Fairness Preferences Research Articles

Considering Decoy Effect and Fairness Preference: An Incentive Mechanism for Crowdsensing

Crowdsensing is a system which collects sensing data through recruiting a large number of participants to perform the sensing tasks. It consists of two parts: 1) the platform side and 2) the user side. The incentive mechanism is necessary to recruit a sufficient number of participants for the utility of the platform, and to guarantee the utility of the participants for the users. Current mechanisms for crowdsensing are based on traditional economics with two basic hypotheses. The first is that the preference of people is constant, which implies that their preference for an item does not change under different circumstances; the second is that the utility of people is equal to the payment they obtain. However, decoy effect from behavioral economics shows that people’s preferences change as the alternative set changes. And resulting from fairness preference theory, people’s utility depends not only on the actual income they receive but also on the fairness of the income of all people. Thus, current incentive mechanisms will lead to users’ wrong selection making. To solve these problems, we design the framework for publishing tasks based on decoy effect (FPDE) mechanism on the platform side. And we design the payoff allocation based on fairness preference (PAFP) mechanism for the user side. We compare our mechanisms with a new and advanced mechanism called incentive mechanism for crowdsensing-centric (IMCC) model. The simulations show that FPDE can increase the utility of the platform by approximately 20.8%, and the utility of the users will increases by 14.8% under PAFP.

Preferences for fairness over losses

Economic decision making often involves determining how to share losses, or liabilities. While preferences for fairness over positive outcomes, i.e., gains, have been extensively studied, preferences for fairness over negative outcomes, i.e., losses, are largely unknown. Preferences for fairness over losses may differ from those over gains, given loss aversion and disutility from imposing losses on others (e.g., the do-no-harm principle). In two incentivized dictator game experiments, we examine altruism in two different frames – a loss condition and a gain condition. Study 1 shows that Dictators are more generous when splitting losses compared to gains. Study 2 shows that Dictator generosity in the loss condition substantially decreases when subjects are reminded of the payoff distribution resulting from their decisions. Our results support the idea that preferences for fairness over losses may differ from those over gains, underscoring the importance of studying preferences for fairness over losses and their determinants.

Social motives in bilateral bargaining games: How power changes perceptions of fairness

Power, a fundamental characteristic of social interactions, characterizes one's ability to influence others. Fairness, inherently a type of social preference, impacts distributive decision-making. How does power shape the perceptions of fairness in economic interactions? While previous research finds that power holders tend to take more, it remains unclear whether they are driven by selfish motives to exploit weaker counterparts or act upon the belief that powerful individuals deserve more. With an innovative modified ultimatum game, we analytically and experimentally study how power interplays with fairness consideration to affect bilateral bargaining. We concentrate on behaviors by the responders, to elicit their fairness preferences in response to shifts in power. We find strong evidence that changes in power can modify what is perceived as a fair division in the modified ultimatum game, and thus influence the distributive behaviors and outcomes. However, such an effect only arises when there is common knowledge about the power distribution between the two parties prior to their decision-making. In addition, we find that, while feedback on past decisions and outcomes can help players fine-tune their choices to avoid money left on the table in bargaining, learning from experience is not required for power to take effect.

Ownership dynamics within founder teams: The role of external financing

Abstract Research SummaryThis paper examines how founders within start‐up teams dynamically readjust their relative ownership stakes. It leverages a unique dataset from British Columbia, Canada, which contains detailed information on founder ownership over time. Two trade‐offs between efficiency and fairness are identified, one at the time of founding, the other as the venture develops. Teams with a preference for fairness at the start, as revealed by an equal division of the founder shares, also exhibit a dynamic preference for fairness, as witnessed by their reluctance to change the ownership structure over time. Relative founder stakes are more likely to change when a company raises investments. Larger rounds and lower valuations are associated with bigger changes in relative founder stakes. Managerial SummarySplitting the equity stakes among founders involves a delicate trade‐off between efficiency and fairness. This trade‐off is made when founders determine their initial division of equity, and also as the venture develops. We find that teams with a preference for fairness, as revealed by an equal split of their original founder equity, are also unlikely to change their relative stakes over time. We also find that changes in the division of founder ownership often coincide with external financing rounds, suggesting that renegotiations within teams are more easily settled in the presence of outside investors. Overall, the evidence suggests that although notions of fairness inhibit changes to the relative founder equity stakes, the stakes are not set in stone, and financing rounds provide opportunities for recalibration.

