Lars-Olof Johansson Department of Psychology 2008-06-01 Third-party fairness Lars-Olof Johansson &...

Lars-Olof JohanssonDepartment of Psychology2008-06-01

Third-party fairness

Lars-Olof Johansson & Henrik Svedsäter Göteborgs Universitet, Sweden, 2009



Dm

A B

Fairness between me and two others

Egocentric fairness “inequality aversion”:advantageous / disadvantageous positions (Fehr & Schmidt, 1999)



Dm

Student 1

Fairness between two others

Student 2


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)


Methods

We induce conflicts between self-interest and fairness

Decision makers pay real money to ensure fairness

Factorial designs

Preference ratings


Between-group designs

Pre-determined group

Coin-flip group

Forced choice group


Advantageous position Alt. A Alt. B

You get 50 90

Student 1 gets 50 40


Choice examples

Experiment 1 (one group, in classrooms)


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


Experiment 2


Coin-flip group


Advantageous Alt. A Alt. B

You get 50 100



Disadvantageous Alt. A Alt. B

You get 50 100



Experiment 2 (two groups)

Pre-determined (by us) group


Alt. A Alt. B1 Alt. B2

You get 50 150 150

Student 1 gets 50 75 25


Experiment 2

Coin-flip group


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



Percent of equal-split choices

0%

20%

40%

60%

80%

0 20 40


Rel

ativ

e fr

eque

ncy

Pre-determined group Coin-flip group

Results


You get

Share x

Share y

Alternative A Alternative B

Experiment 3

Preference rating


Experiment 3


Coin-flip group



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


Experiment 4 (3 groups)


Coin-flip group

Forced choice group


Alt. A Alt. B1 Alt. B2

You get 50 150 150



Experiment 4

Forced choice group



0

1

2

3

4

Low High


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)


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


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!


Reference

Johansson, L.-O. & Svedsäter, H. (in press). Piece of cake? Allocating rewards when fairness is costly. Organizational Behaviour and Human Decision Processes.


Thank you!


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


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.


Proposed new model

kjkji

ijjii

ijijiii

xxn

xxn

xxn

xxU

1

1

0,max1

1

0,max1

1)(


Advantageous Alt. A Alt. B

You get 50 100



Disadvantageous Alt. A Alt. B

You get 50 100



Experiment 2 (two groups individually)


Lars-Olof Johansson Department of Psychology 2008-06-01 Third-party fairness Lars-Olof Johansson &...

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