Equity versus equality: Spectators, stakeholders and groups

Justice figures prominently in a wide variety of economically important contexts that involve both third parties and involved parties, e.g., in environmental regulation, international trade, and legal proceedings. The primary rivals for fairness rules over the distribution of a fixed good are equality and equity (i.e., allocations that are proportional to contributions). This paper reports the results of a dictator experiment in relation to a large variety of factors that might affect these rules, including performance on a real effort task, in-group identity, subject pools, allocative power, cultural orientation and demographic variables. We find impersonal third parties (i.e., Spectators) allocating anonymously for others favor equity. Subjects who share personal stakes anonymously with recipients (i.e., Stakeholders) allocate amounts between equity and equality. Stakeholders, who meet and communicate with their recipients (i.e., In-groups), allocate even more equally than anonymous stakeholders to their own recipients and behave more selfishly toward other subjects (i.e., Out-groups). These findings are robust with respect to subject pool, a measure of culture, and demographic variables, which seldom matter. We conclude that there is considerable agreement about these fairness rules, when parties are well informed, although there remain important differences across subject pools in the willingness to act on those rules.