Equity and Fairness: Easy as Pie?
Dividing resources fairly is a difficult task.
People often rely on intuition and narrow self-interest.
Marginal gains from cooperation should be divided equally.
Tous pour un, un pour tous [All for one, one for all]. ― Alexandre Dumas, The Three Musketeers
Achieving fairness when dividing resources presents a perennial challenge. Sometimes this is easy. When Adele and Billy are invited to divide six peanuts, all they need to do is count to three, unless there are other considerations, such as when it was Adele who had planted and harvested the peanuts while Billy did nothing.
When the resource does not break down into countable units, the task is tricky. A classic solution is to tell one person to make the division, e.g., by cutting the proverbial pie, and the other to pick one of the pieces. The ancients, we are told, used a version of this method when dividing up land (Brams & Taylor, 1996). The residual challenge is how to decide who will do the cutting. The cutter can anticipate being at a slight disadvantage, as any departure from perfect even-handedness will be their loss. A third-party authority is needed to appoint the roles of cutter and chooser, or this could be made a matter of chance.
Most people facing division tasks experience a conflict between self-regard (greed) and the wish to maintain a moral reputation (fairness). This conflict comes into play even when resources can be counted. If fairness dominates, an even split is the way to go, but equalitarianism often prevails even when a rational and balanced decision rule suggests unequal division (Krueger, 2000). Writing for a business audience, Nalebuff and Brandenburger (2021) presented the intriguing case of a division problem where a particular kind of equalitarian decision rule would be fair and rational, and yet is overlooked by most untrained observers, such as........
