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http://hdl.handle.net/10419/31730
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| Title: | | Social welfare versus inequality aversion in an incomplete contract experiment  |
| Authors: | | Faravelli, Marco Kirchkamp, Oliver Rainer, Helmut |
| Issue Date: | | 2009 |
| Series/Report no.: | | Jena economic research papers 2009,016 |
| Abstract: | | We explore experimentally how power asymmetries between partners affect relationship-specific investments. We find that on average players' investments are larger than equilibrium investments. In contrast to social dilemma experiments, in our experiment preferences for social welfare and those for equality call for different actions. Surprisingly, even disadvantaged players care more for social welfare and less for equality. As a result social welfare increases but so does inequality. We then study conditions under which power-advantaged players give up power. 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: | | Jena Economic Research Papers, MPI für Ökonomik
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