The Demand for ‘Fair’ Outcomes: An Experimental Study of Payoff Maximization, Social Efficiency, Fairness, Gender, and Personality Type

Abstract

We use a modified dictator experiment to examine subjects’ willingness to pay for a ‘fair’ outcome and how this is influenced by social efficiency.  We find that subjects exhibit a downward-sloping demand for the fair outcome that increases when the fair outcome is socially efficient and decreases with the experimental stakes.  Because a subject’s relative emphasis on payoff maximization, fairness and social efficiency may likely be related to personality type, we add controls for personality preferences as measured by the Myers Briggs Type Indicator (MBTI).  This also allows for a more precise examination of gender effects.  We find that personality preferences are important determinants of decision making.  Controlling for personality preferences, we find that women are more likely to choose the fair outcome then men.  This effect is particularly strong when the unequal payoff outcome favors the (passive) responder.