Pricing Procedural Fairness

Abstract: Behavioural economics literature thinks of process fairness either in terms of reciprocating the perceived kindness of intentions or as an influence on the judgment of distributive fairness. In contrast ruling out reciprocity motives and concerns for equal outcomes we propose that individuals display preferences for procedures itself. We show that subjects involved in a process of hierarchical decision making prefer a transparent over an opaque mechanism, while the information revealing the process has no payoff relevance.