Fair share and social effciency: a mechanism in which peers decide on the payoff division

Lu Dong (), Rodney Falvey and Shravan Luckraz

No 2016-10, Discussion Papers from The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham

Abstract: We propose and experimentally test a mechanism for a class of principal-agent problems in which agents can observe each others' efforts. In this mechanism each player costlessly assigns a share of the pie to each of the other players, after observing their contributions, and the final distribution is determined by these assignments. We show that cooperation can be achieved under this simple mechanism and, in a controlled laboratory experiment, we find that players use a proportional rule to reward others in most cases and that the players' contributions improve substantially and almost immediately with 80% of players contributing fully.

Keywords: mechanism design; experimental economics; fairness; distributive justice (search for similar items in EconPapers)
Date: 2016-10
New Economics Papers: this item is included in nep-cbe, nep-cdm, nep-exp and nep-gth
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Citations: View citations in EconPapers (4)

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Journal Article: Fair share and social efficiency: A mechanism in which peers decide on the payoff division (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:not:notcdx:2016-10

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