Measuring Inequity Aversion in a Heterogeneous Population Using Experimental Decisions and Subjective Probabilities

Charles Bellemare (), Sabine Kröger () and Arthur van Soest ()

Econometrica, 2008, vol. 76, issue 4, 815-839

Abstract: We combine choice data in the ultimatum game with the expectations of proposers elicited by subjective probability questions to estimate a structural model of decision making under uncertainty. The model, estimated using a large representative sample of subjects from the Dutch population, allows both nonlinear preferences for equity and expectations to vary across socioeconomic groups. Our results indicate that inequity aversion to one's own disadvantage is an increasing and concave function of the payoff difference. We also find considerable heterogeneity in the population. Young and highly educated subjects have lower aversion for inequity than other groups. Moreover, the model that uses subjective data on expectations generates much better in- and out-of-sample predictions than a model which assumes that players have rational expectations. Copyright Copyright 2008 by The Econometric Society.

Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (271)

Downloads: (external link)
http://hdl.handle.net/10.1111/j.1468-0262.2008.00860.x link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecm:emetrp:v:76:y:2008:i:4:p:815-839

Ordering information: This journal article can be ordered from
https://www.economet ... ordering-back-issues

Access Statistics for this article

Econometrica is currently edited by Guido Imbens

More articles in Econometrica from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().