Equity Concerns are Narrowly Framed

103 Pages Posted: 17 Jul 2019

See all articles by Christine Exley

Christine Exley

Harvard Business School

Judd B. Kessler

University of Pennsylvania - Business & Public Policy Department

Date Written: June 19, 2019

Abstract

We show that individuals narrowly bracket their equity concerns. Across six experiments including 2,360 subjects, individuals equalize components of payoffs rather than overall payoffs. When earnings are comprised of “small tokens" worth 1 cent and “large tokens" worth 2 cents, subjects frequently equalize the distribution of small (or large) tokens rather than equalizing total earnings. When payoffs are comprised of time and money, subjects similarly equalize the distribution of time (or money) rather than total payoffs. In addition, subjects are more likely to equalize time than money. These findings can help explain a variety of behavioral phenomena including the structure of social insurance programs, patterns of public good provision, and why transactions that turn money into time are often deemed repugnant.

Suggested Citation

Exley, Christine and Kessler, Judd B., Equity Concerns are Narrowly Framed (June 19, 2019). Harvard Business School Research Paper Series No. 18-040, July 2019, Available at SSRN: https://ssrn.com/abstract=3420954 or http://dx.doi.org/10.2139/ssrn.3420954

Christine Exley (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Judd B. Kessler

University of Pennsylvania - Business & Public Policy Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6372
United States

HOME PAGE: http://https://bepp.wharton.upenn.edu/profile/1671/

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