Incorporating fairness motives into the Impulse Balance Equilibrium concept: an application to experimental 2X2 games

Alessandro Tavoni ()

MPRA Paper from University Library of Munich, Germany

Abstract: Substantial evidence has been accumulated in recent empirical works on the limited ability of the Nash equilibrium to rationalize observed behavior in many classes of games played by experimental subjects. This realization has led to several attempts aimed at finding tractable equilibrium concepts which perform better empirically, often by introducing a reference point to which players compare the available payoff allocations, as in impulse balance equilibrium (Selten & Chmura, forthcoming) and in the inequity aversion model (Fehr & Schmidt,1999). The purpose of this paper is to review some features of this recent literature and to propose a new, empirically sound, unifying concept which combines elements of fairness with reference considerations.

Keywords: Fairness; Inequity aversion; Aspiration level; Impulse balance; Behavioral economics; Experimental economics; Jacknife estimator (search for similar items in EconPapers)
JEL-codes: C72 C91 D01 D63 (search for similar items in EconPapers)
Date: 2007-10
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-gth and nep-upt
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