American Economic Review: Vol. 94 No. 4 (September 2004)
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Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments
Engelmann, Dirk, and Martin Strobel. 2004. "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments." American Economic Review, 94(4): 857-869.
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.
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