concerns: equity- or efficiency-oriented?," Economics Letters, Elsevier, vol. 73(3), pages 333-338, December.
  14. Jacob K. Goeree & Charles A. Holt, 2000. "Ten Little Treasures of Game Theory and Ten Intuitive Contradictions," Virginia Economics Online Papers 333, University of Virginia, Department of Economics.
  15. Michal Krawczyk, 2011. "A model of procedural and distributive fairness," Theory and Decision, Springer, vol. 70(1), pages 111-128, January.
  16. Blanco, Mariana & Engelmann, Dirk & Normann, Hans-Theo, 2010. "A within-subject analysis of other-regarding preferences," DICE Discussion Papers 06, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  17. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
  18. repec:hal:journl:halshs-00429894 is not listed on IDEAS
  19. 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.
  20. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences With Simple Tests," The Quarterly Journal of Economics, MIT Press, vol. 117(3), pages 817-869, August.
  21. Nicolas Jacquemet & Adam Zylbersztejn, 2010. "Learning, words and actions : experimental evidence on coordination-improving information," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00505164, HAL.
  22. Chou, Eileen & McConnell, Margaret & Nagel, Rosemarie & Plott, Charles R., 2007. "The control of game form recognition in experiments: Understanding dominant strategy failures in a simple two person “Guessing” game," Working Papers 1274, California Institute of Technology, Division of the Humanities and Social Sciences.
  23. Daniel J. ZIZZO & Andrew J. OSWALD, 2001. "Are People Willing to Pay to Reduce Others'Incomes?," Annales d'Economie et de Statistique, ENSAE, issue 63-64, pages 39-65.
  24. Willinger, Marc & Keser, Claudia & Lohmann, Christopher & Usunier, Jean-Claude, 2003. "A comparison of trust and reciprocity between France and Germany: Experimental investigation based on the investment game," Journal of Economic Psychology, Elsevier, vol. 24(4), pages 447-466, August.
  25. Ferraro Paul J & Vossler Christian A, 2010. "The Source and Significance of Confusion in Public Goods Experiments," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-42, July.
  26. Jeffrey M. Wooldridge, 2003. "Cluster-Sample Methods in Applied Econometrics," American Economic Review, American Economic Association, vol. 93(2), pages 133-138, May.
  27. Rick L. Williams, 2000. "A Note on Robust Variance Estimation for Cluster-Correlated Data," Biometrics, The International Biometric Society, vol. 56(2), pages 645-646, 06.
  28. Rosenthal, Robert W., 1981. "Games of perfect information, predatory pricing and the chain-store paradox," Journal of Economic Theory, Elsevier, vol. 25(1), pages 92-100, August.
  29. Joseph Henrich & Steve J. Heine & Ara Norenzayan, 2010. "The Weirdest People in the World?," Working Paper Series of the German Council for Social and Economic Data 139, German Council for Social and Economic Data (RatSWD).
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