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Equity Concerns Are Narrowly Framed

Author

Listed:
  • Christine L. Exley
  • Judd B. Kessler

Abstract

Distributional decisions regularly involve multiple payoff components. In a series of experiments, we show that individuals sometimes exhibit narrow equity concerns: applying fairness preferences narrowly on a specific component of payoffs rather than on broader payoff consequences. This behavior results in different distributional decisions depending on which payoff component we frame individuals to consider. We document narrow equity concerns in an exceedingly simple setting—in which payoff components are tokens worth $0.01 and $0.02—and in context-rich applications including tax policy and worker compensation.

Suggested Citation

  • Christine L. Exley & Judd B. Kessler, 2024. "Equity Concerns Are Narrowly Framed," American Economic Journal: Microeconomics, American Economic Association, vol. 16(2), pages 147-179, May.
    • Handle: RePEc:aea:aejmic:v:16:y:2024:i:2:p:147-79
    DOI: 10.1257/mic.20220266
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    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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