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On Inequity Aversion - A Reply to Binmore and Shaked

  • Fehr, Ernst
  • Schmidt, Klaus M.

In this paper we reply to Binmore and Shaked’s criticism of the Fehr-Schmidt model of inequity aversion. We put the theory and their arguments into perspective and show that their criticism is not substantiated. Finally, we briefly comment on the main challenges for future research on social preferences.

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Paper provided by Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich in its series Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems with number 256.

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Date of creation: Feb 2009
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Handle: RePEc:trf:wpaper:256
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  7. Charles Bellemare & Sabine Kröger & Arthur van Soest, 2008. "Measuring Inequity Aversion in a Heterogeneous Population Using Experimental Decisions and Subjective Probabilities," Econometrica, Econometric Society, vol. 76(4), pages 815-839, 07.
  8. Tore Ellingsen & Magnus Johannesson, 2007. "Paying Respect," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 135-150, Fall.
  9. Falk, Armin & Fehr, Ernst & Fischbacher, Urs, 2001. "On the Nature of Fair Behaviour," CEPR Discussion Papers 2984, C.E.P.R. Discussion Papers.
  10. Kocher, Martin G. & Cherry, Todd & Kroll, Stephan & Netzer, Robert J. & Sutter, Matthias, 2008. "Conditional cooperation on three continents," Munich Reprints in Economics 18211, University of Munich, Department of Economics.
  11. John Kagel & Katherine Wolfe, 2001. "Tests of Fairness Models Based on Equity Considerations in a Three-Person Ultimatum Game," Experimental Economics, Springer, vol. 4(3), pages 203-219, December.
  12. Michael Kosfeld & Akira Okada & Arno Riedl, 2006. "Institution Formation in Public Goods Games," IEW - Working Papers 299, Institute for Empirical Research in Economics - University of Zurich.
  13. Dufwenberg, Martin & Heidhues, Paul & Kirchsteiger, Georg & Riedel, Frank & Sobel, Joel, 2008. "Other-Regarding Preferences in General Equilibrium," CEPR Discussion Papers 6815, C.E.P.R. Discussion Papers.
  14. Brandts, J. & Sola, C., 1998. "Reference Points and Negative Reciprocity in Simple Sequential Games," UFAE and IAE Working Papers 425.98, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  15. Ernst Fehr & Simon Gaechter, . "Cooperation and Punishment in Public Goods Experiments," IEW - Working Papers 010, Institute for Empirical Research in Economics - University of Zurich.
  16. Dirk Engelmann & Martin Strobel, 2006. "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments: Reply," American Economic Review, American Economic Association, vol. 96(5), pages 1918-1923, December.
  17. Alvin E. Roth & V. Prasnikar & M. Okuno-Fujiwara & S. Zamir, 1998. "Bargaining and market behavior in Jerusalem, Liubljana, Pittsburgh and Tokyo: an experimental study," Levine's Working Paper Archive 344, David K. Levine.
  18. Ernst Fehr & Klaus M. Schmidt, . "Fairness and Incentives in a Multi-Task Principal-Agent Model," IEW - Working Papers 191, Institute for Empirical Research in Economics - University of Zurich.
  19. Avner Shaked, 2005. "The Rhetoric of Inequity Aversion," Levine's Bibliography 666156000000000570, UCLA Department of Economics.
  20. Ernst Fehr & Klaus M. Schmidt, 2005. "The Rhetoric of Inequity Aversion – Reply," Levine's Bibliography 666156000000000574, UCLA Department of Economics.
  21. David K. Levine, 1998. "Modeling Altruism and Spitefulness in Experiment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(3), pages 593-622, July.
  22. Offerman, Theo, 2002. "Hurting hurts more than helping helps," European Economic Review, Elsevier, vol. 46(8), pages 1423-1437, September.
  23. Gary E. Bolton & Rami Zwick & Elena Katok, 1998. "Dictator game giving: Rules of fairness versus acts of kindness," International Journal of Game Theory, Springer, vol. 27(2), pages 269-299.
  24. Charles Bellemare & Sabine Kroger & Arthur van Soest, 2007. "Preferences, Intentions, and Expectations: a Large-Scale Experiment with a Representative Subject Pool," Cahiers de recherche 0721, CIRPEE.
  25. Korenok Oleg & Edward L. Millner & Laura Razzolini, 2008. "Experimental Evidence on Other-Regarding Preferences: Dictators Give to Help the Less Fortunate," Working Papers 0807, VCU School of Business, Department of Economics, revised Aug 2009.
  26. James Andreoni & Marco Castillo & Ragan Petrie, 2003. "What Do Bargainers' Preferences Look Like? Experiments with a Convex Ultimatum Game," American Economic Review, American Economic Association, vol. 93(3), pages 672-685, June.
  27. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March.
  28. Goeree, Jacob K. & Riedl, Arno & Ule, Aljaz, 2009. "In search of stars: Network formation among heterogeneous agents," Games and Economic Behavior, Elsevier, vol. 67(2), pages 445-466, November.
  29. 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.
  30. Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers 004, Institute for Empirical Research in Economics - University of Zurich.
  31. Dana, Jason & Cain, Daylian M. & Dawes, Robyn M., 2006. "What you don't know won't hurt me: Costly (but quiet) exit in dictator games," Organizational Behavior and Human Decision Processes, Elsevier, vol. 100(2), pages 193-201, July.
  32. Adrian Bruhin & Helga Fehr-Duda & Thomas Epper, 2007. "Risk and Rationality: Uncovering Heterogeneity in Probability Distortion," SOI - Working Papers 0705, Socioeconomic Institute - University of Zurich, revised Jul 2007.
  33. Fehr, Ernst & Schmidt, Klaus M., 2001. "Theories of Fairness and Reciprocity," Discussion Papers in Economics 14, University of Munich, Department of Economics.
  34. 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.
  35. Schmidt, Klaus M., 2009. "The Role of Experiments for the Development of Economic Theories," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 252, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  36. Conte, Anna & Hey, John D. & Moffatt, Peter G., 2011. "Mixture models of choice under risk," Journal of Econometrics, Elsevier, vol. 162(1), pages 79-88, May.
  37. Binmore, K & Shaked, A & Sutton, J, 1985. "Testing Noncooperative Bargaining Theory: A Preliminary Study," American Economic Review, American Economic Association, vol. 75(5), pages 1178-80, December.
  38. Avner Shaked, 2005. "The Rhetoric of Inequity Aversion," NajEcon Working Paper Reviews 666156000000000612, www.najecon.org.
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