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Title: The Role of Equality and Efficiency in Social Preferences

Author(s): Ernst Fehr, Michael Naef and Klaus M. Schmidt

Publication Date: November 2005

Keyword(s): inequity aversion, preferences for efficiency and social preferences

Programme Area(s): Industrial Organization

Abstract: Engelmann and Strobel (AER 2004) question the relevance of inequity aversion in simple dictator game experiments claiming that a combination of a preference for efficiency and a Rawlsian motive for helping the least well-off is more important than inequity aversion. We show that these results are partly based on a strong subject pool effect. The participants of the E&S experiments were undergraduate students of economics and business administration who self-selected into their field of study (economics) and learned in the first semester that efficiency is desirable. We show that for non-economists the preference for efficiency is much less pronounced. We also find a non-negligible gender effect indicating that women are more egalitarian than men. However, perhaps surprisingly, the dominance of equality over efficiency is unrelated to political attitudes.

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Bibliographic Reference

Fehr, E, Naef, M and Schmidt, K. 2005. 'The Role of Equality and Efficiency in Social Preferences'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=5368