12:00
Trust and Inequality in the Lab
Sanne Blauw (Erasmus University of Rotterdam) and David Smerdon (University of Amsterdam)

A large body of empirical research has found a negative correlation between trust and income inequality. In this project, we are interested in investigating the specific channels behind the correlation between higher income inequality and lower trust in societies. By artificially creating societies with different income distributions in the laboratory, we aim to test whether higher inequality lowers trust. In addition, we explore whether the impact on trust differs when members of each society are aware that income is distributed randomly, through merit or based on individuals’ greed. We discuss the design of the experiment and the hypotheses.

Field: micro experiment

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12:45
Inequity Aversion Revisited
Yang Yang (University of Amsterdam)

We provide the first systematic study of the robustness of parameter estimates for the Fehr-Schmidt (1999) model of inequity aversion with respect to (i) the occurrence of efficiency concerns; (ii) the scale of payoffs; and (iii) the game used (i.e., cross-game consistency). Moreover, we provide evidence of a bias in the estimates that occurs if one does not correct for strategic considerations and reciprocity. Our results show that the model is remarkably robust, but that previous estimates (especially of the disutility of disadvantageous inequity aversion) may overestimate the importance of inequity aversion.

Field: micro experiment