When Equality Trumps Reciprocity: Evidence from a Laboratory Experiment

Journal of Economic Psychology 31 (3): 456-470, 2010

36 Pages Posted: 8 May 2008 Last revised: 26 Jul 2012

See all articles by Erte Xiao

Erte Xiao

Monash University

Cristina Bicchieri

University of Pennsylvania

Date Written: May 1, 2008

Abstract

Inequity aversion and reciprocity have been identified as two primary motivations underlying human decision making. However, because income and wealth inequality exist to some degree in all societies, these two key motivations can point to different decisions. In particular, when a beneficiary is less wealthy than a benefactor, a reciprocal action can lead to greater inequality. In this paper we report data from a trust game variant where trustees' responses to kind intentions generate inequality in favor of investors. In relation to a standard trust game treatment where trustees' responses reduce inequality, the proportion of non-reciprocal decisions is twice as large when reciprocity promotes inequality. Moreover, we find investors expect that this will be the case. Overall, although both motives clearly play a role, more of our data can be explained by inequality aversion than by reciprocity. Our results call attention to the potential importance of inequality in principal-agent relationships, and have important implications for designing policies aimed at promoting cooperation.

Keywords: inequality aversion, reciprocity, trust game, experimental economics

JEL Classification: C91, C72, D63

Suggested Citation

Xiao, Erte and Bicchieri, Cristina, When Equality Trumps Reciprocity: Evidence from a Laboratory Experiment (May 1, 2008). Journal of Economic Psychology 31 (3): 456-470, 2010, Available at SSRN: https://ssrn.com/abstract=1129550 or http://dx.doi.org/10.2139/ssrn.1129550

Erte Xiao (Contact Author)

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Cristina Bicchieri

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States
215-898-5820 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
55
Abstract Views
806
rank
409,103
PlumX Metrics