How institutions shape individual motives for efficiency and equity: Evidence from distribution experiments

Abstract

We investigate how people trade off between equity and efficiency, using variations of tripled dictator and trust games in a lab experiment. Equalizing payoffs reduces the return from the tripled investment in the dictator game. In contrast, in the trust game both equal and maximized payoffs can be achieved, provided that receiver transfers back half of the return from investment. We find that subjects sacrifice efficiency for equity in the dictator game but manage to achieve both in the trust game. Most subjects equalize payoffs when they are placed behind a veil of ignorance about their position in the trust game, regardless of their aversion to risk. They invest less when they pay to obtain their position as investor but do not send back less if they pay to be the receiver. Subjects who modify their investment decision after receiving information about the average investment in their group tend to move closer to the average.

How fair is the allocation of bike-sharing infrastructure? Framework for a qualitative and quantitative spatial fairness assessment

“…Since fairness is a subjective assessment, one hypothetical case can be "fairer" to one person than other, depending on moral intuitions (Varian, 1975), culture, (Rochat, Dias, Liping, Broesch, Passos-Ferreira, Winning and Berg, 2009;Stobart, 2005), individual preferences (Ambec, Garapin, Muller and Rahali, 2019) or situation (Schmitt, Barbacsy, Binz, Buttgereit, Heinz, Hesse, Kraft, Kuhlmann, Lischetzke, Nisslmüller et al, 1994). A possible "general fair" assessed allocation would exist "when all agents have the same tastes, even though they may have different abilities" or needs (Varian, 1975).…”

Distributive Justice in the Field: How Do Indian Farmers Share Water?

“…An additional draw chooses which of the two subjects will be Farmer A and B. Playing behind the veil of ignorance is supposed to reveal in the DG impartial social preferences (Schildberg-Horisch, 2010, Ambec et al, 2019).…”

“…The tension between equity and efficiency has received specific attention from an experimental point of view, in particular since it allows to assess distributional preferences. Different experimental approaches have been proposed including dictator games (DG thereafter) (Cappelen et al, 2007, Fisman et al, 2007, Ambec et al, 2019, distribution games (Beckman et al, 2002, Engelmann andStrobel, 2004) or trust games (Charness and Rabin, 2002).…”

“…In our setting farmers play behind a "veil of ignorance" (Schildberg-Horisch, 2010, Ambec et al, 2019, i.e., they choose an allocation of resources without knowing their own future position in the group (upstream or downstream), nor the one of the other members. Playing behind the veil of ignorance, individuals should be able to deliberate independently from their self-interest and, therefore, reveal their preferences for fair outcomes.…”

“…Playing behind the veil of ignorance, individuals should be able to deliberate independently from their self-interest and, therefore, reveal their preferences for fair outcomes. In the literature, Schildberg-Horisch (2010) find that subjects more often choose equal distributions behind the veil of ignorance than in front of the veil, while Ambec et al (2019) show that subjects more often seek to equalize payoffs.…”