Decisions under uncertainty in social contexts

Arbeitspapier

This paper theoretically and experimentally studies decision-making in risky and social environments. We explore the interdependence of individual risk attitudes and social preferences in the form of inequality aversion as two decisive behavioral determinants in such contexts. Our model and the data demonstrate that individual risk aversion is attenuated when lagging behind peers, whereas it is amplified under favorable income inequality. Moreover, people's choices are not only contextdependent, but are sensitive to their degree of inequality aversion. The majority of our experimental findings cannot be rationalized by rank-dependent utility models or cumulative prospect theory. Our results contribute to the basic understanding of the underlying motives of private households' saving decisions, employees' careertrack choices or charitable giving under uncertainty.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: cege Discussion Papers ; No. 290

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Individual ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Criteria for Decision-Making under Risk and Uncertainty
• Subject: choice under uncertainty ; social comparison ; inequality aversion ; risk preferences

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Müller, Stephan ; Rau, Holger A.
• Event: Veröffentlichung
• (who): University of Göttingen, Center for European, Governance and Economic Development Research (cege)
• (where): Göttingen
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/155761
• Last update: 10.03.2025, 11:41 AM CET