Overview

In both their evaluations and their behavioral choices, people are sensitive to issues of fairness. First, people in this culture and in others evaluate individual actions and social procedures in terms of fairness. A judgment that an action or a procedure is unfair provides us with one reason for modifying it. Some people even maintain that life itself is – or at least “should be” – fair, to the point that President John F. Kennedy's declaration during the 1961 Berlin crisis that “life is not fair” was widely considered to be an act of political courage.

Considerations of fairness also constrain behavioral choice. People often eschew egoistically satisficing or maximizing behaviors in favor of those judged to be fair. For example, people with greater power take less than they might in ultimatum bargaining games (Guth, Schmittberger, & Schwarze, 1982; Ochs & Roth, 1989); people choose to work for less pay in an organization where pay is distributed fairly (Schmitt & Marwell, 1972); and, when people have control of scarce resources, they do not sell those resources at their market price, an action which would be personally advantageous, but is widely viewed as unfair (Kahneman, Knetsch, & Thaler, 1986a, b; Okun, 1981; Solow, 1980).

The central question to which this chapter is addressed is whether these attitudinal and behavioral constraints can be explained in terms of egoistic incentives.