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Preference reversals and the analysis of income distributions

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  • Yoram Amiel
  • Frank Cowell

    ()

  • Liema Davidovitz
  • Avraham Polovin

Abstract

It is known from the literature on uncertainty that in cases where individuals express a preference for a high win-probability bet over a bet with high winnings they nevertheless will bid more to obtain the bet with high winnings. We investigate whether a similar phenomenon applies in the parallel social-choice situation. Here decisions are to be made between a distribution with a small group of very highincome people. Results from a number of experimental designs are analysed.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s00355-007-0234-3
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Bibliographic Info

Article provided by Springer in its journal Social Choice and Welfare.

Volume (Year): 30 (2008)
Issue (Month): 2 (February)
Pages: 305-330

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Handle: RePEc:spr:sochwe:v:30:y:2008:i:2:p:305-330

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  1. Amiel, Yoram & Cowell, F. A. & Polovin, Avraham, 2001. "Risk perceptions, income transformations and inequality," European Economic Review, Elsevier, vol. 45(4-6), pages 964-976, May.
  2. Rothschild, Michael & Stiglitz, Joseph E., 1970. "Increasing risk: I. A definition," Journal of Economic Theory, Elsevier, vol. 2(3), pages 225-243, September.
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  4. Manfred NERMUTH, 1992. "Different Economic Theories with the Same Formal Structure: Risk, Income Inequality, Information Structures," Vienna Economics Papers vie9207, University of Vienna, Department of Economics.
  5. Tversky, Amos & Slovic, Paul & Kahneman, Daniel, 1990. "The Causes of Preference Reversal," American Economic Review, American Economic Association, vol. 80(1), pages 204-17, March.
  6. Grether, David M. & Plott, Charles R., . "Economic Theory of Choice and the Preference Reversal Phenomenon," Working Papers 152, California Institute of Technology, Division of the Humanities and Social Sciences.
  7. Uri Gneezy & John List & George Wu, 2006. "The uncertainty effect: When a risky prospect is valued less than its worst possible outcome," Framed Field Experiments 00152, The Field Experiments Website.
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  9. Seidl, Christian, 2002. " Preference Reversal," Journal of Economic Surveys, Wiley Blackwell, vol. 16(5), pages 621-55, December.
  10. Loomes, Graham & Starmer, Chris & Sugden, Robert, 1991. "Observing Violations of Transitivity by Experimental Methods," Econometrica, Econometric Society, vol. 59(2), pages 425-39, March.
  11. John C. Harsanyi, 1955. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility," Journal of Political Economy, University of Chicago Press, vol. 63, pages 309.
  12. Leima Davidovitz & Yoram Kroll, 1999. "Choices in Egalitarian Distribution: Inequality Aversion versus Risk Aversion," STICERD - Distributional Analysis Research Programme Papers 43, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  13. Holt, Charles A, 1986. "Preference Reversals and the Independence Axiom," American Economic Review, American Economic Association, vol. 76(3), pages 508-15, June.
  14. Yoram Amiel & Frank A Cowell, 2001. "Attitudes towards Risk and Inequality: A Questionnaire-Experimental Approach," STICERD - Distributional Analysis Research Programme Papers 56, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  15. Michael Rothschild & Joseph E. Stiglitz, 1972. "Some Further Results on the Measurement of Inequality," Cowles Foundation Discussion Papers 344, Cowles Foundation for Research in Economics, Yale University.
  16. Karni, Edi & Safra, Zvi, 1987. ""Preference Reversal' and the Observability of Preferences by Experimental Methods," Econometrica, Econometric Society, vol. 55(3), pages 675-85, May.
  17. Reilly, Robert J, 1982. "Preference Reversal: Further Evidence and Some Suggested Modifications in Experimental Design," American Economic Review, American Economic Association, vol. 72(3), pages 576-84, June.
  18. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
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  20. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931.
  21. Cox, James C & Epstein, Seth, 1989. "Preference Reversals without the Independence Axiom," American Economic Review, American Economic Association, vol. 79(3), pages 408-26, June.
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  23. Amiel,Yoram & Cowell,Frank, 1999. "Thinking about Inequality," Cambridge Books, Cambridge University Press, number 9780521466967, October.
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Cited by:
  1. Camacho-Cuena, Eva & Seidl, Christian & Morone, Andrea, 2005. "Comparing preference reversal for general lotteries and income distributions," Journal of Economic Psychology, Elsevier, vol. 26(5), pages 682-710, October.
  2. Oliver, Adam, 2006. "Further evidence of preference reversals: Choice, valuation and ranking over distributions of life expectancy," Journal of Health Economics, Elsevier, vol. 25(5), pages 803-820, September.

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