Abstract
Fehr and Schmidt (FS) introduced an influential social utility function for individuals in interpersonal contexts that captures self-centered inequity aversion. The value of this social utility function lies in its exceptionally good balance between parsimony and fit. This paper provides a preference foundation for exactly the model of FS with preference conditions that exactly capture the exceptionally good balance of FS. Remarkably, FS is a special case of Schmeidler's rank-dependent utility for decision under uncertainty.
Original language | English |
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Pages (from-to) | 537-547 |
Number of pages | 11 |
Journal | Social Choice and Welfare |
Volume | 34 |
Issue number | 4 |
DOIs | |
Publication status | Published - 2010 |
Externally published | Yes |