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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/30751
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| Title: | | Social welfare versus inequality concerns in an incomplete contract experiment  |
| Authors: | | Faravelli, Marco Kirchkamp, Oliver Rainer, Helmut |
| Issue Date: | | 2010 |
| Series/Report no.: | | CESifo working paper 2933 |
| Abstract: | | We study a situation where two players first choose a sharing rule, then invest into a joint production process, and then split joint benefits. We investigate how social preferences determine investments. In our experiment we find that even the materially disadvantaged player cares more for social welfare than about inequality. Behavioral preferences of disadvantaged players actually increase inequality. We also investigate when players give up an advantageous sharing rule. Power-sharing can be successful in the experiment, even when it is not in a selfish world. |
| Subjects: | | experiments incomplete contracts relationship-specific investment allocation of power social preferences |
| JEL: | | C91 D23 D86 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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