Adverse Impact of Fairness on Efficient Outcomes of Resource Allocation Decisions

Two experiments were conducted to investigate the impact of fairness on the efficiency of resource allocation decisions. In Experiment 1 participants allocated payoffs to one privileged and one unprivileged group in a multi-stage decision task. Conflicts between fairness and resource preservation were induced. Selfinterest was varied by awarding participants a high or low bonus if a majority of group members voted for it. Fairness was varied at three levels as differences in group allocations. An adverse impact of fairness on efficient resource use was found. In order to distinguish between effects of differences in and sum of group payoffs, fairness and goodness of allocations were directly rated in Experiment 2. The results showed that participants based fairness and goodness ratings on differences although an influence of the sums was discernible when growing larger. It was concluded that the impact of fairness is primarily due to participants’ desire to minimize differences between privileged and unprivileged groups.