How not to extend models of inequality aversion

Dirk Engelmann

Journal of Economic Behavior & Organization, 2012, vol. 81, issue 2, 599-605

Abstract: Several authors have made attempts to improve the explanatory power of models of inequality aversion, in particular the one by Fehr and Schmidt (1999), by adding concerns for total surplus or efficiency. In this note, I point out that these attempts are misguided because they are equivalent to a much simpler change, not requiring an additional parameter, unless we simultaneously consider games with different numbers of players. In the latter case, however, such an approach yields implausible predictions.

Keywords: Inequality aversion; Efficiency; Social preferences (search for similar items in EconPapers)
JEL-codes: C72 C91 C92 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (29)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:81:y:2012:i:2:p:599-605

DOI: 10.1016/j.jebo.2011.08.007

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