Envy, malice and Pareto efficiency: An experimental examination

Abstract Economists have long speculated that envy and malice play important roles in economic decisions. Surprisingly little empirical evidence has been offered in support of such claims. This paper uses experimental and multinomial logit techniques to estimate the effects of envy and malice in economic decisions involving Pareto efficiency. Envy and malice turn out to be powerful motivations with strong differential impacts across countries and relative positions. In some cases, opposition to Pareto gains reaches 60%. Behind a veil of ignorance, however, opposition falls to 10% overall. Pareto efficiency thus garners its greatest support under conditions which can lay claim to greatest legitimacy, those free of situational and personal bias.“... the greater part of human actions have their origin not in logical reasoning but in sentiment. This is particularly true for actions that are not motivated economically.... Man, although impelled to act by nonlogical motives, likes to tie his actions logically to certain principles; he therefore invents these a posteriori in order to justify his actions.”V. Pareto in The rise and fall of the elites (1968, p. 27)

[1]  H. Fawcett.  Manual of Political Economy , 1995 .

[2]  Georg Kirchsteiger,et al.  The role of envy in ultimatum games , 1994 .

[3]  S. Kolm.  The Optimal Production of Social Justice , 1969 .

[4]  Vai-Lam Mui,et al.  The Economics of Envy , 1995 .

[5]  Charles A. Holt,et al.  Preference Reversals and the Independence Axiom , 1986 .

[6]  Gary E. Bolton,et al.  ERC: A Theory of Equity, Reciprocity, and Competition , 2000 .

[7]  Steven J. Kachelmeier,et al.  Examining Risk Preferences under High Monetary Incentives: Experimental Evidence from the People's Republic of China , 1992 .

[8]  Julie A. Nelson,et al.  Beyond Economic Man , 1993 .

[9]  Jacob K. Goeree,et al.  A theoretical analysis of altruism and decision error in public goods games , 1998 .

[10]  S. Fiske,et al.  The Handbook of Social Psychology , 1935 .

[11]  Kenneth O. May,et al.  A Set of Independent Necessary and Sufficient Conditions for Simple Majority Decision , 1952 .

[12]  J. Kagel,et al.  Handbook of Experimental Economics , 1997 .

[13]  A. Sen,et al.  Collective Choice and Social Welfare , 2017 .

[14]  V. Pareto,et al.  The rise and fall of the elites , 1968 .

[15]  James C. Cox,et al.  Preference Reversals Without the Independence Axiom , 1989 .

[16]  Frank A. Cowell,et al.  Measurement of income inequality: Experimental test by questionnaire , 1992 .

[17]  Matthew L. Spitzer,et al.  Entitlements, Rights, and Fairness: An Experimental Examination of Subjects' Concepts of Distributive Justice , 1985, The Journal of Legal Studies.

[18]  Charles R. Plott,et al.  Industrial Organization Theory and Experimental Economies , 1982 .

[19]  A. Shorrocks.  Ranking Income Distributions , 1983 .

[20]  Tatsuyoshi Saijo,et al.  The “Spite” Dilemma in Voluntary Contribution Mechanism Experiments , 1995 .

[21]  P. Lambert.  The Distribution and Redistribution of Income , 1989 .

[22]  A. Sen.  On Economic Inequality , 1974 .

[23]  Hajime Wago,et al.  The Measurement of Income Inequality , 1978 .

[24]  Steven J. Kachelmeier,et al.  Examining risk preferences under high monetary incentives: Reply , 1994 .

[25]  张谷.  实验经济学（Experimental Economics）研究思路及成果应用简述 , 1994 .

[26]  J. Harsanyi.  Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility , 1955 .

[27]  Frank A. Cowell,et al.  Income inequality and social welfare , 1994 .

[28]  Vai-Lam Mui,et al.  Fairness and sharing in innovation games: a laboratory investigation , 2002 .

[29]  E. Miller.  Handbook of Social Psychology , 1946, Mental Health.

[30]  F. Bourguignon.  On the Measurement of Inequality , 2003 .

[31]  Serge-Christophe Kolm,et al.  The Economics Of Social Sentiments: The Case Of Envy , 1995 .

[32]  M. Jones-Lee,et al.  Beyond Economic Man. , 1977 .

[33]  H. Hochman,et al.  Pareto Optimal Redistribution , 1969 .

[34]  John C. Harsanyi,et al.  Cardinal Utility in Welfare Economics and in the Theory of Risk-taking , 1953, Journal of Political Economy.

[35]  A. Sen,et al.  On Economic Inequality , 1999 .

[36]  John H. Beck.  An Experimental Test of Preferences for the Distribution of Income and Individual Risk Aversion , 1994 .