Entitlements in Laboratory Experiments

Abstract

Entitlements are rights granted by contract, law or practice. Under the assumption of pure self-interest, modelling games with entitlements is fairly straightforward; however, work in behavioural economics has consistently demonstrated the existence of other-regarding preferences, with strong effects of perceptions of what is fair. In the laboratory, behaviour is affected not only by the entitlement per se but also by the procedure by which entitlements come about. One form of laboratory entitlement is a more advantageous position in an economic game, where the advantage arises from a larger endowment, favourable exchange rules or greater decision-making authority. A second type of entitlement is a guaranteed payoff or a payoff floor. Experimental results show that the means by which entitlements are acquired is one cue that influences the nature of other-regarding behaviour. This is important both for understanding behaviour and the design of experiments.