Intention-based fairness preferences in multi-partner project teams

We propose a stylized model of cooperative effort expenditure in multi-agent teams which is driven by intention-based preferences for fairness. Differing from preferences about material payoffs, we consider agents with intention-based preferences for fairness who also care about the motivation that drives other agents’ actions. In the spirit of Rabin (1993), we define the agent's kindness to other agents in terms of how much more or less than other agents’ equitable payoff that agent believes she is giving to the other agent. In a series of propositions, we compare to each other two kinds of agents: “selfish” agents who are only motivated to maximize their material payoffs, and “unselfish” agents who are also motivated by considerations of intention-based fairness to their co-workers. Our analysis shows that the effect of intention-based fairness preferences on the agents’ cooperative effort expenditure depends critically on the effort cost of the agents and on major attributes of the project. Additionally, the intention-based fairness preference may change the way that the project attributes influence the agents’ cooperative effort choices. We conclude the paper by proposing recommendations for enhancing cooperation of the agents in project teams.

Fair ways to share benefits from community forests? How commodification is associated with reduced preference for equality and poverty alleviation

This research is concerned with the trend towards commodification of forestry, in the context of community forest governance for sustainable development in the tropics. In these contexts, commodification takes different forms, including sales of certified timbers and sales of carbon credits. In addition to the general aim to enhance income, these market-based forestry interventions typically aim to align with sustainable development agendas, including (a) safeguarding ecological integrity and (b) promoting poverty alleviation. Our concern here is that the process of forest commodification might lead to a shift in local norms of benefit-sharing, in ways that can hinder these key components of sustainable development goals. We report the results of a survey (N = 519) conducted across sites in Bolivia, China and Tanzania that shows that switching from non-monetary to monetary benefits is associated with changes in preferences for distributional fairness in ways that may be detrimental to the poor. In particular, we show that forest commodification is associated with a lower likelihood of selecting pro-poor or egalitarian approaches to benefit sharing and higher likelihood of selecting to distribute benefits in a way that rewards individual contributions or compensates losses.

Effective and necessary: Individual supplier behavior in revenue sharing and wholesale contracts

We consider under what conditions a revenue sharing contract is most effective at improving system efficiency relative to a simple wholesale price contract. We find that a complex coordinating contract is not always necessary because the wholesale price contract may perform sufficiently well; and coordinating contracts are not always effective if decision makers are strongly risk averse. Using a behavioral laboratory approach, we investigate how a supplier's risk aversion and fairness concerns influence how they set the pricing parameter(s) of a contract. We find that risk-neutral self-interested suppliers were able to improve the system and their own profits significantly under revenue sharing compared to wholesale pricing. However, individual behavioral factors of risk aversion or fairness preferences often made the more complicated revenue sharing contract either ineffective or unnecessary. Specifically, given a fairness-seeking supplier, the simple wholesale price contract is comparably efficient to the revenue sharing contract set by a risk-neutral supplier and we find the coordinating contract is unnecessary. Conversely, given a strongly risk-averse supplier with no concerns for fairness a revenue sharing contract is ineffective in overcoming double marginalization.

