Xiao, Erte and Bicchieri, Cristina (2008): When Equality Trumps Reciprocity: Evidence from a Laboratory Experiment.
Download (218kB) | Preview
Inequity aversion and reciprocity have been identified as two primary motivations underlying human decision making. However, because income and wealth inequality exist to some degree in all societies, these two key motivations can point to different decisions. In particular, when a beneficiary is less wealthy than a benefactor, a reciprocal action can lead to greater inequality. In this paper we report data from a trust game variant where trustees’ responses to kind intentions generate inequality in favor of investors. In relation to a standard trust game treatment where trustees’ responses reduce inequality, the proportion of non-reciprocal decisions is twice as large when reciprocity promotes inequality. Moreover, we find investors expect that this will be the case. Overall, although both motives clearly play a role, we found strong evidence for inequality aversion. Our results call attention to the potential importance of inequality in principal-agent relationships, and have important implications for designing policies aimed at promoting cooperation.
|Item Type:||MPRA Paper|
|Original Title:||When Equality Trumps Reciprocity: Evidence from a Laboratory Experiment|
|Subjects:||D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior
|Depositing User:||Erte Xiao|
|Date Deposited:||30. Jun 2008 07:27|
|Last Modified:||15. Feb 2013 02:45|
Anderson, L., Mellor, J. and Milyo, J. (2006) “Induced heterogeneity in trust experiments”. Experimental Economics 9, p223-235. Andreoni, J., Brown, P.M. and Vesterlund, L. (2002). “What makes an allocation fair? Some experimental evidence”, Games and Economic Behavior, vol. 40, pp. 1–24. Babcock, L., Loewenstein, G. 1997.” Explaining Bargaining Impasse: The Role of Self-Serving Biases”. Journal of Economic Perspective 11(1), 109-126. Bardsley, N., Sausgruber, R. (2005) “Conformity and reciprocity in public good provision”. Journal of Economic Psychology, 26(5), 664-681. Berg J., Dickhaut, J. and McCabe K (1995) “Trust, Reciprocity and Social History.” Games Economic Behavior 10, 122-142. Bicchieri, C. (2000). “Words and Deeds: A Focus Theory of Norms”. Rationality, Rules and Structure. Ed. J. Nida-Rumelin and W. Spohn. Great Britain, Kluwer Academic Publishers: 153-184. Bicchieri, C (2006). The Grammar of Society: The Nature and Dynamics of Social Norms. New York: Cambridge University Press Bicchieri, C. and Chavez, A. (2008) “Behaving as Expected: Public Information and Fairness Norms”, working paper, University of Pennsylvania. Bicchieri, C. and Xiao, E. (2007). “Do the right thing: But only if others do so”. working paper. University of Pennsylvania. Blount, S.( 1995). “When Social Outcomes Aren’t Fair: The Effect of Causal Attributions on Preferences”. Organizational Behavior and Human Decision Process 63 (2), 131-144. Brandts, J., Solà, C. 2001. Reference Points and Negative Reciprocity in Simple Sequential Games. Games and Economic Behavior. 36, 397-409. Brülhard, M. and Usunier, J-C. 2007 “Verified Trust: Reciprocity, Altruism, and Randomness in Trust Games”, working paper Bolton, G. E and Ockenfels, A. (2000) “ERC: A Theory of Equity, Reciprocity, and Competition.” American Economic Review, 90, pp166-193. Bolton, G. E., Brandts, J. And Ockenfels, A. (1998). “Measuring Motivations for the Reciprocal Responses Observed in a Simple Dilemma Game”. Experimental Economics, 1. 