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Individual Sense of Fairness: An Experimental Study

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Listed:
  • Barry Sopher

    () (Rutgers University)

  • Edi Karni

    () (Johns Hopkins University)

  • Tim Salmon

    () (Florida State University)

Abstract

This paper presents an experimental test of the theory of individual sense of fairness of Karni and Safra (2000). According to this theory individuals' choice among random procedures designed to allocate indivisible goods is motivated, in part, by concern for fairness. The experimental study is intended to test this hypothesis. In the experiments, the subjects are asked to play a three person dictator game. The dictator, player A, is presented with a feasible set of lotteries that assign to each player a probability of winning a $15 prize. Player A is asked to choose a lottery from the feasible set (i.e. a point along a chord in the two-dimensional probability simplex) to be used in actually allocating the prize. The feasible set is constructed such that by giving up some of his own probability of winning the prize, player A can make the overall lottery more ``fair''. If these subjects have no concern for fairness, they will choose the lottery that assigns them the highest probability of winning. However, if they have preference for fairness, they may choose a lottery farther down the chord thereby trading off some of their own chance of winning for a fairer allocation procedure. The results indicate strongly bi-modal outcomes with around half of the subjects keeping the initial allocation which yields the highest probability of winning for the dictator while the other half chooses very close to the ``perfect equity'' point along the chord. Several other properties of the subjects' preferences are also checked such as whether or not their preferences are symmetric with respect to the other players, the impact of endowment effects on preferences for fairness and the notion of fairness that underlies their choices.

Suggested Citation

  • Barry Sopher & Edi Karni & Tim Salmon, 2001. "Individual Sense of Fairness: An Experimental Study," Departmental Working Papers 200107, Rutgers University, Department of Economics.
  • Handle: RePEc:rut:rutres:200107
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    References listed on IDEAS

    as
    1. Karni, Edi & Safra, Zvi, 2002. "Intensity of the Sense of Fairness: Measurement and Behavioral Characterization," Journal of Economic Theory, Elsevier, vol. 105(2), pages 318-337, August.
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    4. Forsythe Robert & Horowitz Joel L. & Savin N. E. & Sefton Martin, 1994. "Fairness in Simple Bargaining Experiments," Games and Economic Behavior, Elsevier, vol. 6(3), pages 347-369, May.
    5. Smith, Vernon L, 1976. "Experimental Economics: Induced Value Theory," American Economic Review, American Economic Association, vol. 66(2), pages 274-279, May.
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    Cited by:

