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Risk Tolerance, Self-Interest, and Social Preferences

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Author Info

  • Lucy F. Ackert
  • Ann B. Gillette
  • Jorge Martinez-Vazquez
  • Mark Rider

Abstract

We use an experimental method to investigate whether systematic relationships exist across distinct aspects of individual preferences: risk aversion in monetary outcomes, altruism in a twoperson context, and social preferences in a larger group context. Individual preferences across these three contexts are measured, and there is no possibility for risk sharing, wealth effects, or updating expectations of the population choices. We find that social preferences are related to demographic variables, including years of education, gender, and age. Perhaps most importantly, self allocation in a two-person dictator game is related to social preferences in a group context. Participants who are more generous in a dictator game are more likely to vote against their selfinterest in a group decision-making task which we interpret to be expressions of social preferences.

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File URL: http://excen.gsu.edu/workingpapers/GSU_EXCEN_WP_2009-04.pdf
File Function: First version, 2009
Download Restriction: no

File URL: http://excen.gsu.edu/workingpapers/GSU_EXCEN_WP_2011-03.pdf
File Function: Revised version, 2011
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Bibliographic Info

Paper provided by Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University in its series Experimental Economics Center Working Paper Series with number 2009-04.

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Length: 46
Date of creation: Jan 2009
Date of revision: Feb 2011
Handle: RePEc:exc:wpaper:2009-04

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  1. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences With Simple Tests," The Quarterly Journal of Economics, MIT Press, vol. 117(3), pages 817-869, August.
  2. Martinez-Vazquez, Jorge & Rider, Mark, 2005. "Multiple Modes of Tax Evasion: Theory and Evidence," National Tax Journal, National Tax Association, vol. 58(1), pages 51-76, March.
  3. John Hey & Jinkwon Lee, 2005. "Do subjects remember the past?," Applied Economics, Taylor & Francis Journals, vol. 37(1), pages 9-18.
  4. Charness, Gary & Villeval, Marie Claire, 2007. "Cooperation, Competition, and Risk Attitudes: An Intergenerational Field and Laboratory Experiment," IZA Discussion Papers 2574, Institute for the Study of Labor (IZA).
  5. Dirk Engelmann & Martin Strobel, 2006. "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments: Reply," American Economic Review, American Economic Association, vol. 96(5), pages 1918-1923, December.
  6. Robert H. Frank & Thomas Gilovich & Dennis T. Regan, 1993. "Does Studying Economics Inhibit Cooperation?," Journal of Economic Perspectives, American Economic Association, vol. 7(2), pages 159-171, Spring.
  7. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers 92-199, University of California at Berkeley.
  8. Fehr, Ernst & Schmidt, Klaus M., 1998. "A Theory of Fairness, Competition and Cooperation," CEPR Discussion Papers 1812, C.E.P.R. Discussion Papers.
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  11. Eckel, Catherine C & Grossman, Philip J, 1998. "Are Women Less Selfish Than Men? Evidence from Dictator Experiments," Economic Journal, Royal Economic Society, vol. 108(448), pages 726-35, May.
  12. Gary Charness, University of California, Santa Barbara and Garance Genicot,Georgetown University, 2004. "An Experimental Test of Risk-Sharing Arrangements," Working Papers gueconwpa~04-04-02, Georgetown University, Department of Economics.
  13. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
  14. Rachel Croson & Uri Gneezy, 2009. "Gender Differences in Preferences," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 448-74, June.
  15. Jorge Martinez-Vazquez & Mark Rider, 2003. "Multiple Modes of Tax Evasion: Theory and Evidence from the TCMP," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0306, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  16. James C. Cox & Cary A. Deck, 2006. "When Are Women More Generous than Men?," Economic Inquiry, Western Economic Association International, vol. 44(4), pages 587-598, October.
  17. Keith Murnighan & M Saxon, 1998. "Ultimatum bargaining by children and adults," Artefactual Field Experiments 00100, The Field Experiments Website.
  18. Lucy F. Ackert & Jorge Martinez-Vazquez & Mark Rider, 2007. "Social Preferences And Tax Policy Design: Some Experimental Evidence," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 487-501, 07.
  19. Joulfaian, David & Rider, Mark, 1996. "Tax Evasion in the Presence of Negative Income Tax Rates," National Tax Journal, National Tax Association, vol. 49(4), pages 553-70, December.
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  21. Clotfelter, Charles T, 1983. "Tax Evasion and Tax Rates: An Analysis of Individual Returns," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 363-73, August.
  22. Brad M. Barber & Terrance Odean, 2001. "Boys Will Be Boys: Gender, Overconfidence, And Common Stock Investment," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 261-292, February.
  23. Murnighan, J. Keith & Saxon, Michael Scott, 1998. "Ultimatum bargaining by children and adults," Journal of Economic Psychology, Elsevier, vol. 19(4), pages 415-445, August.
  24. Lucy F. Ackert & Ann B. Gillette & Jorge Martinez-Vazquez & Mark Rider, 2007. "Voting on Tax Policy Design," Public Finance Review, , vol. 35(2), pages 263-284, March.
  25. Gary E. Bolton & Rami Zwick & Elena Katok, 1998. "Dictator game giving: Rules of fairness versus acts of kindness," International Journal of Game Theory, Springer, vol. 27(2), pages 269-299.
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Cited by:
  1. Armin Falk & Stephan Meier & Christian Zehnder, 2010. "Did we Overestimate the Role of Social Preferences? The Case of Self-Selected Student Samples," CESifo Working Paper Series 3177, CESifo Group Munich.
  2. Barmettler, Franziska & Fehr, Ernst & Zehnder, Christian, 2012. "Big experimenter is watching you! Anonymity and prosocial behavior in the laboratory," Games and Economic Behavior, Elsevier, vol. 75(1), pages 17-34.

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