Inequality Aversion, Efficiency and Maximin Preferences in Simple Distribution experiments

D. Engelmann, M. Strobel

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Abstract

We present simple one-shot distribution experiments comparing the relative importance of efficiency concerns, maximin preferences, and inequality aversion, as well as the relative performance of the fairness theories by Gary E Bolton and Axel Ockenfels and by Ernst Fehr and Klaus M. Schmidt. While the Fehr-Schmidt theory performs better in a direct comparison, this appears to be due to being in line with maximin preferences. More importantly, we find that a combination of efficiency concerns, maximin preferences, and selfishness can rationalize most of the data while the Bolton-Ockenfels and Fehr-Schmidt theories are unable to explain important patterns.
Original languageEnglish
Pages (from-to)857-869
Number of pages12
JournalAmerican Economic Review
Volume94
Issue number4, Sept.
DOIs
Publication statusPublished - 1 Jan 2004

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