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American Economic Review: Vol. 94 No. 4 (September 2004)

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Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments

Article Citation

Engelmann, Dirk, and Martin Strobel. 2004. "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments." The American Economic Review, 94(4): 857-869.

DOI: 10.1257/0002828042002741

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.

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Authors

Engelmann, Dirk
Strobel, Martin


American Economic Review



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