Examining the Role of Fairness in High Stakes Allocation Decisions

Recent experimental evidence has led to a debate about the nature of utility functions in which people are concerned about the amount others earn, and what factors heighten or diminish social preference. We explore fairness by examining behavior across three variants of the dictator game. Using data from nearly 200 dictators allocating as much as $100 each, we observe that fairness considerations are very powerful—when subjects could reasonably believe that disproportionately low offers are “fair”, only 8-12 percent of dictators make positive offers. Examining the comparative static results from these allocation decisions, we find that recent theoretical models of inequality do a respectable job of explaining the data patterns.

Pigouvian tax aversion and inequity aversion in the lab

We use an experimental market with externalities to test whether inequality aversion could help explain the popularity of earmarking tax revenues. We find that voter opposition is not fully explained by material self-interest: Results indicate that preferences for fairness influence voting behavior, with greater inequality in tax revenue distribution negatively affecting the acceptability of the tax. In addition to this, we also discover a significant degree of tax-aversion in the votes. Our findings provide greater understanding of the behavioral underpinnings of the positive impact that earmarking has on the acceptability of Pigouvian taxes.Pigouvian taxes, public acceptability, earmarking, fairness, inequity aversion, laboratory experiments

Residential Photovoltaic Systems in Norway: Household Knowledge, Preferences and Willingness to Pay

Solar power or photovoltaic (PV) systems have emerged as a leading low-carbon energy technology worldwide, but the deployment of residential PV systems in Norway has lagged behind other Scandinavian countries. Therefore, the Norwegian market provides an opportunity to gain insights on the demand factors that determine residential PV adoption. This paper presents results from a stated-preference survey designed to elicit household knowledge, preferences and willingness to pay for residential PV systems. Results suggest that meaningful growth in residential PV capacity depends greater knowledge among households, continued advances in technology, clarity with the grid tariff and stronger support systems. A review of recent experiences in the field corroborates the important role of effective regulatory structures and support programs

Residential Photovoltaic Systems in Norway: Household Knowledge, Preferences and Willingness to Pay

Solar power or photovoltaic (PV) systems have emerged as a leading low-carbon energy technology worldwide, but the deployment of residential PV systems in Norway has lagged behind other Scandinavian countries. Therefore, the Norwegian market provides an opportunity to gain insights on the demand factors that determine residential PV adoption. This paper presents results from a stated-preference survey designed to elicit household knowledge, preferences and willingness to pay for residential PV systems. Results suggest that meaningful growth in residential PV capacity depends greater knowledge among households, continued advances in technology, clarity with the grid tariff and stronger support systems. A review of recent experiences in the field corroborates the important role of effective regulatory structures and support programs

Individual and institutional determinants of the male female wage gap among U.S. economics faculty

This paper provides new evidence on the male female wage gap in academia. Using unique data from the economics discipline, we estimate a human-capital based model to explore the nature of wage differentials among male and female economics professors. Results indicate the salary gap varies across systematically across individual and institutional characteristics.discrimination, wages, academia

Investigating Behavioral Responses to Positive Inducements for Filing Tax Returns

A significant amount of non-compliance associated with the personal income tax is due to the taxpayers who are not “in the system,” not having filed a tax return in the recent past or perhaps ever. We use experimental laboratory methods to examine two types of positive incentives for filing tax returns: tax credits and social safety net benefits, both of which are conditional on tax filing. Our experimental design captures the essential features of the voluntary income reporting and tax assessment system used in many countries. Human participants in a controlled laboratory environment earn income through their performance in a task. The participants must then decide whether to file a tax return and, conditional upon filing, how much income to report. Taxes are paid on reported income only. Unreported income of filers may be discovered via a random audit, and the participant must then pay the owed taxes plus a fine based on the unpaid taxes; non-filers are not subject to an audit. Inducements for filing are introduced in several alternative treatments. In one treatment we introduce a social safety net (e.g., unemployment replacement income) that is conditional on past filing behavior. In a second treatment we introduce tax credits that are available either to low income participants or to all income levels, but again only to those who file a tax return. Our results suggest that a tax credit increases filing but only if the credit is targeted to low income earners. The provision of a social safety net via unemployment benefits also has a positive, albeit indirect, impact on participation. Key Words:

The Endogenous Formation of Coalitions to Provide Public Goods: Theory and Experimental Evidence

This paper examines the endogenous formation of coalitions that provide public goods in which players implement a minimum participation requirement before deciding whether to join. We demonstrate theoretically that payoff-maximizing players will vote to implement efficient participation requirements and these coalitions will form. However, we also demonstrate that if some players are averse to inequality they can cause inefficient outcomes. Inequality-averse players can limit free riding by implementing larger than efficient coalitions or by blocking efficient coalitions from forming. We test the theory with experimental methods and observe individual behavior and coalition formation consistent with a model of inequality-averse players.public goods, coalition formation, inequality aversion, participation requirement, experiments

Sharing as Risk Pooling in a Social Dilemma Experiment

In rural economies with missing or incomplete markets, idiosyncratic risk is frequently pooled through informal networks. Idiosyncratic shocks, however, are not limited to private goods but can also restrict an individual from partaking in or benefiting from a collective activity. In these situations, a group must decide whether to provide insurance to the affected member. In this paper, we describe results of a laboratory experiment designed to test whether a simple sharing institution can sustain risk pooling in a social dilemma with idiosyncratic risk. We test whether risk can be pooled without a commitment device and, separately, whether effective risk pooling induces greater cooperation in the social dilemma. We find that even in the absence of a commitment device or reputational considerations, subjects voluntarily pool risk thereby reducing variance in individual earnings. In spite of effective risk pooling, however, cooperation in the social dilemma is unaffected

The appropriation of endogenously provided common-pool resources

Abstract Because game theory suggests that the origin of a common-pool resource should not affect appropriation behavior, experimental studies of appropriation from common-pool resources generally presume resources are exogenously provided. However, behavioral economic research indicates that the origin of a resource may affect the use of that resource. We investigate the potential role of resource origin by considering the appropriation of a common-pool resource after users have determined its productive capacity through contributions. Results indicate that resource origin does not significantly influence aggregate appropriation levels but that endogenous resource provision leads to individual strategic behavior