CONCESSION MODEL FOR FAIR DISTRIBUTION OF BENEFITS AND RISKS IN BUILD-OPERATE-TRANSFER ROAD PROJECTS

A fair distribution of benefits and risks is not only one of the key factors in deciding concession period but also an important prerequisite for good cooperation between the government and the private sector in a Build-Operate-Transfer (BOT) road project. Considering the psychological characteristic of decision makers’ fairness preference, this study innovatively introduces the inequity aversion theory into the concession model, which provides a novel perspective to investigate the distribution of benefits and risks. In the improved model, the decision makers’ investment utility involves their economic benefits as well as their disutility due to inequity. Furthermore, the equilibrium principle of benefits and risks in this model has changed to minimize the gap between the investment utility-risk ratios of the government and the private sector. Based on Monte Carlo simulation, this study verifies the application of the model to a BOT road project in China. The results show that the concession period with fairness preference can effectively narrow the gap between the investment utility-risk ratios of the government and the private sector, thus guaranteeing the fair distribution of benefits and risks in the BOT road project.

Prosociality and morality through the lens of personality psychology

Prosociality and morality are critical to the functioning and flourishing of society. There is, however, great variation in the degree to which individuals help or hinder one another, or adhere to ethical standards of “rightness.” One way to understand this variation is by drawing on theories and models within personality psychology, which may illuminate the basic individual characteristics that drive a wide range of other‐regarding tendencies. In this review, we provide a snapshot of three research strands addressing these themes. The first concerns how personality traits map onto prosocial preferences for fairness and cooperation, as studied using classic social decision‐making tasks called economic games. The second concerns the robust associations between personality traits and indicators of inter‐group prejudice (e.g., authoritarian ideology). The third concerns the emerging concept of moral exceptionality, and the personality traits that may characterise individuals at the forefront of moral progress. These examples demonstrate the core role that personality psychology is playing in the study of prosocial and moral behaviour, as well as the critical mass emerging in the Australian context around these themes.

Profit Distribution Model of Green Building Supply Chain with Fairness Preferences and Cap-and-Trade Policy

The green building is a sustainable form of construction. Carbon emissions are one of the important criteria for measuring the green building. The cap-and-trade policy is widely used by governments as an effective emission reduction policy. Green building supply chain companies need to decide how to distribute profit under the cap-and-trade policy. At the same time, supply chain members with fairness preferences have an impact on supply chain decisions. The paper formulates the profit distribution models under the cap-and-trade policy, which are the model without considering fairness preferences and the other model considering the subcontractor cares about fairness preferences. The paper drives the optimal proportion of the profit and the unit carbon emissions in the two models. The fairness preferences degree of the subcontractor is considered to analyse the effect of fairness preferences degree on the unit carbon emissions and the profit of the supply chain. Our study also shows that subcontractors’ fairness preferences will damage the profit of the general contractor and the supply chain. So, when the general contractor chooses the subcontractor, he should try to choose the subcontractor that does not pay too much attention to fairness.

Behavioral Contract Design Under Asymmetric Forecast Information

ABSTRACTWe investigate the capacity investment decision of a supplier who produces a critical component for a buyer. An incentive conflict is present, because the buyer possesses private forecast information about end customer demand. We use laboratory experiments to test the performance of nonlinear capacity reservation contracts offered by the supplier. We show that both bounded rationality and fairness preferences consistently lead to buyer contract choices that harm supplier performance and overall supply chain performance. We therefore examine several capacity reservation contracts that take into account the buyer's inability to maximize utility (bounded rationality) and/or the buyer's motives (inequity aversion). We find that considering these behavioral aspects in contract design enhances supply chain performance.

A Simple Experimental Test of the Coase Conjecture: Fairness in Dynamic Bargaining

We conduct a novel experimental test of the Coase conjecture using subjects' private information about preferences for fairness. In an infinite horizon bargaining game, a proposer proposes a division of chips, until a responder accepts. Given private information about fairness preferences and patient players, the Coase conjecture predicts almost immediate agreement on equal payoffs. We test this for two different chip-to-money exchange rates, and compare outcomes to ultimatum games. Behavior closely matches theory. In particular, when chips are worth more to proposers than responders, initial offers, minimum acceptable offers, responder payoffs and efficiency are significantly larger in the infinite horizon.