207-219. Bolton, G. E., Brandts, J. And Ockenfels, A. (2003) “Fair Procedures: Evidence from Games Involving Lotteries”. Economic Journal, 115, pp1054-1076. Camerer, C. Behavioral Game Theory: Experiments in Strategic Interaction. Princeton University Press, Princeton, NJ, 2003. Cason, T. N., Mui, V. (1998) “ Social Influence in the Sequential Dictator Game”, Journal of Mathematical Psychology 42, pp. 248-265. Charness, G. (2004). “Attribution and Reciprocity in an Experimental Labor Market” , Journal of Labor Economics 22 (3), p665-688. Charness, G. and Haruvy, E. (2002). “Altruism, Fairness, and Reciprocity in a Gift-Exchange Experiment: An Encompassing Approach”, Games and Economic Behavior 40, p203-231. Charness, G., and M. Rabin (2002): “Understanding Social Preferences with Simple Tests", Quarterly Journal of Economics, 117(3): 817-869. Cialdini, R.B., Kallgren, C. A., Reno R.R., 1990. A Focus Theory of Normative Conduct: A Theoretical Refinement and Reevaluation of the Role of Norms in Human Behavior. Advances in Experimental Social Psychology, 24, pp 201-234. Cox, J. (2004). “How to identify trust and reciprocity”, Games and Economic Behavior 46, p260-281. Dawes CT, Fowler JH, Johnson T, McElreath R, Smirnov O. (2007) "Egalitarian Motives in Humans," Nature 446 (12), p 794-796 Dufwenberg, M. and Kirchsteiger, G. (2004). “A Theory of Sequential Reciprocity”. Games an Economic Behavior 47, 268-298 Engelmann, D. And Strobel, M. (2004) "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments.” American Economic Review 94, 4, p857-869 Falk, A. and Fischbacher, U. (2006) “A theory of reciprocity”, Games and Economic Behavior 54, p293-315. Falk, A., Fehr, E. and Fischbacher, U. (2008) “Testing Theories of Fairness—Intentions Matter”. Games and Economic Behavior. 62, p287-303. Fehr, E. and Gächter, S. (2000) “ Fairness and Retaliation: The Economis of Reciprocity”, Journal of Economic Perspectives 14(3), p 159-181. Fehr, E. and Gächter, S. (2002). “Altruistic punishment in humans”. Nature 415, p137-140. Fehr, E., Kirchler, E., Weichbold, A. And Gächter, S. (1998). “When Social Norms Overpower Competition: Gift Exchange in Experimetnal Labor Markets”. Journal of Labor economics 16(2), p324-351. Fehr, E., Naef, M., Schmidt, K. M. (2006). “ Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments: Comment”. American Economic Review, 96 (5), pp. 1912-1917. Fehr, E.and Schmidt, K. (1999) “A Theory of Fairness, Competition, and Cooperation.” Quarterly Journal of Economics, 114, pp817-868 Fowler JH, Johnson T, Smirnov O.(2005) "Egalitarian Motive and Altruistic Punishment," Nature 433: doi:10.1038/nature03256 (06 January 2005) Glaeser, E.L., Laibson, D.I., Scheinkman, J.A., and Soutter, C.L. (2000). Measuring trust. Quarterly Journal of Economics, 115(3), p811-846. Greiner, B., Ockenfels, A. and Werner, P. (2007) “ The Dynamic Interplay of Inequality and Trust- An Experimental Study”, working paper. Güth, W., Schmittberger, R., Schwarze, B., 1982. An experimental analysis of ultimatum bargaining. Journal of Economic Behavior and Organization. 3, p367-388. Houser, D. Xiao, E., McCabe, K. and Smith, V. (2008) “When punishment fails: Research on sanctions, intentions and non-cooperation”, Games and Economic Behavior, 62 (2), 509-532. Johansson-Stenman, O., Mahumd, M., Martinsson, P. (2005). “ Does stake size matter in trust games?” Economic Letters, 88, p365-369. Loewenstein, G. F., Thompson, L., and Bazerman, M. H. (1989). Social utility and decision making in interpersonal contexts. Journal of Personality and Social Psychology, 57, p426-441. Krupka, E., Weber, R., 2007. “The Focusing and Observational Effects of Social Norms.” Carnegie Mellon. Working paper McCabe, K., Rigdon, M. and Smith, V. (2003). “Positive reciprocity and intention in trust game”. Journal of Economic Behavior and Organization. 52(2), 267-275. Nelson W.R. Jr. (2002) “Equity and intention: it’s the thought that counts.” Journal of Economic Behavior and Organization. 48(4),423-430. Rabin, M. (1993) “Incorporating Fairness into Game Theory and Economics”. American Economic Review. 83, pp1281-1302. Walster, E., Walster, G.W. and Berscheid, E. (1978), Equity Theory and Research, Boston: Allyn & Bacon.