Social preferences under risk: Minimizing collective risk vs. reducing ex-post inequality

Arbeitspapier

We refine the understanding of individual preferences across social lotteries, whereby the payoffs of a pair of subjects are exposed to random shocks. We find that aggregate behavior is ex-post and ex-ante inequality averse, but also that there is a wide variety of individual preferences and that the majority of subjects are indifferent to social concerns under risk. Furthermore, we determine whether subjects are averse to collective risk - the variability in the sum of payoffs of the pair. We do so by varying the presentation of payoffs. They are shown side by side in one treatment and added-up in the other. The first presentation draws attention to inequality in payoffs, the second to collective risk. We find that subjects dislike lotteries that lead to ex-post unequal distributions of payoffs in both cases and that emphasizing collective risk changes choice only marginally and not significantly, though in the direction of collective risk reduction. We conclude that ex-post inequality aversion is the primary concern in the evaluation of social lotteries while collective risk is only of secondary interest.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: cege Discussion Papers ; No. 283

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: Altruism ; Collective Risk ; Experimental Economics ; Fairness ; Inequality ; Risk ; Social Lotteries ; Social Preferences

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gaudeul, Alexia
• Event: Veröffentlichung
• (who): University of Göttingen, Center for European, Governance and Economic Development Research (cege)
• (where): Göttingen
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/141319
• Last update: 10.03.2025, 11:43 AM CET