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

Dirk Engelmann and Martin Strobel

American Economic Review, 2004, vol. 94, issue 4, 857-869

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.

Date: 2004
Note: DOI: 10.1257/0002828042002741
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Working Paper: Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments (2002)
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