2019
Working Paper
HBS Working Paper Series

Equity Concerns Are Narrowly Framed

By: Christine L Exley and Judd B. Kessler

Format:Print
| Language:English
| Pages:103

Abstract

We show that individuals narrowly bracket their equity concerns. Across six experiments including 2,360 subjects, individuals equalize components of payoffs rather than overall payoffs. When earnings comprise “small tokens" worth 1 cent and “large tokens" worth 2 cents, subjects frequently equalize the distribution of small (or large) tokens rather than equalizing total earnings. When payoffs comprise time and money, subjects similarly equalize the distribution of time (or money) rather than total payoffs. In addition, subjects are more likely to equalize time rather than money. These findings can help explain a variety of behavioral phenomena including the structure of social insurance programs, patterns of public good provision, and why transactions that turn money into time are often deemed repugnant.

Keywords

Equality and Inequality; Fairness; Perception; Outcome or Result; Resource Allocation; Behavior

Citation

Exley, Christine L., and Judd B. Kessler. "Equity Concerns Are Narrowly Framed." Harvard Business School Working Paper, No. 18-040, November 2018. (Revised June 2019.)