Institutional framing and perceptions of fairness

This paper's goal is to construct a positive theory of economic fairness. Using the theoretical schema developed by Hurwicz and others, the paper makes precise the notions of an “institution,” “fairness fraiming,” and “institutional framing.” Four fairness propositions yield an important corollary: the economic environment, the operative institution and history give meaning to the often used FORMAL PRINCIPLE OF DISTRIBUTIVE JUSTICE (“equals should be treated equally, and unequals unequellay, in proportion to relevant similarities and differences”). We support these four propositions and corollary by an analysis of laboratory, survey, and anecdotal evidence. Finally we describe a number of areas for future research.

[1]  L. Hurwicz.  Studies in Resource Allocation Processes: Optimality and informational efficiency in resource allocation processes , 1977 .

[2]  V. Smith,et al.  Hypothetical Valuations and Preference Reversals in the Context of Asset Trading , 1987 .

[3]  John Rawls,et al.  Justice as Fairness: Political Not Metaphysical , 1991 .

[4]  Stephen G. Breyer,et al.  Regulation and its reform , 1982 .

[5]  C. Wellman.  A theory of rights , 1985 .

[6]  David Lewis.  Convention: A Philosophical Study , 1986 .

[7]  William D. Schulze,et al.  The Disparity Between Willingness to Accept and Willingness to Pay Measures of Value , 1987 .

[8]  Michael Walzer,et al.  Spheres of Justice , 1983 .

[9]  D. North.  Institutions, Institutional Change and Economic Performance: Economic performance , 1990 .

[10]  M. Yaari,et al.  On dividing justly , 1984 .

[11]  Ronald Dworkin,et al.  Taking Rights Seriously , 1977 .

[12]  G. Marwell,et al.  Economists free ride, does anyone else? : Experiments on the provision of public goods, IV , 1981 .

[13]  A. Shaked,et al.  Testing non-cooperative bargaining theory: a preliminary study , 1985 .

[14]  John Orbell,et al.  Explaining discussion-induced cooperation. , 1988 .

[15]  J. Kemp,et al.  The Concept of Law , 1962 .

[16]  Stanley Reiter,et al.  Information and Performance in the (New)2 Welfare Economics , 1977 .

[17]  W. Güth,et al.  An experimental analysis of ultimatum bargaining , 1982 .

[18]  Bruce M. Owen,et al.  The Regulation Game: Strategic Use of the Administrative Process , 1978 .

[19]  A. Roth,et al.  Game-Theoretic Models and the Role of Information in Bargaining , 1979 .

[20]  R. Mark Isaac,et al.  Group Size Effects in Public Goods Provision: The Voluntary Contributions Mechanism , 1988 .

[21]  L. Lomasky.  Persons, Rights, and the Moral Community , 1987 .

[22]  J. Coleman.  Foundations of Social Theory , 1990 .

[23]  F. Hayek.  The economic nature of the firm: The use of knowledge in society , 1945 .

[24]  Charles R. Plott,et al.  Committee Decisions under Majority Rule: An Experimental Study , 1978, American Political Science Review.

[25]  S. Siegel,et al.  Bargaining And Group Decision Making , 1960 .

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

[27]  E. Ullmann-Margalit.  The Emergence Of Norms , 1977 .

[28]  A. Buchanan,et al.  Philosophy and Justice , 1986 .

[29]  C. Plott,et al.  Cooperative Game Models of the Influence of the Closed Rule in Three Person, Majority Rule Committees: Theory and Experiment , 1978 .

[30]  R. Axelrod.  An Evolutionary Approach to Norms , 1986, American Political Science Review.

[31]  James Andreoni,et al.  Why free ride?: Strategies and learning in public goods experiments , 1988 .

[32]  Ken Binmore,et al.  Do People Exploit Their Bargaining Power? An Experimental Study* , 1991 .

[33]  R. Mark Isaac,et al.  Communication and Free-Riding Behavior: The Voluntary Contribution Mechanism , 1988 .

[34]  L. Lomasky,et al.  Persons, Rights and the Moral Community. , 1990 .

[35]  R. Dworkin.  Lord Devlin and the Enforcement of Morals , 1966 .

[36]  Matthew L. Spitzer,et al.  The Coase Theorem: Some Experimental Tests , 1982, The Journal of Law and Economics.

[37]  L. Sumner,et al.  The moral foundation of rights , 1987 .

[38]  J. Rawls.  Justice as Fairness , 2001 .

[39]  J. Rawls.  Kantian Constructivism in Moral Theory , 1980 .

[40]  William Samuelson,et al.  Status quo bias in decision making , 1988 .

[41]  D. North,et al.  Institutions, Institutional Change and Economic Performance. , 1991 .

[42]  David M. Kreps,et al.  Rational cooperation in the finitely repeated prisoners' dilemma , 1982 .

[43]  M. Canovan,et al.  Sharing Walzer's Understandings , 1983, Government and Opposition.

[44]  R. Posner,et al.  Economic Analysis of Law , 1974 .

[45]  Edna Ullmann-Margalit,et al.  The Emergence Of Norms , 1977 .

[46]  D. Kahneman,et al.  CHAPTER EIGHT. Fairness as a Constraint on Profit Seeking: Entitlements in the Market , 2004 .

[47]  Alvin E. Roth,et al.  Expectations and Reputations in Bargaining: An Experimental Study , 1982 .

[48]  Karen S. Cook,et al.  Distributive Justice: A Social-Psychological Perspective. , 1986 .

[49]  V. Smith.  Microeconomic Systems as an Experimental Science , 1982 .