Optimal Decision of Different Fair Reference Points in Supply Chain under “Farmer-Supermarket Direct-Purchase” Mode

In a two-echelon “Farmer-Supermarket Direct-Purchase” supply chain composed of a supermarket and a farmer, the dominant supermarket used the Nash equilibrium solution and the Shapley value as the fair reference points. By constructing the Stackelberg game model, this paper analyzed the influence of supermarket’s fairness preference on the operation of supply chains and made a sensitivity analysis. The research indicates that supermarket’s fairness preference decreases order prices and the effort level of farmer increases the utility of the supermarket but reduces the income of the farmer. No matter whether the Nash equilibrium solution or the Shapley value is used as the fair reference point of the supermarket, the supply chain cannot be achieved coordination. However, the supply chain can be improved with the Shapley value as the fair reference point. Thus, the farmer, the supermarket and the supply chain tend to use Shapley value as a fairness reference point for the supermarket.

Choice of Distribution Channels for Experience Products Using Virtual Reality

Research on product distribution channels has mainly focused on channel cost, risk aversion, consumer fairness preference, price decision, channel coordination, and channel selection while paying less attention to the product experience. Compared with offline channels, the online channel is at a disadvantage with regards to the product experience. For experience products, consumers cannot accurately access the value of the products through online channels because of its virtuality. In contrast, offline channels can attract more consumers with real product experience. However, the application of virtual reality technology has become increasingly more extensive in recent years. Virtual reality technology enhances the interaction level between online consumers and experience products, and it can help consumers assess product value more accurately, which has a greater impact on consumers’ purchase decisions. Manufacturers can make full use of virtual reality technology to expand online sales. To maximize the manufacturers’ revenue, this paper uses consumer utility theory and game theory to design four experience products’ distribution channel models and analyzes the relationship between the manufacturers’ revenue in different distribution channel models and virtual reality technology. The results show when the interaction level of virtual reality technology is low, manufacturers tend to choose a dual distribution channel, but when the interaction level of virtual reality technology is high, a single online distribution channel is the best choice for manufacturers.

Equity Concerns are Narrowly Framed

Distributional decisions regularly involve multiple payoff components. In a series of experiments involving over 3,300 subjects and 81,000 decisions, we find that—even when payoff components can be easily aggregated—many subjects exhibit narrow equity concerns, applying fairness preferences to a single component of payoffs. This behavior leads to preference reversals; subjects make different choices depending on which payoff component is used to denominate their decision. In our simplest setting, in which the two payoff components are small and large tokens, displaying narrow equity concerns is 63%–83% as prevalent as achieving equity in total payoffs and just as prevalent as applying the well-documented norm of a 50/50-split. Subjects also exhibit narrowly equity concerns over payoffs of time and money.

Service Mechanism and Pricing Based on Fairness Preference of Customers in Queuing System

AbstractService providers often adopt the mechanism of customer classification due to the heterogeneity of customer waiting cost. However, the classification service may cause unfairness feeling of regular customers, then affect the revenue and social welfare. This paper provides the first exact analysis about the situation that service providers offer two classes of non-preemptive priority service when customer fairness perception is explicitly modeled. We model customer fairness perception as a negative utility on regular customers that’s proportional to the waiting time difference between the two queues. By analyzing a stylized M/M/1 queue in monopoly service system, we can derive important results some of which reaffirm existed research results. First, from the perspective of revenue maximization, service providers should also adopt the mechanism of customer classification and set up the two kinds of customers where they can see each other. Next, considering customer utility maximization, service providers should cancel the mechanism of customer classification, and keep one queue (regular customers) only. Then, from the perspective of social welfare maximization, service providers should also adopt the mechanism of customer classification but set up the two kinds of customers where they cannot feel each other. Finally, this paper concludes the optimal pricing based on customer classification in the above three different perspectives. This research shows important reference value and practical significance for service providers who adopt the mechanism of classification service.

