Distributive and Reciprocal Fairness: What Can We Learn from Heterogeneous Social Preferences?

Abstract

This study evaluates people’s concerns for distributive fairness (equality of outcomes and payoffs to those worse-off) and reciprocal fairness (receiving what one is due based on one’s past actions) utilizing dictator, ultimatum, and trust games. In the dictator games we classify individuals’ preferences as self-interested, inequity averse, efficiency maximizing, or compassionate social surplus maximizing. We find that the different utility functions of the social preference types guide participants’ behavior in the ultimatum and trust games. The self-interested and efficiency maximizers make the lowest offers in the ultimatum game, are least likely to reject a low offer in the ultimatum game, and send back the least amount in the trust game. Consistent with the goal of maximizing the sum of payoffs however, efficiency maximizers and compassionate social surplus maximizers make the highest offers in the trust game, and in attempts to ensure equal outcomes, inequity averters make low offers. Because those classified as self-interested or efficiency maximizing do not exhibit concern for pure distributive fairness, we can identify choices, in particular positive offers in the ultimatum games and positive amounts sent back in the trust games, as motivated only by concerns for reciprocal fairness. Furthermore, we find strong evidence supporting concern for reciprocal fairness in the trust games where the modal response of second movers in all preference groups is to equalize payments across participants.