Medium of Exchange Matters: What's Fair for Goods is Unfair for Money
Sanford E. Devoe
University of Toronto - Joseph L. Rotman School of Management
Sheena S. Iyengar
Columbia Business School - Management Division
Psychological Science, Vol. 21, No. 2, pp. 159-162, 2010
Organized groups face a fundamental problem of how to distribute resources fairly. We found people view it as less fair to distribute resources equally when the allocated resource invokes the market by being a medium of exchange than when the allocated resource is a good that holds value in use. These differences in fairness can be attributed to being a medium of exchange, and not to other essential properties of money (i.e., being a unit of account or a store of value). These findings suggest that egalitarian outcomes have a greater likelihood of being accepted as fair when the resources being distributed take the form of in-kind goods rather than of cash transfers.
Number of Pages in PDF File: 5Accepted Paper Series
Date posted: October 31, 2011
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