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Equality, equity, and incentives: An experiment

  • Loukas Balafoutas

    (Department of Economics, University of Innsbruck)

  • Martin G. Kocher

    (School of Economics, University of East Anglia)

  • Louis Putterman

    (Department of Economics, Brown University)

  • Matthias Sutter

    (Department of Economics, University of Innsbruck; Department of Economics, Gothenburg University)

We devise a new experimental game by nesting a voluntary contributions mechanism in a broader spectrum of incentive schemes. With it, we study tensions between egalitarianism, equity concerns, self-interest, and the need for incentives. In a 2x2 design, subjects either vote on or exogenously encounter incentive settings while assigned unequal incomes that are either task-determined or random. We find subjects‘ voting to be mainly self- interested but also influenced by egalitarian and equity concerns, which sometimes cut in opposite directions. Contributions, which seem mainly determined by boundedly rational responses to incentives, are influenced by egalitarian, equity and strategic considerations.

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Paper provided by School of Economics, University of East Anglia, Norwich, UK. in its series Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) with number 10-13.

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Date of creation: 01 Sep 2010
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Handle: RePEc:uea:wcbess:10-13
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