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An Egalitarian Regime Breeds Generosity: The Effect of Endowment Allocation Procedures on Social Preferences

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  • Riyanto, Yohanes Eko
  • Zhang, Jianlin

Abstract

We experimentally investigate the effect of endowment allocation procedures on social preferences using a two-stage dictator game. In the first stage, participants who were randomly selected as allocators had to perform a task in order to earn money. Better performance on the task resulted in higher earnings. In our baseline meritocratic treatment, the allocators' initial endowment was set equal to their individual earnings. We compared this with an egalitarian treatment whereby the allocators' initial endowment was set equal to the average earnings of all allocators. Essentially, high performers were taxed and under performers were subsidized by the high performers. In the second stage, the allocators had to divide their endowment with the recipients. We show that the allocators were more generous in the egalitarian treatment than in the meritocratic treatment. Interestingly, being taxed did not reduce the high performers' generosity but being subsidized did significantly increase the under performers' generosity. Thus, being treated kindly induced the under performers to reciprocate forward to other people.

Suggested Citation

  • Riyanto, Yohanes Eko & Zhang, Jianlin, 2010. "An Egalitarian Regime Breeds Generosity: The Effect of Endowment Allocation Procedures on Social Preferences," MPRA Paper 21727, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:21727
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    References listed on IDEAS

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    1. Ernst Fehr & Klaus M. Schmidt, "undated". "Theories of Fairness and Reciprocity - Evidence and Economic Applications," IEW - Working Papers 075, Institute for Empirical Research in Economics - University of Zurich.
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    Cited by:

    1. Umer, Hamza & Kurosaki, Takashi & Iwasaki, Ichiro, 2022. "Unearned Endowment and Charity Recipient Lead to Higher Donations: A Meta-Analysis of the Dictator Game Lab Experiments," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 97(C).
    2. Leonardo Becchetti & Giacomo Degli Antoni & Stefania Ottone & Nazaria Solferino, 2011. "Spectators versus stakeholders with or without veil of ignorance: the difference it makes for justice and chosen distribution criteria," Econometica Working Papers wp31, Econometica.
    3. Roland Cheo, 2012. "Gamblers hate inequality: evidence from China," Applied Economics Letters, Taylor & Francis Journals, vol. 19(12), pages 1139-1142, August.

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    More about this item

    Keywords

    Other-regarding Behavior; Dictator Game; Endowment Allocation Procedures; Meritocratic; Egalitarian; Forward Reciprocity;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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