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)....

The article is concerned with understanding the impact of social preferences and wealth inequality on aggregate economic outcomes. We investigate how different manifestations of other-regarding preferences affect incentive contracts at the microeconomic level and how these in turn translate into...