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Modeling Inequity Aversion in a Dictator Game with Production

Author

Listed:
  • Luis José Blas Moreno Garrido

    (Dpto. Fundamentos del Análisis Económico)

  • Ismael Rodríguez Lara

    (Universidad de Alicante)

Abstract
We expand upon the previous models of inequity aversion of Fehr and Schmidt (1999) and Frohlich, Oppenheimer and Kurki (2004), which assume that dictators get disutility if the final allocation of the surplus deviates from the equal split (egalitarian principle) or from the subjects’ production (libertarian principle). In our model, dictators may also account for the way in which the surplus was generated. More precisely, our model incorporates the idea of the liberal egalitarian ethics into the analysis, making it possible for dictators to divide the surplus according to the accountability principle, which states that subjects should only be rewarded for factors under their control. This fairness ideal does not hold subjects responsible for factors beyond their control in the production of the surplus, an idea that is absent in the models of inequity aversion cited above.

Suggested Citation

  • Luis José Blas Moreno Garrido & Ismael Rodríguez Lara, 2012. "Modeling Inequity Aversion in a Dictator Game with Production," Working Papers. Serie AD 2012-04, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    • Handle: RePEc:ivi:wpasad:2012-04
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    References listed on IDEAS

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    Cited by:

    1. Chunliang Feng & Yi Luo & Ruolei Gu & Lucas S Broster & Xueyi Shen & Tengxiang Tian & Yue-Jia Luo & Frank Krueger, 2013. "The Flexible Fairness: Equality, Earned Entitlement, and Self-Interest," PLOS ONE, Public Library of Science, vol. 8(9), pages 1-1, September.
    2. Ozan Aksoy & Jeroen Weesie, 2013. "Hierarchical Bayesian Analysis of Biased Beliefs and Distributional Other-Regarding Preferences," Games, MDPI, vol. 4(1), pages 1-23, February.
    3. Luis José Blas Moreno Garrido, 2015. "Relative Injustice Aversion," Working Papers. Serie AD 2015-08, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    4. Moreno-Garrido, Luis José Blas, 2013. "Relative Injustice Aversion," QM&ET Working Papers 13-4, University of Alicante, D. Quantitative Methods and Economic Theory, revised 27 Jul 2015.

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    More about this item

    Keywords

    social preferences; inequity aversion; inequality aversion; egalitarian principle; libertarian principle; accountability principle.;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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