Examining models of social preferences and a generalized model of inequity aversion: An analysis and application

Khan, Hayat; Ahmed, Abdullahi D.

doi:10.22495/cocv12i1c1p6

Cited by 2 publications

(11 citation statements)

References 29 publications

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“…9 There are a number of theoretical models that seek to explain the results of laboratory experiments. 10 Khan and Ahmed (2014) demonstrate that none of the previous models is able to explain Eckel and Grossman (1996) found a significant increase in donations in a dictator game when they increased the extent to which a donation goes to a "deserving" recipient. Bra nas-Garza (2006) conducted three different dictator games; the standard dictator game and two versions of the game with poverty where the dictator is informed that their recipients were poor.…”

Section: The Tftwe and Equitable Distributionmentioning

confidence: 92%

“…F I G U R E 6 Multiple Walrasian equilibria (adopted from Bryant, 1994) [Colour figure can be viewed at wileyonlinelibrary.com] 14 In our analysis above, we only considered inequity advantageous to the rich only. Following Fehr and Schmidt (1999), Khan and Ahmed (2014) model the disadvantageous inequity which has a similar impact in that the agent derives disutility from disadvantageous inequity as well. be eliminated, the unique solution could still be achieved by redistributing the endowment such that the new endowment lies in the neighbourhood of B.…”

Section: Contact Curvementioning

confidence: 99%

“…There are a number of theoretical models that seek to explain the results of laboratory experiments . Khan and Ahmed () demonstrate that none of the previous models is able to explain the variety of outcomes observed in laboratory experiments (the V‐test) and fail Sen's weak equity axiom (the S‐test) . They propose a generalised model of inequity aversion as an extension of the Fehr and Schmidt () model.…”

Section: The Third Fundamental Theorem Of Welfare Economicsmentioning

confidence: 99%

“…These findings inspired a number of theoretical papers which replaced selfish preferences with other-regarding preferences. See for example Levine (1998), Fehr andSchmidt (1999), Bolton and Ockenfels (2000), Charness and Rabin (2002), Erlei (2004), Rotemberg (2004), Ottone and Ponzano (2005), Cox, Friedman, and Gjerstad (2007), and Khan and Ahmed (2014). 5 The practical application of Islamic banking has been more successful than attempts to modify economic and finance theories to highlight ills of interest-based dealings and promoting the principles of Islamic finance as the basis for a more efficient and equitable financial architecture.…”

mentioning

confidence: 99%

“…These findings inspired a number of theoretical papers which replaced selfish preferences with other‐regarding preferences. See for example Levine (), Fehr and Schmidt (), Bolton and Ockenfels (), Charness and Rabin (), Erlei (), Rotemberg (), Ottone and Ponzano (), Cox, Friedman, and Gjerstad (), and Khan and Ahmed ().…”

mentioning

confidence: 99%

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Islamic economics and a third fundamental theorem of welfare economics

Khan

2017

World Economy

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The discipline of economics started as a moral science but became detached from moral concerns over time to emulate natural science and to adopt positivism. Consequently, mainstream economics assumes people to be sordidly selfish. The teachings of Islam, however, promote social preferences where individuals should be other‐regarding and have preferences over social outcomes. This paper replaces the selfish agent with a social agent and presents the results in a theorem referred to as the third fundamental theorem of welfare economics (TFTWE). The TFTWE states that “when the selfish agents are replaced with the social agents, market outcomes are Pareto optimal, equitable, and unique”. This is an important result which has widespread implications. We show that the TFTWE holds under conditions where the first two fundamental theorems of welfare economics fail and that a Walrasian equilibrium is more likely to exist when selfish preferences are non‐convex. Unlike the popular convention, there is no equity‐efficiency trade‐off. In fact we point to the possibility of reversal in equity‐efficiency trade‐off.

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Section: The Tftwe and Equitable Distributionmentioning

confidence: 92%

Section: Contact Curvementioning

confidence: 99%

Section: The Third Fundamental Theorem Of Welfare Economicsmentioning

confidence: 99%

mentioning

confidence: 99%

mentioning

confidence: 99%

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Islamic economics and a third fundamental theorem of welfare economics

Khan

2017

World Economy

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G-Donic Happiness: An Alternative to Hedonic and Eudemonic Happiness for Sustainable Consumption

Aydın

Khan

2021

Sustainability

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This paper provides a spiritual perspective on happiness referred to as the G-donic approach to happiness which is fundamentally different from the hedonic and eudemonic approaches. The G-donic approach identifies the importance of the spiritual self and argues that it embodies the technology that converts physical resources into happiness. We argue that with G-donic preferences, it is possible to achieve a higher level of happiness with moderate consumption. The G-donic approach encourages living a virtuous life by fulfilling the biological, social, emotional, intellectual, moral, and spiritual needs in a balanced manner. It urges spiritual people to go beyond phenomenal reality to perceive transcendental reality in pursuit of authentic happiness. We use a multi-dimensional human nature model to highlight the relevance and importance of this approach, and modify standard utility models to show how it might result in higher happiness with lower consumption and compare and contrast it with outcomes under hedonic and eudemonic approaches to happiness. The G-donic approach contends that resources and spirituality are substitutes, as well as complements and that a reasonable approach to happiness should seek an optimal mix of both. Unlike popular convention, this deviation from hedonic pleasure due to lower consumption does not result in lower happiness. In fact, we show that, theoretically, it results in an overall increase in happiness as any loss in hedonic is compensated by greater eudemonic and G-donic rewards which increases utility.

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Examining models of social preferences and a generalized model of inequity aversion: An analysis and application

Cited by 2 publications

References 29 publications

Islamic economics and a third fundamental theorem of welfare economics

Islamic economics and a third fundamental theorem of welfare economics

G-Donic Happiness: An Alternative to Hedonic and Eudemonic Happiness for Sustainable Consumption

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