Effects of gain-loss frames on advantageous inequality aversion

• Published in: Journal of the Economic Science Association Vol. 4; no. 2; pp. 99 - 109
• Main Authors: Boun My, Kene, Lampach, Nicolas, Lefebvre, Mathieu, Magnani, Jacopo
• Format: Journal Article
• Language: English
• Published: New York Springer US 01.12.2018; Springer Nature B.V; Springer
• Subjects: Behavioral/Experimental Economics; Business administration; Economic models; Economic Theory/Quantitative Economics/Mathematical Methods; Economics; Economics and Finance; Game Theory; Humanities and Social Sciences; Inequality; Microeconomics; Operations Research/Decision Theory; Original Paper; Risk aversion; Social and Behav. Sciences; D63; Inequality aversion; Modified dictator game; C91; Laboratory experiment; C70; Social preferences; Loss aversion
• ISSN: 2199-6776; 2199-6784; 2199-6784; 2199-6776
• DOI: 10.1007/s40881-018-0057-2

This paper studies individuals’ preference for reducing advantageous inequality in the distribution of gains and losses. Combining the inequality aversion model of Fehr and Schmidt (Q J Econ 114(3):817–868, 1999 ) with loss aversion à la Kahneman and Tversky (Econom J Econom Soc:263–291, 1979 ), we predict the relative dislike for advantageous inequality is lower when outcomes are framed as losses than when outcomes are framed as gains. We test this prediction using data from two modified dictator game experiments. Consistent with the model, we find that the amount of payoff that subjects are willing to sacrifice to increase the net payoff of others and reduce advantageous inequality is smaller under a loss frame than under a gain frame. The results also show that women are more inequality averse than men in both gains and losses.