Also called social preferences. In decisions which affect others, people will sometimes give up some direct personal benefit or take on a cost in order to achieve a fair or equal outcome.

Bolton and Ockenfels (2000) and Fehr and Schmidt (1999) explore decision-makers who are concerned with fairness of distributions and have disutility from others’ being much better off or much worse off. A closely related area of research is concerned with reciprocal fairness; the decision-makers desire to reward kind actions or intentions and punish unkind ones.

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