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We expand upon the previous models of inequity aversion of Fehr and Schmidt [1], and Frohlich et al. [2], which assume that dictators get disutility if the final allocation of surplus deviates from the equal split (egalitarian principle) or from the subjects' production (libertarian principle)....
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subjects are exposed to random shocks. We find that aggregate behavior is ex-post and ex-ante inequality averse, but also that … the other. The first presentation draws attention to inequality in payoffs, the second to collective risk. We find that … conclude that ex-post inequality aversion is the primary concern in the evaluation of social lotteries while collective risk is …
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