|M.Sc Student||Gilly Koritzky|
|Subject||Inequity Aversion: A Social Utility or a Reasonable|
|Department||Department of Industrial Engineering and Management||Supervisor||Full Professor Erev Ido|
|Full Thesis text|
The current investigation focuses on inequity aversion - the tendency to prefer equity over helping another research participant by maximizing his or her payoff. The common models used in explaining this phenomenon assume that subjective utility decreases with inequity (see Fehr and Schmidt, 1999; Bolton and Ockenfels, 2000). It appears that although these models demonstrate high predictive power in many settings, inequity aversion is not a general phenomenon. It has been found that, when choosing equity does not increase one's own payoff, only about 30% of the population behave as if they were inequity averse (Andreoni & Miller, 2002; Charness & Rabin, 2002). We asserted that the prevalence of inequity aversion can in fact be lower than that. More specifically, the goal of the current research was to examine two alternative interpretations of this tendency (of a significant minority) to prefer equity over helping. Study 1 explored and rejected the hypothesis that the preference rate for helping over equity would be higher when equity was clearly unbeneficial. Helping rates were virtually the same when the distributed commodity was either time or money. Nonetheless, these helping rates we observed were higher than found in previous works. Study 2 examined the hypotheses that equity seeking is a product of a reasonable strategy, which is sometimes employed needlessly due to overgeneralization. The results demonstrate the value of this hypothesis. Recent experience with a setting where social maximization was achieved by equity, increased the tendency to choose equity over helping later on. Helping rates were higher when no such recent experience was evoked. Our conclusion is that social maximization is generally preferred, though prone to erroneous choice of strategy in certain conditions.