Date: 2016
Type: Article
Inequity aversion revisited
Journal of economic psychology, 2016, Vol. 54, pp. 1-16
YANG, Yang, ONDERSTAL, Sander, SCHRAM, Arthur, Inequity aversion revisited, Journal of economic psychology, 2016, Vol. 54, pp. 1-16
- https://hdl.handle.net/1814/45230
Retrieved from Cadmus, EUI Research Repository
Using a laboratory experiment, we study the predictive power of the Fehr–Schmidt (1999) model of inequity aversion and its robustness to reciprocity and stakes. We find stronger evidence for the model’s predictive power at the individual level than what the existing literature suggests. This finding is robust to stakes. However, the model’s predictive power is highly reduced if subjects can reciprocate others’ actions. This suggests that parameter estimates obtained in an environment that allows for reciprocal responses yield a bias in the parameter estimates. In particular, previous estimates (especially of the disutility of disadvantageous inequity aversion) may overestimate the importance of inequity aversion.
Additional information:
Available online 19 January 2016
Cadmus permanent link: https://hdl.handle.net/1814/45230
Full-text via DOI: 10.1016/j.joep.2015.12.009
ISSN: 0167-4870
Publisher: Elsevier
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