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Revolution And Risk

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  • Chris Snijders
  • Werner Raub

Abstract

We analyze the effects of risk preferences on cooperative behavior in a repeated Prisoner's Dilemma. We show that, counterintuitively, risk aversion favors cooperative behavior. Hence, if people are risk averse for gains and risk seeking for losses, conditions for cooperation are less restrictive when outcomes represent gains than if outcomes represent losses. In an experimental test of this prediction, we find that risk aversion indeed favors cooperation. After controlling for the effect of risk preferences, we do not find any empirical evidence for a difference between cooperation in social dilemmas in which outcomes represent gains and dilemmas where outcomes represent losses. The relevance of this result with respect to theories of collective action, in particular Coleman's account of theories of revolution, is outlined.

Suggested Citation

  • Chris Snijders & Werner Raub, 1998. "Revolution And Risk," Rationality and Society, , vol. 10(4), pages 405-425, November.
    • Handle: RePEc:sae:ratsoc:v:10:y:1998:i:4:p:405-425
    DOI: 10.1177/104346398010004002
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    References listed on IDEAS

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    5. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
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    Cited by:

    1. M.A.L.M. van Assen & C.C.P. Snijders, 2010. "The effect of nonlinear utility on behaviour in repeated prisoner’s dilemmas," Rationality and Society, , vol. 22(3), pages 301-332, August.
    2. Andreas Flache, 2001. "Individual Risk Preferences And Collective Outcomes In The Evolution Of Exchange Networks," Rationality and Society, , vol. 13(3), pages 304-348, August.
    3. Weijun Zeng & Minqiang Li & Nan Feng, 2017. "The effects of heterogeneous interaction and risk attitude adaptation on the evolution of cooperation," Journal of Evolutionary Economics, Springer, vol. 27(3), pages 435-459, July.
    4. Mattijs Lambooij & Andreas Flache & Jacques Siegers, 2009. "Shadow of the Future, Risk Aversion, and Employee Cooperation," Rationality and Society, , vol. 21(3), pages 307-336, August.

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    risk aversion; cooperative behavior;

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