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An experimental comparison of the fairness models by Bolton and Ockenfels and by Fehr and Schmidt

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  • Engelmann, Dirk
  • Strobel, Martin

Abstract

In this note we present an experiment to compare the two competing fairness theories by Bolton / Ockenfels and Fehr / Schmidt. For most experiments that these theories have previously been applied to, they make similar predictions so that it is difficult to compare their predictive accuracy. We designed a very simple experiment that induces opposing predictions made by both theories. We find that if the maximization of total payoff is in line with the decision predicted by Fehr and Schmidt, almost all subjects decide accordingly, whereas if it is in line with the prediction by Bolton and Ockenfels, decisions are dispersed.

Suggested Citation

  • Engelmann, Dirk & Strobel, Martin, 2000. "An experimental comparison of the fairness models by Bolton and Ockenfels and by Fehr and Schmidt," SFB 373 Discussion Papers 2000,28, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    • Handle: RePEc:zbw:sfb373:200028
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    References listed on IDEAS

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    1. 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.
    2. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    3. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
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    1. Gary Bolton & Axel Ockenfels, 2005. "A stress test of fairness measures in models of social utility," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 25(4), pages 957-982, June.
    2. Attila Gulyás, 2010. "- Friends?... Fair enough," Proceedings of FIKUSZ '10, in: László Áron Kóczy (ed.),Proceedings of FIKUSZ 2010, pages 72-92, Óbuda University, Keleti Faculty of Business and Management.
    3. Clark, Andrew E. & D'Ambrosio, Conchita, 2014. "Attitudes to Income Inequality: Experimental and Survey Evidence," IZA Discussion Papers 8136, Institute of Labor Economics (IZA).
    4. Ke-Young Chu, 2004. "Group-Oriented Values, Rules and Cooperation," WIDER Working Paper Series RP2004-66, World Institute for Development Economic Research (UNU-WIDER).
    5. David Masclet, 2002. "Peer Pressure in Work Teams : The effects of Inequity Aversion," Post-Print halshs-00178476, HAL.
    6. Paul Koster, 2023. "Urban income inequality and social welfare," Tinbergen Institute Discussion Papers 23-009/VIII, Tinbergen Institute.
    7. Guth, Werner & Kliemt, Hartmut & Ockenfels, Axel, 2003. "Fairness versus efficiency: An experimental study of (mutual) gift giving," Journal of Economic Behavior & Organization, Elsevier, vol. 50(4), pages 465-475, April.

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