APPROACHING FAIR BEHAVIOR: DISTRIBUTIONAL AND RECIPROCAL PREFERENCES

Abstract

This paper suggests to combine different kind of “other-regarding” preferences as an approach to fair behavior which is observed in controlled experiments. We assert that participants in two-person experiments have a good will capital which may be described by altruistic preferences. These preferences guide a large fraction of participants when they have to make distributional choices in one-stage games. We further show that in games with more than one stage the previous action of the other person may cause reciprocal feelings in addition to the altruistic preferences. A friendly (unfriedly) act of the other person may increase (decrease) the good will capital of the participants. Upon these findings, we conclude that a combination of altruism and reciprocity is able to describe the variety of behavior in several experiments despite their differing strategic context.

Citation

Kritikos, A. and Bolle, F. (2004), "APPROACHING FAIR BEHAVIOR: DISTRIBUTIONAL AND RECIPROCAL PREFERENCES", Cowell, F. (Ed.) Inequality, Welfare and Income Distribution: Experimental Approaches (Research on Economic Inequality, Vol. 11), Emerald Group Publishing Limited, Leeds, pp. 149-180. https://doi.org/10.1016/S1049-2585(04)11008-9