The Behavioral Tradeoff between Efficiency and Equity when a Majority Rules

Gary Bolton () and Axel Ockenfels

Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group

Abstract: Voting is a natural context to investigate how democratic societies balance claims of economic efficiency against claims of distributive equity. We examine data from a series of simple experimental voting games; in each, voters are confronted with two distributional policies, one that promotes efficiency versus one that promotes equity. We find that as a social good, equity has more attraction than efficiency by about a two-to-one margin, even though those who deviate for efficiency pay on average less for it than those who deviate for equity. Strikingly, nearly half those who do not benefit (nor lose) from the Pareto choice vote against it; yet the same choice finds wide support when a fair random draw determines who captures the gain.

Pages: 21 pages
Date: 2004-01
New Economics Papers: this item is included in nep-cdm
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