Inequality and Procedural Justice in Social Dilemmas

This study investigates the influence of resource inequality and the fairness of the allocation procedure of unequal resources on cooperative behavior in social dilemmas. We propose a simple formal behavioral model that incorporates conflicting selfish and social motivations. This model allows us to predict how inequality influences cooperative behavior. Allocation of resources is manipulated by three treatments that vary in terms of procedural justice: allocating resources randomly, based on merit, and based on ascription. As predicted, procedural justice influences cooperation significantly. Moreover, gender is found to be an important factor interacting with the association between procedural justice and cooperative behavior.

Trust among Internet Traders: A Behavioral Economics Approach

Standard economic theory does not capture trust among anonymous Internet traders. But when traders are allowed to have social preferences, uncertainty about a seller's morals opens the door for trust, reward, exploitation and reputation building. We report experiments suggesting that sellers' intrinsic motivations to be trustworthy are not sufficient to sustain trade when not complemented by a feedback system. We demonstrate that it is the interaction of social preferences and cleverly designed reputation mechanisms that solves to a large extent the trust problem on Internet market platforms. However, economic theory and social preference models tend to underestimate the difficulties of promoting trust in anonymous online trading communities.

How Does Voice Matter? Evidence from the Ultimatum Game

Prior research in economics and psychology has shown that process can matter in determining outcomes in many social situations. In particular, the opportunity to express ones opinion-voice-has been found to be highly influential. However, little is known about the channels through which voice may operate. In this paper, we develop a simple economic model of voice to explore these channels. We show that individuals value voice for: 1) its effect on outcomes, 2) its inherent value, or 3) its role in signaling one's social standing. Through the introduction of a hypothetical round in the standard ultimatum game, we were able to test the channels of voice directly by observing recipients' responses to offers which are lower than what they asked for. Our experimental results suggest that voice works primarily through its inherent value which appears to exceed its contribution to the perception of procedural fairness. Further, unlike voice which softens the impact of an unfair outcome, the possibility for voice may have dichotomous effects.voice, ultimatum game

Corruption and Inequality as Correlates of Social Trust: Fairness Matters More Than Similarity

Argued is that the fairness of a society affects its level of social trust more than does its homogeneity. Societies with fair procedural rules (democracy), fair administration of rules (freedom from corruption), and fair (relatively equal and unskewed) income distribution produce incentives for trustworthy behavior, develop norms of trustworthiness, and enhance interpersonal trust. Based on a multi-level analysis using the World Values Surveys data that cover 80 countries, I find that (1) freedom from corruption, income equality, and mature democracy are positively associated with trust, while ethnic diversity loses significance once these factors are accounted for; (2) corruption and inequality have an adverse impact on norms and perceptions of trustworthiness; (3) the negative effect of inequality on trust is due to the skewness of income rather than its simple heterogeneity; and (4) the negative effect of minority status is greater in more unequal and undemocratic countries, consistent with the fairness explanation.This publication is Hauser Center Working Paper No. 29. The Hauser Center Working Paper Series was launched during the summer of 2000. The Series enables the Hauser Center to share with a broad audience important works-in-progress written by Hauser Center scholars and researchers

How to Solve an Allocation Problem?

Game theory proposes several allocation solutions: we know (a) fairness properties, (b) how to develop (c) methods building on these properties, and (d) how to calculate (e) allocations. We also know how to influence the perceived fairness and realization of allocation solutions. However, we cannot explain properly that theoretically fair allocation methods are rarely used.\ud To obtain more insight into these issues we solved an allocation problem in a purchasing cooperative case study by confronting theory with perceptions. We find large theoretical and perception differences and inconsistencies between and within the five steps from a to e. We note that theoretically fair methods tend to be more complex than theoretically unfair methods. In addition, the allocations of some simple methods are perceived fairer than the allocations of complex methods in our case study. To improve theoretical solutions the focus should be on a and c. To influence perceptions the focus should be on b, c, and d. Finally, all five steps are modeled into comparable fairness measures and a general model. Using this model implies that both theory and perceptions are considered in solving allocation problems

SYNALLAGMA AND FREEDOM OF CONTRACT - The Concept of Reciprocity and Fairness in Contracts from the Historical and Law and Economics Perspective

The problem of commutative justice has been widely analysed by the contemporary doctrine of civil law. Simultaneously there is a profound debate about the meaning of commutative justice and equivalence in exchange within the sphere of moral philosophy. All these issues seem to concern the problem of interdependence between parties. Such interdependence is called synallagma or the principle of synallagma. In this paper I would like to present the concept of synallagma in civil law and in philosophy of law. Since the dispute in both disciplines seems to be unresolved and inconclusive, I would like to present the two economic theories concerning synallagma as the strategic interaction between agents. The most appropriate tool to be implemented seems to be the game theory. In conclusion I would like to address the question whether substantial and objective equivalence in contracts is possible or under which conditions it is meaningful.

Random Matching in the College Admissions Problem

In the college admissions problem, we consider the incentives confronting agents who face the prospect of being matched by a random stable mechanism. We provide a fairly complete characterization of ordinal equilbria. Namely, every ordinal equilib- rium yields a degenerate probability distribution. Furthermore, individual rationality is a necessary and sufficient condition for an equilibrium outcome, while stability is guaranteed in ordinal equilibrium where firms act straightforwardly. Finally, we re- late equilibrium behavior in random and in deterministic mechanisms.Matching; College Admissions Problem; Stability; Random Mechanism.

Fair Procedures. Evidence from Games Involving Lotteries

Procedural fairness plays a prominent role in the social discourse concerning the marketplace in particular, and social institutions in general. Random procedures are a simple case, and they have found application in several important social allocation decisions. We investigate random procedures in the laboratory. We find that an unbiased random procedure is an acceptable substitute for an unbiased allocation: similar patterns of acceptance and rejection result when either is inserted as a feasible proposal in a sequential battle-of-the-sexes. We also find that unbiasedness, known to be a crucial characteristic of allocation fairness, is important to procedural fairness: in the context of a random offer game, a biased outcome is more readily accepted when chosen by an unbiased random draw than by one that is biased. Procedural fairness is conceptually different than allocation fairness or attribution-based behavior, and none of the current models of fairness and reciprocity captures our results. Post hoc extension of one of these models (ERC) suggests that a deeper understanding of procedural fairness requires further investigation of competing fairness norms.Experimental economics, Motivations