Are Group Members Less Inequality Averse Than Individual Decision Makers?

Abstract

Do groups exhibit more or less inequality aversion than individuals? Although the previous literature has shown that in many environments individuals in groups make more selfish decisions than when deciding in isolation, we find that individuals express more inequality aversion when making initial proposals in a group decision-making environment compared to an individual decision-making environment. This may be driven by a change in the reference group and by beliefs about the prevailing norm in the group, but we exclude that it is driven by a loss of anonymity. By investigating how groups aggregate individual preferences under a unanimity rule, we show that the members with median social preferences lead the group decisions and a higher inequality aversion compared to the median slows down the convergence process. Overall, final decisions in groups reveal the same level of inequality aversion than individual decisions.

Keywords: group, inequality aversion, preference aggregation, social image, experiment

JEL Classification: C91, C92, D03, D63, D72