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  4. September 2004
  5. Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments

Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments

  • Dirk Engelmann
  • Martin Strobel
American Economic Review
vol. 94, no. 4, September 2004
(pp. 857-869)
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Abstract

We present simple one-shot distribution experiments comparing the relative importance of efficiency concerns, maximin preferences, and inequality aversion, as well as the relative performance of the fairness theories by Gary E Bolton and Axel Ockenfels and by Ernst Fehr and Klaus M. Schmidt. While the Fehr-Schmidt theory performs better in a direct comparison, this appears to be due to being in line with maximin preferences. More importantly, we find that a combination of efficiency concerns, maximin preferences, and selfishness can rationalize most of the data while the Bolton-Ockenfels and Fehr-Schmidt theories are unable to explain important patterns.

Citation

Engelmann, Dirk, and Martin Strobel. 2004. "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments." American Economic Review, 94 (4): 857-869. DOI: 10.1257/0002828042002741

Additional Materials

JEL Classification

  • D12 Consumer Economics: Empirical Analysis
  • D63 Equity, Justice, Inequality, and Other Normative Criteria and Measurement