- Inequity aversion revisted
- Number of pages
- Amsterdam: Universiteit van Amsterdam
- CREED Working Papers
- Document type
- Working paper
- Faculty of Economics and Business (FEB)
- Amsterdam School of Economics Research Institute (ASE-RI)
We provide the first systematic study of the robustness of parameter estimates for the Fehr-Schmidt (1999) model of inequity aversion with respect to (i) the occurrence of efficiency concerns; (ii) the scale of payoffs; and (iii) the game used (i.e., cross-game consistency). Moreover, we provide evidence of a bias in the estimates that occurs if one does not correct for strategic considerations and reciprocity. Our results show that the model is remarkably robust, but that previous estimates (especially of the disutility of disadvantageous inequity aversion) may overestimate the importance of inequity aversion plays.
- October 4, 2012
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