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Testing the Framework of Other-Regarding Preferences

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  • M. Vittoria Levati

    (Max Planck Institute of Economics, Jena, and Department of Economics, University of Verona)

  • Aaron Nicholas

    (Graduate School of Business, Deakin University)

  • Birendra Rai

    (Department of Economics, Monash University)

Abstract

We assess the empirical validity of the overall theoretical framework of other-regarding preferences by focusing on those preference axioms that are common to all the prominent theories of outcome-based other-regarding preferences. This common set of preference axioms leads to a testable implication: the strict preference ranking of self over a finite number of alternatives lying on any straight line in the space of material payoffs to self and other will be single-peaked. The extent of single-peakedness varies from a high of 79% to a low of 54% across our treatments that are based on dictator and trust games. Positively and/or negatively other-regarding subjects are significantly less likely to report single-peaked rankings relative to self-regarding subjects. We delineate the potential reasons for violations of single-peakedness and discuss the implications of our findings for theoretical modeling of other-regarding preferences.

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Bibliographic Info

Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2011-041.

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Date of creation: 30 Sep 2011
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Handle: RePEc:jrp:jrpwrp:2011-041

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Keywords: Other-regarding preferences; social preferences; decision making under risk; single-peaked preferences; experiments;

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