Game analysis of incremental income allocation in the marketization of rural collectively-owned commercial construction land under fairness preference

Abstract

This study explains how fairness preferences affect the allocation of income based on the practices of rural collectively-owned commercial construction land (RCOCCL) entering the market in contemporary China. The theoretical model for RCOCCL's market income allocation is extended based on Fehr and Schmidt (1999), and a fairness preference model is developed for analysis. The study makes the following conclusions. First, the stakeholders are bounded rational people with fair preferences, making them eager to narrow the income gap between themselves and others. Second, the income to local governments should be increased. Third, the more willing farmers accept the allocation scheme, the higher the benefits. Overall, this study provides new perspectives on the fair allocation of income and references for subsequent research on rural land income allocation in other developing countries.