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Effects of gain-loss frames on advantageous inequality aversion

Kene Boun My (), Nicolas Lampach (), Mathieu Lefebvre () and Jacopo Magnani ()
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Nicolas Lampach: KU Leuven

Journal of the Economic Science Association, 2018, vol. 4, issue 2, No 1, 99-109

Abstract: Abstract This paper studies individuals’ preference for reducing advantageous inequality in the distribution of gains and losses. Combining the inequality aversion model of Fehr and Schmidt (Q J Econ 114(3):817–868, 1999) with loss aversion à la Kahneman and Tversky (Econom J Econom Soc:263–291, 1979), we predict the relative dislike for advantageous inequality is lower when outcomes are framed as losses than when outcomes are framed as gains. We test this prediction using data from two modified dictator game experiments. Consistent with the model, we find that the amount of payoff that subjects are willing to sacrifice to increase the net payoff of others and reduce advantageous inequality is smaller under a loss frame than under a gain frame. The results also show that women are more inequality averse than men in both gains and losses.

Keywords: Social preferences; Inequality aversion; Modified dictator game; Loss aversion; Laboratory experiment; C70; C91; D63 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s40881-018-0057-2

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