Services are often provided by groups. The question of remuneration arises both at the group level and for each individual group member. We examine the question of how relative pay should be designed within the group if all group members are to regard the payment scheme as fair. We use a...

Services are often provided by groups. The question of remuneration arises both at the group level and for each individual group member. We examine the question of how relative pay should be designed within the group if all group members are to regard the payment scheme as fair. We use a...

In this paper, we extend the Fehr and Schmidt model of inequality aversion to a situation where the players differ with respect to their benefits and costs from contributions to a non-linear public good. A necessary condition for contributing to the public good is that the players’ benefit...

We present a simple two-steps procedure for a within-subject test of the inequity aversion model of Fehr and Schmidt (1999). In the first step, subjects played modified ultimatum and dictator games and were classified according to their preferences. In the second step, subjects with specific...

This paper demonstrates that cooperation in international environmental negotiations can be explained by preferences for equity. Within a N-country prisoner's dilemma in which agents can either cooperate or defect, in addition to the standard non-cooperative equilibrium, cooperation of a large...

Theories of fairness preferences have gained remarkable attention throughout much of recent economic literature. Formal models have been proposed which are able to explain behaviour that is yet unexplained by the classical model of the strictly egocentric economic man ("homo oeconomicus"). These...