Besluitvorming in sociale context

The influence of power and social values on inequity aversion to relative gains and losses

An extensive literature in behavioral economics suggests that people derive satisfaction from fairness above and beyond the value of an equally distributed reward. In contrast, unequal reward distributions cause inequity aversion, the extent of which varies depending on whether the distribution results in a relative loss or a relative gain. Unlike loss aversion (which is well-studied in Prospect Theory), inequity aversion persists in losses and gains, but it is understandably less strong for gains because having more than others is desirable from a self-interest point of view. Here we show that the dynamics of inequity aversion resembles the value function of Prospect Theory, and we investigate how intrinsic prosocial values and externally imposed power influence the (dis)liking of relative gains or losses. In a behavioral experiment, we assign participants to work in dyads and manipulate their feeling of power by giving each partner in the dyad the role of a leader (high power), subordinate (low power) or teammate (no power). After completion of the joint work, each participant is asked to evaluate a series of monetary distributions (ranging from equal to highly unequal) between themselves and their work partner. The results indicate that having a prosocial value orientation increases inequity aversion, especially in the gain domain. Compared to no power, high power increases, and low power decreases inequity aversion, but only for relative losses. For relative gains, the effect of power depends on values, with high power making prosocials more, and non-prosocials less, inequity averse.

Cathrin G. Schödler, Carolyn H. Declerck, & Christophe Boone

Contact:
Cathrin Schödler
Universiteit Antwerpen | Faculteit Bedrijfswetenschappen en Economie
Prinsstraat 13
BE-2000 Antwerpen
cathrin.schoedler@uantwerpen.be

01.10.2018