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Justice among strangers. On altruism, inequality aversion and fairness

Luciano Andreozzi, Matteo Ploner and Ivan Soraperra

No 1304, CEEL Working Papers from Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia

Abstract: We present an axiomatic model of choice involving two agents, motivated by the experimental evidence on non-selfish preferences. We distinguish two classes of social preferences, depending on whether they are or not separable. Altruism and spite (Andreoni & Miller, 2002; Cox et al., 2007) are separable, while the various forms of inequality aversion are not (Fehr & Schmidt, 1999; Bolton & Ockenfels, 2000; Charness & Rabin, 2002). Separable and non-separable preferences give very close predictions when only sure outcomes are involved, but they make opposite predictions in choices involving lotteries. We show this by proposing a generalization of expected utility that accounts for preferences for �fair procedures�, which violate the independence axiom. An experimental test of the model reveals little evidence of ex-post inequality aversion, even when non-expected utility preferences are accounted for.

Date: 2013
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp and nep-upt
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Citations: View citations in EconPapers (8)

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