Rank reversal aversion, inequality aversion, and fairness in distributive preferences

BELAUS A; REYNA C; FREIDIN E

Congreso; Society for the Advancement of Behavioral Economics (SABE) 2020 Annual Conference; 2020

Introduction. There could be tension between hierarchy, equality, and fairness in human social groups. Whereas people may extract benefits from hierarchical organizations, for example in terms of group performance, a preference for hierarchy can be moderated by perceptions of fairness, and these values may even clash between themselves and against other values as well. The present paper is about an experiment to assess people´s distributive preferences when values such as equality, fairness, and hierarchy conflict. With a novel protocol, Xie et al. (2017) found that the probability that disinterested third parties choose to reduce inequality was lower when it also involved inverting recipients’ relative payoff positions, a phenomenon which they called Rank Reversal Aversion (hereafter RRA). This phenomenon posits questions in terms of how the preference for a stable hierarchy might be traded off against conflicting values, such as equality. But, some authors claim that equality, despite having been considered a widespread human motivation, is often confounded with fairness which is what actually people seek for (Starmans et al., 2017). The difference between equality and fairness is that the latter not only contemplates outcome distributions, but also need and deservedness. The goal of the present experiment was to assess participants´ distributive preferences when RRA, Inequality Aversion, and fairness considerations were in conflict.Methods. We here present a pre-registered experiment (https://osf.io/8kdx6) with university students (N=170) in which we propose a methodologically cleaner alternative to explore whether people may have a preference for preserving an established hierarchy. Participants in role X (n=130) played a Third-Party Dictator Game with real consequences in which they had to decide on monetary allocations destined to two participants in roles A and B. The experiment had a within-subject desing in which each dictator faced 40 allocation choices. To asses RRA, some choice trials involved an unequal initial endowment for A and B, while the Dictator could make monetary transfers that changed A and B´s initial payoff rank without changing the inequality between them. To assess the importance participants attributed to inequality over rank, there were choices in which preserving the initial rank led to slight increases of inequality. In turn, to test for fairness, in some trials the dictator was also provided with information about A and B´s relative performance in an effortful task. All reported results are significant with an alpha value of 0.05. Results. When dictators´ transfers could not alter the inequality between A and B and fairness was not at stake (there was no information about performance), results confirmed a RRA: participants were reluctant to change A and B´s initial payoff rank in 65% of these choices, conceptually replicating Xie et al.,´s (2017) findings. However, when RRA was pitted against eliminating inequality, participants preferred to tackle inequality instead of preserving the initial rank in 72% of the choices, and when preserving the initial rank involved slight increases in inequality between A and B, participants preferred to revert the initial rank 78% of times rather than increase inequality. In turn, the preference to allocate money to the participant with the higher relative performance in the effortful task was stronger than both the RRA (80% chose to revert the initial rank when relative performance mismatched the initial hierarchy) and the preference for reducing inequality (71% chose fairness even if it involved increasing inequality, and 67% chose fairness when pitted against eliminating inequality). In average, distributive preferences were ordered as follows: fairness > equality > ranking. In addition, we obtained measures of political self-positioning (left-right), Social Dominance Orientation (SDO), Right Wing Authoritarianism (RWA), Global Belief in a Just World (GBJW), and cognitive style (Cognitive Reflection Test, CRT). These individual difference measures did not make significant predictions in terms of choices antagonizing inequality aversion against relative performance in the effort task (fairness). However, when choice scenarios antagonised inequality aversion and RRA, GBJW predicted higher endorsement of RRA, whereas a more analytic cognitive style predicted higher endorsement of inequality aversion. Conclusions. The present experiment presents a conceptual replication of the Ranking Reversal Aversion (RRA) first reported by Xie et al. (2017). Our original contribution is three-fold: first, we managed to replicate the RRA with a methodologically cleaner protocol; second, we tested the relative strength of the RRA when pitted against conflicting values, in particular equality and fairness; and third, we tested whether individual differences in diverse psychological measures were predictive of participants´ distributive preferences. Indeed, we showed RRA to be weaker than inequality aversion and a preference for fairness. Moreover and in line with Starmans et al. (2017), our results point towards the primacy of fairness over equality in the preferences expressed by participants. We also showed that a belief in a just world was predictive of prioritizing ranking over equality, whereas people with a more reflective cognitive disposition preferred the opposite. Finally, we discuss different contextual conditions that might alter the ordering of the preferences tested here.