<p>As @Henry commented and according to <a href="https://meta.stackexchange.com/questions/117251/what-should-be-done-with-questions-that-have-been-self-resolved-as-a-comment-ins">https://meta.stackexchange.com/questions/117251/what-should-be-done-with-questions-that-have-been-self-resolved-as-a-comment-ins</a> I made a community wiki with the answer:</p>

<blockquote class="spoiler">
  <p>αi and βi are coefficients related to how much an individual i feels bad about being less wealthy or more wealthy than other people. max{xj−xi,0} is the difference between person j's wealth and person i's wealth if person j's wealth is higher than person i's wealth; otherwise it is 0. The division by n−1 to get an average is because there are n−1 individuals apart from person i for person i to compare to.</p>
</blockquote>

CC BY-SA 4.0
2020-05-01T22:44:51.807Z
2020-05-01T22:44:51.807Z
Stratos
<p><a href="https://i.sstatic.net/eB5tJ.jpg" rel="nofollow noreferrer"><img src="https://i.sstatic.net/eB5tJ.jpg" alt="enter image description here"></a>This is from page 274 of "Advances in Behavioural Economics" by Camerer, Rabin, Loewenstein.
This chapter of the book is entitled "A theory about fairness, competition, and cooperation".</p>

<p>I have difficulty understanding parts of this equation. (see attachment).
I would need an explanation of the equation in detail (I assume this book is designed for graduate students, as I am currently an undergrad).
What do alpha and beta represent? What does monetary payoff mean exactly? Is it similar to game theory? Why is there a 0 in [<em>xj-xi, 0</em>]? And why is it 1/(n-1) and not n-1? This is very confusing for me, who has little mathematical background.</p>

CC BY-SA 4.0
2020-03-20T13:05:47.807Z
$\alpha_i$ and $\beta_i$ are coefficients related to how much an individual $i$ feels bad about being less wealthy or more wealthy than other people.  $\max\{x_j-x_i,0\}$ is the difference between person $j$'s wealth and person $i$'s wealth if  person $j$'s wealth is higher than person $i$'s wealth; otherwise it is $0$.  The division by $n-1$ to get an average is because there are $n-1$ individuals apart from person $i$ for person $i$ to compare to.
Henry
CC BY-SA 4.0
2020-03-23T15:50:24.707Z
@Henry: Your comment is actually an answer, and a correct one. Why don't you make it an answer? (Sorry, just curious.)
VARulle
CC BY-SA 4.0
2020-03-23T16:07:45.117Z
@VARulle because sometimes I feel like commenting.  You can use for an answer if you wish
Henry
CC BY-SA 4.0
2020-03-23T16:13:47.580Z
@Henry: Thx for the offer, but I don't want to adorn myself with borrowed plumes.
VARulle
<utility><behavioral-economics><fairness>
Specification of the parameters of this utility function [Behavioral Economics]
TheLight OI
# Specification of the parameters of this utility function [Behavioral Economics]

(Asked by: username_0 on 2020-03-20)

[![enter image description here](https://i.sstatic.net/eB5tJ.jpg)](https://i.sstatic.net/eB5tJ.jpg)This is from page 274 of "Advances in Behavioural Economics" by Camerer, Rabin, Loewenstein.
This chapter of the book is entitled "A theory about fairness, competition, and cooperation".

I have difficulty understanding parts of this equation. (see attachment).
I would need an explanation of the equation in detail (I assume this book is designed for graduate students, as I am currently an undergrad).
What do alpha and beta represent? What does monetary payoff mean exactly? Is it similar to game theory? Why is there a 0 in [*xj-xi, 0*]? And why is it 1/(n-1) and not n-1? This is very confusing for me, who has little mathematical background.

**Tags:** utility, behavioral-economics, fairness
> **Comments:**
> **username_1**: $\alpha_i$ and $\beta_i$ are coefficients related to how much an individual $i$ feels bad about being less wealthy or more wealthy than other people.  $\max\{x_j-x_i,0\}$ is the difference between person $j$'s wealth and person $i$'s wealth if  person $j$'s wealth is higher than person $i$'s wealth; otherwise it is $0$.  The division by $n-1$ to get an average is because there are $n-1$ individuals apart from person $i$ for person $i$ to compare to.  
> **username_2**: @Henry: Your comment is actually an answer, and a correct one. Why don't you make it an answer? (Sorry, just curious.)  
> **username_1**: @VARulle because sometimes I feel like commenting.  You can use for an answer if you wish  
> **username_2**: @Henry: Thx for the offer, but I don't want to adorn myself with borrowed plumes.  

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## 1 answers

### Answer by username_3 on 2020-05-01. Score: 1

As @Henry commented and according to <https://meta.stackexchange.com/questions/117251/what-should-be-done-with-questions-that-have-been-self-resolved-as-a-comment-ins> I made a community wiki with the answer:

> αi and βi are coefficients related to how much an individual i feels bad about being less wealthy or more wealthy than other people. max{xj−xi,0} is the difference between person j's wealth and person i's wealth if person j's wealth is higher than person i's wealth; otherwise it is 0. The division by n−1 to get an average is because there are n−1 individuals apart from person i for person i to compare to.


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