The models of Falk and Fischbacher (1999) and Fehr and Schmidt (1999) also predict the existence of third-party punishment. The Fehr and Smith model is based on the assumption that there are players who are willing to pay to reduce the differences between their own payoffs and those of other. In the F&F model, players are willing to pay because they view inequalities as unfair; inequality is the trigger of punishment but, in contrast to the Fehr and Smith model, it is not the aim of the players to establish equality.

DEFINE: Distinguishes Fehr-Schmidt's inequality-aversion model from Falk-Fischbacher's fairness-based model.

Ernst Fehr, Third-Party Punishment and …, loc. 46