Inequitable outcomes that people would otherwise reject are acceptable when
they come about through ‘fair procedures’, according to new research. The
findings suggest that public acceptance of economic policies that promote
efficiency at the expense of equity may be influenced by whether the policy
creates a level playing field for determining winners and losers.
The experimental study – reported in the October 2005 issue of the Economic
Journal – was carried out by an international team of economists from
Germany, Spain and the United States. It involved a simple ultimatum
bargaining game in which one person makes a proposal to split a sum of
money – in this case about 12 euros – with a second person. The second
person sees the offer and decides to accept or reject.
Previous research has shown that a large number of people will reject the
offer if it is highly inequitable, even though doing so leaves both people with
no money.
This research posited that the acceptability of an inequitable offer might be
influenced by the equity of the procedure for choosing it. So instead of having
one of the bargainers name the offer, it was chosen by a roll of the dice.
When the dice roll gave each bargainer an equal chance, an inequitable split
was twice as acceptable as it was when chosen by a person: 41% instead of
19%. Hence an equitable procedure could overcome a losing player’s
resistance to an inequitable outcome.
When the dice roll was biased in favour of one bargainer, an acceptance of
the inequitable split by the bargainer with less chance was virtually
unchanged from when a person decided the outcome. A separate part of the
study shows that the option of using an equitable procedure in the game is
sufficient to create resistance to inequitable outcomes.
The findings suggest that even the losers from economic policies that promote
efficiency at the expense of equity can come to accept it if the outcome was
the result of a level playing field in which they were given an equal chance.
The researchers caution that this is a first study and follow-up studies to verify
the results are necessary.
ENDS
Notes for editors: ‘Fair Procedures: Evidence from Games involving
Lotteries’ by Gary Bolton, Jordi Brandts and Axel Ockenfels is published in the
October 2005 issue of the Economic Journal.
Gary Bolton is at Penn State University. Jordi Brandts is at the Institut
d'Anàlisi Econòmica (CSIC) in Barcelona. Axel Ockenfels is at the University
of Cologne.
For further information: contact Jordi Brandts on +34-93-580-6612 (email:
Jordi.Brandts@uab.es); or RES Media Consultant Romesh Vaitilingam on
0117-983-9770 or 07768-661095 (email: romesh@compuserve.com).