Inequality aversion and diminishing sensitivity
نویسندگان
چکیده
We define inequality aversion as a decision-maker disliking it when his opponents’ payoffs differ from his own, diminishing sensitivity as this effect increasing less-than-proportionately as the opponents’ payoffs move further from the decision-maker’s, and a preference for Robin Hood redistributions as a preference for taking money from a high-payoff opponent and giving it to a low-payoff opponent. Existing models of inequality averse preferences are unable to accommodate all three properties. The three are not inherently inconsistent, though, and we construct a new model which exhibits all three properties. 2006 Elsevier B.V. All rights reserved. JEL classification: C72; D81 PsycINFO classification: 3040
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