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Inequality Aversion and Reciprocity in Moonlighting Games

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  • Dirk Engelmann

    (Department of Economics, University of Mannheim,L7, 3-5, 68131 Mannheim, Germany
    Centre for Experimental Economics, University of Copenhagen, Øster Farimagsgade 5, 1353 København K, Denmark
    Economics Institute of the Academy of Sciences of the Czech Republic, P.O. Box 882 Politickych veznu 7, 111 21 Praha 1, Czech Republic)

  • Martin Strobel

    (Department of Economics, Maastricht University, P.O. Box 616, 6200 MD Maastricht, The Netherlands)

Abstract

We study behavior in a moonlighting game with unequal initial endowments. In this game, predictions for second-mover behavior based on inequality aversion are in contrast to reciprocity. We find that inequality aversion explains only few observations. The comparison to a treatment with equal endowments supports the conclusion that behavior is better captured by intuitive notions of reciprocity than by inequality aversion. Extending the model by allowing for alternative reference points promises better performance, but leads to other problems. We conclude that the fact that inequality aversion often works as a good short-hand for reciprocity is driven by biased design choices.

Suggested Citation

  • Dirk Engelmann & Martin Strobel, 2010. "Inequality Aversion and Reciprocity in Moonlighting Games," Games, MDPI, vol. 1(4), pages 1-19, October.
    • Handle: RePEc:gam:jgames:v:1:y:2010:i:4:p:459-477:d:9946
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    References listed on IDEAS

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    3. Barber IV, Benjamin S. & English, William, 2019. "The origin of wealth matters: Equity norms trump equality norms in the ultimatum game with earned endowments," Journal of Economic Behavior & Organization, Elsevier, vol. 158(C), pages 33-43.
    4. Nathan W. Chan & Leonard Wolk, 2023. "Reciprocity with stochastic loss," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 9(1), pages 51-65, June.

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