In the aftermath of the financial crisis, attention concerning inequality as a risk factor has risen. Nevertheless studies, focusing on the implications of inequality as a collective risk, remain seldom. Therefore the following paper will discuss why inequality is indeed a collective risk,...

We expand upon the previous models of inequity aversion of Fehr and Schmidt [1], and Frohlich et al. [2], which assume that dictators get disutility if the final allocation of surplus deviates from the equal split (egalitarian principle) or from the subjects' production (libertarian principle)....