How Exposure to Markets Can Favor Inequity-Averse Preferences

21 Pages Posted: 26 Mar 2008 Last revised: 8 Jun 2010

Robertas Zubrickas

University of Zurich - Department of Economics

Date Written: September 18, 2008

Abstract

This paper shows how non-individualistic preferences can be individual fitness maximizing in market-integrated societies. In the model, individuals share an endowment, which is used for consumption and/or purchase of goods on the external market. We show that inequity aversion about endowment distribution can be an optimal response to merchants' price discrimination. Then, assuming that increased consumption means increased individual fitness, we argue that evolutionary selection can favor inequity-averse preferences. We also argue that our model can explain an empirical finding of Henrich et al. (2004) about the positive effect of a society's exposure to markets on its members' sociality.

Keywords: Inequity aversion, endogenous preferences, preference evolution, market exposure, cross-societal differences

JEL Classification: A10, C73, D63

Suggested Citation

Zubrickas, Robertas, How Exposure to Markets Can Favor Inequity-Averse Preferences (September 18, 2008). Available at SSRN: https://ssrn.com/abstract=1112163 or http://dx.doi.org/10.2139/ssrn.1112163

Robertas Zubrickas (Contact Author)

University of Zurich - Department of Economics ( email )

Z├╝rich
Switzerland

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