2,112 research outputs found

    A Tractable Model of Reciprocity and Fairness

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    We introduce a parametric model of other-regarding preferences in which my emotional state determines the marginal rate of substitution between my own and others' payoffs, and thus my subsequent choices. In turn, my emotional state responds to relative status and to the kindness or unkindness of others' choices. Structural estimations of this model with six existing data sets demonstrate that other-regarding preferences depend on status, reciprocity, and perceived property rights.

    A Tractable Model of Reciprocity and Fairness

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    We introduce a parametric model of other-regarding preferences. The income distribution and the kindness or unkindness of others' choices ('intentions') systematically affect a person's emotional state. The emotional state systematically affects the marginal rate of substitution between own and others' payoffs, and thus the person's subsequent choices. The model is applied to two sets of laboratory data: simple binary choice mini-ultimatum games, and Stackelberg duopoly games with a range of choices. The results confirm that other-regarding preferences respond to others' intentions as well as to the income distribution.

    A Tractable Model of Reciprocity and Fairness

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    We introduce a parametric model of other-regarding preferences in which my emotional state determines the marginal rate of substitution between my own and others’ payoffs, and thus my subsequent choices. In turn, my emotional state responds to relative status and to the kindness or unkindness of others’ choices. Structural estimations of this model with six existing data sets demonstrate that other-regarding preferences depend on status, reciprocity, and perceived property rights

    A Trackable Model of Reciprocity and Fairness.

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    We introduced a parametric model of other-regarding preferences in which my emotional state determines the marginal rate of substitution between my own and other' payoffs, and thus my subsequent choices. In turn, my emotional state responds to relative status and to the kindness or unkindness of others' choices. Structural estimations of this model with six existing data sets demonstrate that other-regarding preferences depend on status, reciprocity, and perceived property rights.RECIPROCITY ; MARGINAL RATE OF SUBSTITUTION ; PAYOFFS

    Trust, Fear, Reciprocity, and Altruism: Theory and Experiment

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    This paper describes central topics in our research program on social preferences. The discussion covers experimental designs that discriminate among alternative components of preferences such as unconditional altruism, positive reciprocity, trust (in positive reciprocity), negative reciprocity, and fear (of negative reciprocity). The paper describes experimental data on effects of social distance and decision context on reciprocal behavior and male vs. female and group vs. individual differences in reciprocity. The exposition includes experimental designs that provide direct tests of alternative models of social preferences and summarizes implications of data for the models. The discussion reviews models of other-regarding preferences that are and are not conditional on othersù?? revealed intentions and the implications of data for these models.

    On Inequity Aversion - A Reply to Binmore and Shaked

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    In this paper we reply to Binmore and Shaked’s criticism of the Fehr-Schmidt model of inequity aversion. We put the theory and their arguments into perspective and show that their criticism is not substantiated. Finally, we briefly comment on the main challenges for future research on social preferences

    On Inequity Aversion - A Reply to Binmore and Shaked

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    In this paper we reply to Binmore and Shaked’s criticism of the Fehr-Schmidt model of inequity aversion. We put the theory and their arguments into perspective and show that their criticism is not substantiated. Finally, we briefly comment on the main challenges for future research on social preferences.Experiments; other-regarding preferences; inequity aversion;

    Testing and Modeling Fairness Motives

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    The advent of laboratory experiments in economics over the last few decades has produced an enormous literature devoted to describing, testing and modeling economic and social behavior. Measured by publications and citations, the development of social preference models to capture decisions motivated by fairness and other social criteria, is one of the success stories in this literature. But with this success, and maybe even because of it, controversies have arisen about what the models can and cannot do. In this note, we comment on some of these debates. Our main theme is that descriptive models of behavior should be judged with respect to their usefulness. This is often neglected, partly because there are no accepted measures and tests for the usefulness of a model, while standard procedures to test whether a model is true are readily available. A model that does not capture a 'grain of truth' is unlikely to be useful; however, the relationship is not monotonic in that a 'truer' model is not necessarily a more useful model.experimental economics, fairness, behavioral economics, methodology, usefulness

    The Role of Experiments for the Development of Economic Theories

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    Economic experiments interact with economic theories in various ways. First of all they are used to test economic theories. However, they can neither confirm nor falsify them in a strict sense. They rather inform us about the range of applicability, the robustness and the predictive power of a theory. Furthermore, economic experiments discover and isolate phenomena and challenge economic theorists to explain them. Finally, many economic experiments are ñ€Ɠmaterialñ€ models. They are used to analyse and predict how changes in the environment affect economic outcomes. However, they cannot offer an explanation for what we observe. This has to be provided by economic theory.Economic experiments; economic theories; falsification; confirmation; phenomena; models

    Fairness and Incentives in a Multi-Task Principal-Agent Model

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    This paper reports on a two-task principal-agent experiment in which only one task is contractible. The principal can either offer a piece-rate contract or a (voluntary) bonus to the agent. Bonus contracts strongly outperform piece rate contracts. Many principals reward high efforts on both tasks with substantial bonuses. Agents anticipate this and provide high efforts on both tasks. In contrast, almost all agents with a piece rate contract focus on the first task and disregard the second. Principals understand this and predominantly offer bonus contracts. This behavior contradicts the self-interest theory but is consistent with theories of fairness.Incentives; Moral Hazard; Multiple Tasks; Fairness; Experiments
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