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Resource Allocation Decisions: When Do We Sacrifice Efficiency in the Name of Equity?

  • Tom Gordon-HeckerEmail author
  • Shoham Choshen-Hillel
  • Shaul Shalvi
  • Yoella Bereby-Meyer

Abstract

Equity, or the idea that one should be compensated according to one’s respective contribution, is a fundamental principle for resource allocation. People tend to endorse equity in a wide range of contexts, from interpersonal relationships to public policy. However, at times, equity might come at the expense of efficiency. What do people do when they must waste resources to maintain equity? In this chapter, we adopt a behavioral perspective on such equity–efficiency trade-offs, reviewing the relevant findings from the social psychology, judgment and decision-making and behavioral economics literature. We show that whereas allocators will often choose to waste in the name of equity, this is not necessarily the case. We review various psychological aspects that affect the allocators’ decision.

Keywords

Equity Efficiency Resource allocation Decision-making Partiality Responsibility Fairness 

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Copyright information

© Springer International Publishing AG 2017

Authors and Affiliations

  • Tom Gordon-Hecker
    • 1
    Email author
  • Shoham Choshen-Hillel
    • 2
  • Shaul Shalvi
    • 3
  • Yoella Bereby-Meyer
    • 1
  1. 1.Psychology DepartmentBen-Gurion University of the NegevBeer ShevaIsrael
  2. 2.Jerusalem School of Business Administration and the Federmann Center for the Study of RationalityThe Hebrew University of JerusalemJerusalemIsrael
  3. 3.Department of Economics, Center for Research in Experimental Economics and Political Decision Making (CREED)University of AmsterdamAmsterdamNetherlands

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