Inequity Aversion May Increase Inequity

Maria Montero

Economic Journal, 2007, vol. 117, issue 519, C192-C204

Abstract: Inequity aversion models have been used to explain equitable payoff divisions in bargaining games. I show that inequity aversion can actually "increase" the asymmetry of payoff division if unanimity is not required. This is because responders may be willing to accept a lower share rather than risk being left out. Inequity aversion may also affect comparative statics: the advantage of being the proposer can "decrease" as players become more impatient. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.

Date: 2007
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Working Paper: Inequity Aversion May Increase Inequity (2006)
Working Paper: Inequity Aversion May Increase Inequity (2006)
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