Income Distributions versus Lotteries Happiness, Response-Mode Effects, and Preference

Arbeitspapier

This paper provides a comparative experimental study of risky prospects (lotteries) and income distributions. The experimental design consisted of multi-outcome lotteries and n-dimensional income distributions arranged in the shapes of ten distributions which were judged in terms of ratings and valuations, respectively. Material incentives applied. We found heavy response-mode effects, which cause inconsistent behavior between rating and valuation of lotteries and income distributions in more than 50% of all cases. This means that ethical inequality measures lack support in peoples' perceptions. In addition to classical preference reversals between generalized P-bets and $-bets we observed three additional patterns of preference reversal, two of which apply only to income distributions. Dominating Lorenz curves and Lorenz curves cutting others from below receive decidedly higher ratings (which implies risk and inequality aversion), but lower valuations. The transfer principle is largely violated. The rating of lotteries is a decreasing function of skewness, the rating of income distributions is a decreasing function of standard deviation. The valuation of lotteries is an increasing function of standard deviation and kurtosis, and the valuation of income distributions is an increasing function of standard deviation, skewness, and kurtosis.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Economics Working Paper ; No. 2003-01

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Personal Income, Wealth, and Their Distributions ; Design of Experiments: Laboratory, Individual ; Criteria for Decision-Making under Risk and Uncertainty ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement
• Thema: Income Distribution ; Lotteries ; Income Happiness ; Inequality and Risk Aversion ; Ethical Inequality Measures ; Preference Reversal ; Einkommensverteilung ; Disparitätsmaß ; Meinung ; Entscheidung bei Risiko ; Risikopräferenz ; Experiment ; Theorie ; Lebenszufriedenheit

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Seidl, Christian ; Camacho Cuena, Eva ; Morone, Andrea
• Ereignis: Veröffentlichung
• (wer): Kiel University, Department of Economics
• (wo): Kiel
• (wann): 2003

Weitere Informationen

• Handle: http://hdl.handle.net/10419/22062
• URN: urn:nbn:de:101:1-200910133567
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