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. (Joint with Sander Onderstal and Arthur Schram)

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Superstars Need Social Benefits: An Experiment on Network Formation
Boris van Leeuwen (University of Amsterdam)

We investigate contributions to the provision of public goods on a network when efficient provision requires the formation of a star network. We provide a theoretical analysis and study behavior is a controlled laboratory experiment. In a 2×2 design, we examine the effects of group size and the presence of (social) benefits for incoming links. We find that social benefits are highly important. They facilitate convergence to equilibrium networks and enhance the stability and efficiency of the outcome. Moreover, in large groups social benefits encourage the formation of superstars: star networks in which the core contributes more than expected in the stage-game equilibrium. We show that this result is predicted by a repeated game equilibrium. (Joint with Theo Offerman and Arthur Schram)