Exaggerated envy and guilt measured by economic games in Japanese women with anorexia nervosa

BackgroundAnorexia nervosa (AN) patients are assumed to express high levels of guilt and envy. Ultimatum game (UG) is a standard behavioral task that focuses on interpersonal behavior when splitting a sum of money between two players. UG studies consistently demonstrate that people tend to decrease their inequity in outcomes, one explanation being that economically irrational decision-making may partly arise from the emotions guilt and envy. We assumed that AN patients would perform excessively fair in UG, reflecting high guilt and envy.MethodsWe utilized UG to investigate the characteristics of guilt and envy among 24 Japanese AN patients and 22 age-matched healthy controls (HC). The relation between the outcome of UG and decision strategy confirmed by post-experimental questionnaires was analyzed.ResultsAs proposer, AN offered a larger amount to the responder compared with HC (p = 0.002) while, on the other hand, as responder, AN demanded much higher allocation to accept the offer compared with HC (p = 0.026). Regarding the strategy as responder, AN put more emphasis on fairness and less emphasis on monetary reward compared with HC (p = 0.046, p = 0.042, respectively).ConclusionsThe results indicate that Japanese AN patients demonstrate strong preference for fairness, with high guilt and high envy. High sensitivity to guilt and envy of AN patients can affect not only their own behavior concerning eating attitude and body shape, but also decision-making in interpersonal situations. Behavioral experimental settings among social situations will enable us to evaluate and help actual decision-making in the real life of patients.

Decisions of Green Supply Chain under Fairness Concerns and Different Power Structures

This article constructs a two-stage dynamic game model for green manufacturers, retailers, and consumers to address the issue that fairness preference in manufacturing can impact supply chain decision-making. This is done by discussing decision-making under the three power structures of green-manufacturer-dominated, retailer-dominated, and the Nash-equilibrium, and compares the balanced decision under the three power structures. The results show that in the manufacturer-dominated and Nash equilibrium games, product greenness, retailer profits, manufacturer profits, total supply chain profits, and a manufacturer's utility all decrease as the fairness preference increases, whereas the retail price and wholesale price are just the opposite of each other. In the retailer-dominated game, the retail price, product greenness, and total supply chain profits are not impacted by the fairness preference. The wholesale price, manufacturer's profits, and manufacturer's utility increases as the fairness preference increases, whereas the retailer profits decrease.

Anthropomorphization of artificial agents leads to fair and strategic, but not altruistic behavior

• Anthropomorphization of opponents was positively correlated with more preference for fairness and more strategic behavior in the ultimatum game. • Physical appearance showed no relation with preference for fairness and strategic behavior. • To improve human-robot interaction, studies should focus more on the determinants of anthropomorphism than on robot appearance. With robots playing an increasing role in our daily lives, our emotional responses to them have become an active subject of study. The process of anthropomorphization, ascribing human affordances to non-human objects, is thought to play a large role in human-robot interaction. However, earlier studies have relied largely on experimenter’s manipulation of anthropomorphism, and the use of virtual robots. The aim of this study was to investigate peopleâs fairness preference and strategic and altruistic behavior toward different opponents (a human, a semi-humanoid and a spider-like robot, and a laptop) in two economic games. Anthropomorphization questionnaires and mood measures were also administered. Our findings suggest that fairness preference and strategic behavior are not predicted by the opponent’s physical appearance, but instead predicted by individual differences in the tendency to anthropomorphize others. Altruistic behavior, on the other hand, is affected by the opponent’s physical appearance.

Fairness preference based decision-making model for concession period in PPP projects

<p style='text-indent:20px;'>Both government and private sector have the characteristic of fairness preference when deciding a suitable concession period for infrastructure projects. The appropriate concession period is helpful to construct the Public-Private-Partnership (PPP) project, to alleviate government's financial burden, and to boast the economic growth. Therefore, this paper aims to develop a decision-making model of concession period with fairness preference based on the two sides' equitable utilities. To better describe decision makers' fair psychology, the Nash bargaining game solution was adopted as a fair reference point. The results show that the concession period with fairness preference will become longer than that without fairness preference. Furthermore, the longer the concession period is, the better construction quality of the infrastructure project (highway) is. So, decision makers with fairness preference tend to make good decisions. In conclusion, the developed decision-making model renders useful references for both government and private sector in negotiating the concession period for infrastructure projects.