Lorenz meets rating but misses valuation
AbstractUsing an experiment with material incentives, this paper investigates the violation of Lorenz relations in the case of dominant and single?crossing Lorenz curves. Our experimental design consists of two treatments: an income distribution treatment and a lottery treatment. Both treatments were conducted in Italy and Spain. In each treatment, subjects were asked to judge ten multiple?outcome lotteries or ten n?dimensional income distributions in terms of both ratings and valuations. This 2 × 2 × 2 experimental design, allows us to investigate the response?mode (rating versus valuation) and framing (lotteries versus income distributions) effects in subjects? perceptions concerning the two types of Lorenz relations. We found the existence of a marked response?mode effect, as only the ratings of the lotteries and income distributions confirm both Lorenz relations, whereas the valuations violate them. The framing effect is significant only for the Spanish data. For this data the sign of the framing effect depends on the type of the Lorenz relation considered. For crossing Lorenz curves, a higher conformity corresponds to the lottery frame, for Lorenz dominance a higher conformity corresponds to the income distribution frame. --
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Bibliographic InfoPaper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2005,05.
Date of creation: 2005
Date of revision:
Income Distributions; Lotteries; Lorenz Curves; Inequality and Risk Aversion; Response?Mode Effects;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-08-05 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Seidl, Christian & Camacho Cuena, Eva & Morone, Andrea, 2003. "Income Distributions versus Lotteries Happiness, Response-Mode Effects, and Preference," Economics Working Papers 2003,01, Christian-Albrechts-University of Kiel, Department of Economics.
- Traub, Stefan & Seidl, Christian & Schmidt, Ulrich, 2003. "Lorenz, Pareto, Pigou: Who Scores Best? Experimental Evidence on Dominance Relations of Income Distributions," Economics Working Papers 2003,04, Christian-Albrechts-University of Kiel, Department of Economics.
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