How institutions shape individual motives for efficiency and equity: Evidence from distribution experiments

Abstract

We investigate how institutions can shape differently the expression for efficiency and equity. We run four variants of the triple dictator game and the trust game in a within-subject design that enables to plot individual patterns. A veil of ignorance, a positional fee and information about others’ behaviors are successively introduced to the two standard games. Alongside those treatments, we also control for individual preferences towards risk and other regarding preferences. Results show that while individuals demonstrate consistency in their preferences, the prospect of transfers in the trust game and the veil of ignorance increases efficiency and equity. Second, the option to choose their position as investor at some cost attracts the less cooperative players: they pay to be investor and keep more for themselves. Third, subjects who modify their investment decision after learning the average investment in their group tend to move closer to the average.

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Replaces

Stefan Ambec, Alexis Garapin, Laurent Muller, and Bilel Rahali, “Trading off between equity and efficiency in dictator and trust games”, TSE Working Paper, n. 16-718, October 2016.

Reference

Stefan Ambec, Alexis Garapin, Laurent Muller, and Bilel Rahali, “How institutions shape individual motives for efficiency and equity: Evidence from distribution experiments”, Journal of Behavioral and Experimental Economics, vol. 81, August 2019, pp. 128–138.