DP2984 On the Nature of Fair Behaviour

Author(s): Armin Falk, Ernst Fehr, Urs Fischbacher
Publication Date: September 2001
Keyword(s): fairness, intentions, models of fairness
JEL(s): C78, D63
Programme Areas: Industrial Organization
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=2984

This Paper shows that identical offers in an ultimatum game generate systematically different rejection rates depending on the other offers that are available to the proposer. This result casts doubt on the consequentialist practice in economics of defining the utility of an action solely in terms of the consequences of the action irrespective of the set of alternatives. It means, in particular, that negatively reciprocal behaviour cannot be fully captured by equity models that are exclusively based on preferences over the distribution of material pay-offs. Models that take into account players’ fairness intentions and distributional preferences are consistent with our data while models that focus exclusively on intentions or on the distribution of material pay-offs are not.