Abstract
We extend the study of procedural fairness in three new directions. Firstly, we focus on lotteries determining the initial roles in a two-person game. One of the roles carries a potential advantage over the other. All the experimental literature has thus far focused on lotteries determining the final payoffs of a game. Secondly, we modify procedural fairness in a dynamic—i.e. over several repetitions of a game—as well as in a static—i.e. within a single game-sense. Thirdly, we analyse whether assigning individuals a minimal chance of achieving an advantaged position is enough to make them willing to accept substantially more inequality. We find that procedural fairness matters under all of these accounts. Individuals clearly respond to the degree of fairness in assigning initial roles, appraise contexts that are dynamically fair more positively than contexts that are not, and are generally more willing to accept unequal outcomes when they are granted a minimal opportunity to acquire the advantaged position. Unexpectedly, granting full equality of opportunity does not lead to the highest efficiency.
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Notes
Note that we use the term ‘role’ to indicate whether a participant is a proposer or a receiver in the UG played in the last phase of the Stage Game (see Fig. 1). We use the term ‘position’ to refer to whether a player is Player 1 (favoured) or Player 2 (unfavoured) in the lottery assigning UG roles—that is, \({\mathcal{L}}_{2}\) in Fig. 1.
In their meta-analysis, Oosterbeek et al. (2004) report that the weighted average acceptance rate from 66 UG studies is 84.25 %, whereas average demands equal 59.5 % of the pie in 75 UG experiments.
The probability of acceptance was significantly higher for students attending Economics degrees (\(P=0.009)\), women (\(P=0.029)\), and students with UK citizenship (\(P=0.033)\). Note that including these variables comes at the cost of a considerable loss of observations due to missing variables.
In our experiments, the average expected payoffs for receivers in the last five rounds—seemingly an appropriate measure for “equilibrium” payoffs—are the highest (\(\pounds 3.16\)) in 0 %_FPC, which is arguably the most unfair procedure in our experiments. The only unbiased procedure in our experiments, i.e. the baseline 50 % condition, only yields \(\pounds 2.47\) to receivers and comes fifth in the ranking of expected receivers’ payoffs across treatments. In our case “equilibrium” expected payoff differences are thus an inaccurate proxy for procedural fairness.
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Acknowledgments
We thank Iwan Barankay, Dirk Engelmann, Enrique Fatás, Peter Hammond, Andrew Oswald, Elke Renner, Blanca Rodriguez, Tim Salmon, Stefan Traub for useful discussion, as well as participants in the Workshop on ‘Procedural fairness—theory and evidence’, Max Planck Institute for Economics (Jena), the 2008 IMEBE conference, the 2008 European ESA conference, the 2010 Seminar on ‘Reason and Fairness’, Granada, and seminar participants at Nottingham, Royal Holloway, Trento, Warwick. We also appreciate the careful reading of the paper and the insightful suggestions by two anonymous referees and the journal editors. We especially thank Malena Digiuni for excellent research assistance, Stefan Trautmann for fruitful discussion, and Steven Bosworth for his comments on a previous version of the paper. Any errors are our sole responsibility. This project was financed by the University of Warwick RDF grant RD0616. Gianluca Grimalda acknowledges financial support from the Spanish Ministry of Science and Innovation (grant ECO 2011-23634), Bancaixa (P1. 1A2010-17), Junta de Andalucía (P07-SEJ-03155), and Generalitat Valenciana (grant GV/2012/045).
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Grimalda, G., Kar, A. & Proto, E. Procedural fairness in lotteries assigning initial roles in a dynamic setting. Exp Econ 19, 819–841 (2016). https://doi.org/10.1007/s10683-015-9469-5
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DOI: https://doi.org/10.1007/s10683-015-9469-5