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Distinguishing Motivations in Economic Decisions
Two individuals, Alex and Ben, are each offered the same deal by a third party: the individual will receive $2 and the third party will receive $18. Both Alex and Ben reject this offer, resulting in neither of them nor the third party receiving any money.
Alex's reasoning is: 'The distribution is too unequal. I would have accepted if the offer was $10 for me and $10 for them.' Ben's reasoning is: 'I don't care about equality. I just don't want them to get $18, even if it means I get nothing.'
Analyze the difference in the underlying social preferences driving Alex's and Ben's decisions.
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Ch.4 Strategic interactions and social dilemmas - The Economy 2.0 Microeconomics @ CORE Econ
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Analysis in Bloom's Taxonomy
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Distinguishing Motivations in Economic Decisions
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