Dorothea K. Herreiner

Inequality aversion and efficiency with ordinal and cardinal social preferences--An experimental study

In this paper, we report on a series of free-form bargaining experiments in which two players have to distribute four indivisible goods among themselves. In one treatment, players are informed about the monetary payoffs associated with each bundle of goods; in a second treatment only the ordinal ranking of the bundles is given. We find that in both cases, inequality aversion plays a prominent role. In the ordinal treatment, individuals apparently use the ranks in the respective preference orderings over bundles of goods as a substitute for the unknown monetary value. Allocations that distribute the value (money or ranks, respectively) most equally serve as natural reference points for the bargaining processes. Frequently, such equal split allocations are chosen by our subjects even though they are Pareto dominated. Whether a Pareto optimal allocation is chosen or not depends on whether or not it is a Pareto improvement relative to the equal split reference allocation. We find less Pareto-damaging behavior due to inequality aversion in the ordinal than in the cardinal treatment.

Fictitious play in coordination games

Abstract. We study the Fictitious Play process with bounded and unbounded recall in pure coordination games for which failing to coordinate yields a payoff of zero for both players. It is shown that every Fictitious Play player with bounded recall may fail to coordinate against his own type. On the other hand, players with unbounded recall are shown to coordinate (almost surely) against their own type as well as against players with bounded recall. In particular, this implies that a FP players realized average utility is (almost surely) at least as large as his minmax payoff in 2×2 coordination games.

Distributing Indivisible Goods Fairly: Evidence from a Questionnaire Study

Abstract We report the results of a questionnaire study on the fair distribution of indivisible goods. We collected data from three different subject pools, first- and second- year students majoring in economics, law students, and advanced economics students with some background knowledge of fairness theories. The purpose of this study is to assess the empirical relevance of various fairness criteria such as inequality aversion, the utilitarian principle of maximizing the sum of individual payoffs, the Rawlsian “maximin” principle of maximizing the payoff of the worst-off individual, and the criterion of envy-freeness (in the sense of Foley 1967).