Beyond Egocentric Judgments of Fairness: Advantageous, Disadvantageous, and Third-Party Inequality Aversion

Abstract

Recent models of economic fairness assume that at least some people are motivated to reduce economic differences between themselves and other individuals. In addition to this motive, this paper investigates whether people care also about differences between third parties. An experiment is conducted where individuals make tradeoffs between (i) own payoff and differences in payoffs versus two other subjects, and (ii) own payoff and differences in payoffs between these two subjects. The results indicate that both these types of inequalities have an adverse impact on participants' choices, suggesting that a concern for fairness extends beyond egocentric comparisons of economic distributions.