FairnessIntro

Overview | What Is Fairness? | Fairness In Game Theory | Retaliation and Reciprocity | William Baumol's Fairness Assumption | The Ultimatum Game Under Baumol's Fairness Assumption | Fairness Theory Homepage

Introduction to Fairness

• When an individual makes the decision to pursue a certain course of action, it is generally assumed that he bases that decision on which action would provide him (individually) with the most beneficial payoff/outcome. Whether we are speaking of economic consumption, financial decisions, or strategies within the arena of a game, this individual is assumed to hold selfish motives without concern for others' utilities (happiness). It has been argued (and seems more reasonable) that individuals engage in certain actions with significant consideration for how those actions will affect other people. It seems only natural for one to ponder the results of a decision and their effects on the well-being of those related to that decision (e.g. friends or family). However, what if these decisions had nothing to do with individuals who were closely related to the decision-maker? How does one make a decision if he is dealing with a complete stranger? This website further explores the application of the concept of fairness into the thought processes experienced by an individual dealing with such situations.