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Fairness Preferences and Default Effects

Author

Listed:
  • Valasek, Justin

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Vorjohann, Pauline

    (University of Exeter Business School)

  • Wang, Weijia

    (Dept. of Economics, Norwegian School of Economics and Business Administration)

Abstract

An influential subset of the literature on distributional preferences studies how preferences condition on characteristics such as workers' relative productivity. In this study we establish that there are default effects when such conditional fairness preferences are measured using the "inequality acceptance" method. Depending on the default, implemented inequality decreases by over 65% and cross-country differences are not observed. To organize the data, we develop a simple framework in which agents form a reference point based on a combination of the distribution suggested by their fairness ideal and the default. We use this framework to illustrate that choice data from different defaults is needed to separately identify the fairness ideal and effect of the default, and discuss best practices for measuring fairness preferences.

Suggested Citation

  • Valasek, Justin & Vorjohann, Pauline & Wang, Weijia, 2024. "Fairness Preferences and Default Effects," Discussion Paper Series in Economics 9/2024, Norwegian School of Economics, Department of Economics.
    • Handle: RePEc:hhs:nhheco:2024_009
    as

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    File URL: https://openaccess.nhh.no/nhh-xmlui/handle/11250/3132474
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    References listed on IDEAS

    as
    1. Ingvild Almås & Alexander W. Cappelen & Bertil Tungodden, 2020. "Cutthroat Capitalism versus Cuddly Socialism: Are Americans More Meritocratic and Efficiency-Seeking than Scandinavians?," Journal of Political Economy, University of Chicago Press, vol. 128(5), pages 1753-1788.
    2. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    inequality; fairness; inequality acceptance; default effects; experiment;
    All these keywords.

    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
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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