Business Intelligence

How Exposure To Markets Can Favor Inequity-averse Preferences

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Executive Summary

Outside the group selection framework, this paper shows how in the presence of general equilibrium effects non-individualistic preferences can be individual …fitness maximizing. The authors present the argument in the model, where individuals share among themselves an endowment and use the proceeds either for immediate consumption or for purchase of consumption goods from merchants on the outside market. Assuming that increased consumption means increased individual fitness, inequity-averse behavior with respect to endowment distribution can be an optimal response to merchants' price discrimination and, eventually, it can lead to the evolution of inequity-averse preferences.

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