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Inequity Aversion and Individual Behavior in Public Good Games: An Experimental Investigation

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  • Dannenberg, Astrid
  • Riechmann, Thomas
  • Sturm, Bodo
  • Vogt, Carsten

Abstract

We present a simple two-steps procedure for a within-subject test of the inequity aversion model of Fehr and Schmidt (1999). In the first step, subjects played modified ultimatum and dictator games and were classified according to their preferences. In the second step, subjects with specific preferences according to the Fehr and Schmidt model were matched into pairs and interacted with each other in a standard public good game and a public good game with punishment possibility. Our results show that the specific composition of groups significantly influences the subjects' performance in the public good games. We identify the aversion against advantageous inequity and the information about the coplayer's type as the main influencing factors for the behavior of subjects.

Suggested Citation

  • Dannenberg, Astrid & Riechmann, Thomas & Sturm, Bodo & Vogt, Carsten, 2007. "Inequity Aversion and Individual Behavior in Public Good Games: An Experimental Investigation," ZEW Discussion Papers 07-034, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:5693
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    Cited by:

    1. Haoran He & Marie Claire Villeval, 2014. "Are teams less inequality averse than individuals?," Post-Print halshs-01077253, HAL.
    2. Al-Ubaydli, Omar & Lee, Min Sok, 2009. "An experimental study of asymmetric reciprocity," Journal of Economic Behavior & Organization, Elsevier, vol. 72(2), pages 738-749, November.
    3. Nieken, Petra & Schmitz, Patrick W., 2012. "Repeated moral hazard and contracts with memory: A laboratory experiment," Games and Economic Behavior, Elsevier, vol. 75(2), pages 1000-1008.
    4. Sabrina Teyssier, 2012. "Inequity and risk aversion in sequential public good games," Public Choice, Springer, vol. 151(1), pages 91-119, April.
    5. Hedegaard, Morten & Kerschbamer, Rudolf & Müller, Daniel & Tyran, Jean-Robert, 2021. "Distributional preferences explain individual behavior across games and time," Games and Economic Behavior, Elsevier, vol. 128(C), pages 231-255.
    6. Dannenberg, Astrid & Riechmann, Thomas & Sturm, Bodo & Vogt, Carsten, 2010. "Stability and explanatory power of inequality aversion: an investigation of the house money effect," ZEW Discussion Papers 10-006, ZEW - Leibniz Centre for European Economic Research.
    7. Benjamin Beranek & Robin Cubitt & Simon Gächter, 2015. "Stated and revealed inequality aversion in three subject pools," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 1(1), pages 43-58, July.
    8. Sabrina Teyssier, 2008. "Experimental Evidence on Inequity Aversion and Self-Selection between Incentive Contracts," Post-Print halshs-00303727, HAL.
    9. Johannes Berger & Christine Harbring & Dirk Sliwka, 2013. "Performance Appraisals and the Impact of Forced Distribution--An Experimental Investigation," Management Science, INFORMS, vol. 59(1), pages 54-68, June.
    10. Kräkel, Matthias & Nieken, Petra & Przemeck, Judith, 2014. "Risk taking and investing in electoral competition," European Journal of Political Economy, Elsevier, vol. 33(C), pages 98-120.
    11. Eisenkopf, Gerald & Teyssier, Sabrina, 2013. "Envy and loss aversion in tournaments," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 240-255.
    12. Grund, Christian & Przemeck, Judith, 2008. "Subjective Performance Evaluation and Inequality Aversion," IZA Discussion Papers 3382, Institute of Labor Economics (IZA).
    13. Yang, Yang & Onderstal, Sander & Schram, Arthur, 2016. "Inequity aversion revisited," Journal of Economic Psychology, Elsevier, vol. 54(C), pages 1-16.
    14. He, Haoran & Villeval, Marie Claire, 2017. "Are group members less inequality averse than individual decision makers?," Journal of Economic Behavior & Organization, Elsevier, vol. 138(C), pages 111-124.
    15. Alfred Endres, 2008. "Ein Unmöglichkeitstheorem für die Klimapolitik?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(3), pages 350-382, August.
    16. He, Haoran & Wu, Keyu, 2016. "Choice set, relative income, and inequity aversion: An experimental investigation," Journal of Economic Psychology, Elsevier, vol. 54(C), pages 177-193.
    17. Fabian Kleine & Manfred Königstein & Balázs Rozsnyói, 2018. "Voluntary Leadership and Asymmetric Endowments in the Investment Game," Games, MDPI, vol. 9(3), pages 1-21, July.
    18. Normann, Hans-Theo & Rau, Holger A., 2014. "Simultaneous and sequential contributions to step-level public goods: One vs. two provision levels," DICE Discussion Papers 135, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    19. Haoran He & Marie Claire Villeval, 2014. "Are team members less inequality averse than individual decision makers?," Working Papers halshs-00996545, HAL.
    20. Liu, Weihua & Wang, Di & Shen, Xinran & Yan, Xiaoyu & Wei, Wanying, 2018. "The impacts of distributional and peer-induced fairness concerns on the decision-making of order allocation in logistics service supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 116(C), pages 102-122.
    21. Francesca Bortolami & Luigi Mittone, 2009. "Does Participating in a Collective Decision Affect the Levels of Contributions Provided? An Experimental Investigation," CEEL Working Papers 0902, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    22. Weiwei Tasch & Daniel Houser, 2018. "Social Preferences and Social Curiosity," CESifo Working Paper Series 7132, CESifo.

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    More about this item

    Keywords

    individual preferences; inequity aversion; experimental economics; public goods;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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