    1. Hongyu Guan & Xianchen Zhu & Ping Zhang, 2016. "Rule-Inequality-Aversion Preference and Conditional Cooperation in Public Goods Experiments: Economic Experiment Evidence from China," Group Decision and Negotiation, Springer, vol. 25(4), pages 799-825, July.
    2. Kircher, Philipp & Sandroni, Alvaro & Ludwig, Sandra, 2009. "Fairness: A Critique to the Utilitarian Approach," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 288, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    3. Heufer, Jan, 2013. "Quasiconcave preferences on the probability simplex: A nonparametric analysis," Mathematical Social Sciences, Elsevier, vol. 65(1), pages 21-30.
    4. Werner Güth & M. Vittoria Levati & Matteo Ploner, 2013. "Does Procedural Fairness Crowd Out Other-Regarding Concerns? A Bidding Experiment," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 169(3), pages 433-450, September.
    5. Adam, Marc T.P. & Kroll, Eike B. & Teubner, Timm, 2014. "A note on coupled lotteries," Economics Letters, Elsevier, vol. 124(1), pages 96-99.
    6. Hill, Sarah A. & Neilson, William, 2007. "Inequality aversion and diminishing sensitivity," Journal of Economic Psychology, Elsevier, vol. 28(2), pages 143-153, April.
    7. Michal Krawczyk & Fabrice Le Lec, 2010. "‘Give me a chance!’ An experiment in social decision under risk," Experimental Economics, Springer;Economic Science Association, vol. 13(4), pages 500-511, December.
    8. Grimalday, Gianluca & Karz, Anirban & Proto, Eugenio, 2012. "Everyone Wants a Chance: Initial Positions and Fairness in Ultimatum Games," CAGE Online Working Paper Series 93, Competitive Advantage in the Global Economy (CAGE).
    9. Grimalda, Gianluca & Farina, Francesco & Schmidt, Ulrich, 2018. "Preferences for redistribution in the US, Italy, Norway: An experiment study," Kiel Working Papers 2099, Kiel Institute for the World Economy (IfW).
    10. Ingrid Rohde & Kirsten Rohde, 2011. "Risk attitudes in a social context," Journal of Risk and Uncertainty, Springer, vol. 43(3), pages 205-225, December.
    11. Nicola Frignani & Giovanni Ponti, 2011. "Social vs. risk preferences under the veil of ignorance," Working Papers. Serie AD 2011-07, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    12. Alice Becker & Luis Miller, 2009. "Promoting justice by treating people unequally: an experimental study," Experimental Economics, Springer;Economic Science Association, vol. 12(4), pages 437-449, December.
    13. Ahrens, Steffen & Snower, Dennis J., 2014. "Envy, guilt, and the Phillips curve," Journal of Economic Behavior & Organization, Elsevier, vol. 99(C), pages 69-84.
    14. Utz Weitzel & Diemo Urbig & Sameeksha Desai & Mark Sanders & Zoltán J. Ács, 2015. "The good, the bad, and the talented: Entrepreneurial talent and selfish behavior," Chapters,in: Global Entrepreneurship, Institutions and Incentives, chapter 2, pages 24-41 Edward Elgar Publishing.
    15. Chlass, Nadine & Güth, Werner & Miettinen, Topi, 2009. "Purely Procedural Preferences - Beyond Procedural Equity and Reciprocity," SITE Working Paper Series 3, Stockholm School of Economics, Stockholm Institute of Transition Economics, revised 21 Oct 2014.
    16. Kota SAITO, 2012. "Social Preferences under Uncertainty: Equality of Opportunity vs. Equality of Outcome," Levine's Working Paper Archive 786969000000000396, David K. Levine.
    17. Luini, Luigi & Sabbatini, Pierluigi, 2012. "Demand cross elasticity without substitutability: An experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(2), pages 255-265.
    18. Kurtis Swope & John Cadigan & Pamela Schmitt & Robert Shupp, 2008. "Social Position and Distributive Justice: Experimental Evidence," Southern Economic Journal, Southern Economic Association, vol. 74(3), pages 811-818, January.
    19. Gianluca Grimalda & Anirban Kar & Eugenio Proto, 2016. "Procedural fairness in lotteries assigning initial roles in a dynamic setting," Experimental Economics, Springer;Economic Science Association, vol. 19(4), pages 819-841, December.
    20. Drichoutis, Andreas & Nayga, Rodolfo & Klonaris, Stathis, 2010. "The Effects of Induced Mood on Preference Reversals and Bidding Behavior in Experimental Auction Valuation," MPRA Paper 25597, University Library of Munich, Germany.
    21. Krawczyk, Michal, 2010. "A glimpse through the veil of ignorance: Equality of opportunity and support for redistribution," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 131-141, February.
    22. Michal Krawczyk, 2011. "A model of procedural and distributive fairness," Theory and Decision, Springer, vol. 70(1), pages 111-128, January.
    23. Bogliacino, Francesco & Grimalda, Gianluca & Jimenez, Laura, 2017. "Consultative Democracy & Trust," MPRA Paper 82138, University Library of Munich, Germany.
    24. Kota Saito, 2010. "Preference for Randomization - Ambiguity Aversion and Inequality Aversion," Levine's Working Paper Archive 661465000000000094, David K. Levine.
    25. repec:spr:joecth:v:65:y:2018:i:1:d:10.1007_s00199-016-1015-y is not listed on IDEAS

    More about this item

    Keywords

    experiments; fairness; individual choice;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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