Abstract:

In recent years, the increasing gap of wealth between the rich and the poor has given rise to the public’s strong sense of income unfairness, which was primarily caused by relative comparison between individual own income and others’ income. This project is based on the reference dependence and loss aversion of prospect theory value function, carrying out a series of empirical studies on the formation mechanisms and management measures of the public’s sense of income unfairness. This project will use multiple methods of psychological measuring, laboratory experiment and intervention study; employing the ERP technique of nerve electrophysiology and SCR method of psycho-physiological experiment; probing into mechanisms of self-reference vs. other-reference dependence, single-reference-point vs. multi-reference point comparison and the loss aversion acting on the asymmetry of advantageous inequality vs. disadvantageous inequality leading to individuals’ sense of income unfairness; finally choosing community resident and manipulating the referent, the reference-point, and the gain-loss framing, and then conducting multi-round and multi-variable intervention studies so as to empirically investigating into the coping strategies of lessening individuals’ sense of income unfairness, which will be used as the basis of management strategies and policy advice.

Key words: sense of income unfairness, prospect theory, value function, reference dependence, loss aversion