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Lars-Olof JohanssonDepartment of Psychology2008-06-01
Third-party fairness
Lars-Olof Johansson & Henrik Svedsäter Göteborgs Universitet, Sweden, 2009
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Dm
A B
Fairness between me and two others
Egocentric fairness “inequality aversion”:advantageous / disadvantageous positions (Fehr & Schmidt, 1999)
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Dm
Student 1
Fairness between two others
Student 2
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Aims of four experiments
To test fairness between others in both advantageous and disadvantageous positions, extending Fehr and Schmidt (1999)
To test the stability of fairness
To test whether fairness depends on how much room is given for motivated reasoning (Kunda, 1990)
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Methods
We induce conflicts between self-interest and fairness
Decision makers pay real money to ensure fairness
Factorial designs
Preference ratings
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Between-group designs
Pre-determined group
Coin-flip group
Forced choice group
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Advantageous position Alt. A Alt. B
You get 50 90
Student 1 gets 50 40
Student 2 gets 50 20
Choice examples
Experiment 1 (one group, in classrooms)
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Results Experiment 1 (n = 52)
Percent of equal-split choices related to advantageous and third-party difference
0%
20%
40%
60%
80%
100%
0 20 40Third-party difference
Rel
ativ
e fr
eque
ncy
Low advantageous difference
High advantageous difference
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Experiment 2
Pre-determined group
Coin-flip group
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Advantageous Alt. A Alt. B
You get 50 100
Student 1 gets 50 75
Student 2 gets 50 25
Disadvantageous Alt. A Alt. B
You get 50 100
Student 1 gets 50 175
Student 2 gets 50 125
Experiment 2 (two groups)
Pre-determined (by us) group
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Alt. A Alt. B1 Alt. B2
You get 50 150 150
Student 1 gets 50 75 25
Student 2 gets 50 25 75
Experiment 2
Coin-flip group
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Experiment 2 (n = 74)
Percent of equal-split choices related to positon and third-party difference
0%
20%
40%
60%
80%
0 20 40
Third-party difference
Rel
ativ
e fr
eque
ncy
Disdvantageous position Advantageous position
Results
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Experiment 2 (n = 74)
Percent of equal-split choices
0%
20%
40%
60%
80%
0 20 40
Third-party difference
Rel
ativ
e fr
eque
ncy
Pre-determined group Coin-flip group
Results
Lars-Olof JohanssonDepartment of Psychology2008-06-01
You get
Share x
Share y
Alternative A Alternative B
Experiment 3
Preference rating
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Experiment 3
Pre-determined group
Coin-flip group
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Experiment 3 (n = 112)
Pre-determined
1
2
3
4
Advantageous Disadvantageous
Ego-centric position
Mea
n pr
efer
ence
Low third-party dif ference High third-party dif ference
Coin-flip
1
2
3
4
Advantageous Disadvantageous
Ego-centric positionM
ean
pref
eren
ce
Low third-party dif ference High third-party dif ference
Mean preference for fair alternatives
Results
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Experiment 4 (3 groups)
Pre-determined group
Coin-flip group
Forced choice group
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Alt. A Alt. B1 Alt. B2
You get 50 150 150
Student 1 gets 50 150 50
Student 2 gets 50 50 150
Experiment 4
Forced choice group
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Experiment 4 (n = 164)
0
1
2
3
4
Low High
Third-party difference
Mea
n pr
efer
ence
Coin-flip Pre-determined Forced choice
Results
Mean preference for fairness on a scale from 4 (fair) to -4 (greed)
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Conclusions
Egocentric inequality aversion (Fehr & Schmidt, 1999) is replicated
People are averse against third-party inequalities
Third-party fairness is sensitive to context
- Interactions between egocentric position and contextual factors
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Take home message!
People care for third-party fairness and are willing to pay for upholding it!
The influence of third-party fairness depends largely on the decision context!
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Reference
Johansson, L.-O. & Svedsäter, H. (in press). Piece of cake? Allocating rewards when fairness is costly. Organizational Behaviour and Human Decision Processes.
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Thank you!
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Dm
(50, 90)
Student 1 (50, 40)
Student 2 (50, 20)
Fairness between me and two others
Third. diff 0, 20 = 40-20
Adv. diff 0, 60 = (50+70)/2
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Fehr and Schmidt model
Set of n players indexed by ni ,....,1
let n ,....,1
)(1
)(1 ji
iij
iii nn
U
Where 0 ii and 1i
iThe first term , is the material payoff of decision maker i
The second term measures the utility loss from disadvantageous inequity
The third term measures the utility loss from advantageous inequity.
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Proposed new model
kjkji
ijjii
ijijiii
xxn
xxn
xxn
xxU
1
1
0,max1
1
0,max1
1)(
Lars-Olof JohanssonDepartment of Psychology2008-06-01
Advantageous Alt. A Alt. B
You get 50 100
Student 1 gets 50 75
Student 2 gets 50 25
Disadvantageous Alt. A Alt. B
You get 50 100
Student 1 gets 50 175
Student 2 gets 50 125
Experiment 2 (two groups individually)
Pre-determined group