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Do trade union leaders violate subjective expected utility? Some insight from experimental data

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  • Anna Maffioletti

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  • Michele Santoni

    ()

Abstract

This paper presents the results of two experiments designed to test violations of Subjective Expected Utility Theory (SEUT) within a sample of Italian trade union delegates and leaders. Subjects priced risky and ambiguous prospects in the domain of gains. Risky prospects were based on games of chance, while ambiguous prospects were built on the standard Ellsberg paradox and on event lotteries whose outcomes were based either on the results of a fictional election or on the future results of the 1999 European Parliamentary election in Italy and the UK. The experiments show that, although risky prospects were priced at their expected values on average, trade union delegates and leaders did violate SEUT when assessing ambiguous prospects. Moreover, their behaviour depended on the source of uncertainty (Ellsberg paradox versus electoral results; fictional versus real election; Italy versus UK election outcomes). We discuss the implications of these results for the economic theory of the trade union as regards technological innovation and the unemployed.

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File URL: http://wp.demm.unimi.it/tl_files/wp/2001/DEMM-2001_015wp.pdf
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Bibliographic Info

Paper provided by Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2001-15.

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Date of creation: 01 Jan 2001
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Handle: RePEc:mil:wpdepa:2001-15

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Keywords: Ambiguity; Ellsberg���s paradox; Trade unions.;

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Cited by:
  1. Akay, Alpaslan & Martinsson, Peter & Medhin, Haileselassie & Trautmann, Stefan T., 2009. "Attitudes toward Uncertainty among the Poor: Evidence from Rural Ethiopia," IZA Discussion Papers 4225, Institute for the Study of Labor (IZA).
  2. Laure Cabantous, 2007. "Ambiguity Aversion in the Field of Insurance: Insurers’ Attitude to Imprecise and Conflicting Probability Estimates," Theory and Decision, Springer, vol. 62(3), pages 219-240, May.
  3. Menachem Brenner & Yehuda Izhakian, 2011. "Asset Priving and Ambiguity: Empirical Evidence," Working Papers 11-10, New York University, Leonard N. Stern School of Business, Department of Economics.

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