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Risk and Inequality Aversion in Social Dilemmas

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  • Brice Magdalou

    (CEREGMIA, Université des Antilles et de la Guyane, campus de Schoelcher, B.P. 7209, F-97275 Schoelcher Cédex, France.)

  • Dimitri Dubois

    (LAMETA, CNRS, Université Montpellier 1, CNRS, avenue de la mer, site Richter, C.S. 79606, F-34960 Montpellier Cédex 2, France.)

  • Phu Nguyen-Van

    (BETA, CNRS, Université de Strasbourg, 61 avenue de la Forêt Noire, F-67085 Strasbourg Cédex, France.)

Abstract

We experimentally investigate cooperative behavior in a social dilemma situation, where the socially efficient outcome may be encouraged by risk aversion and/or inequality aversion.The first part of our experiment is devoted to the elicitation of subjects' aversion profile, taking care to not confuse the two dimensions. Subjects are then grouped by three according to their aversion profiles, and interact in a repeated social dilemma game. In this game, agents are characterised by a social status so that higher the agent's status, higher will be her earnings. Cooperation is costly for a majority of agents at each period, but statuses can be reversed in future periods. We show that cooperation is strongly influenced by the group's aversion profile. Groups averse in both dimensions cooperate more than groups averse in only one dimension. Moreover cooperation seems to be more affected by risk aversion, whereas one might interpret cooperative behavior as an inequality averse or altruistic attitude.

Suggested Citation

  • Brice Magdalou & Dimitri Dubois & Phu Nguyen-Van, 2009. "Risk and Inequality Aversion in Social Dilemmas," Working Papers 09, Development and Policies Research Center (DEPOCEN), Vietnam, revised Feb 2009.
    • Handle: RePEc:dpc:wpaper:0909
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    Cited by:

    1. Sabrina Teyssier, 2012. "Inequity and risk aversion in sequential public good games," Public Choice, Springer, vol. 151(1), pages 91-119, April.
    2. Alexander W. Cappelen & James Konow & Erik ?. S?rensen & Bertil Tungodden, 2013. "Just Luck: An Experimental Study of Risk-Taking and Fairness," American Economic Review, American Economic Association, vol. 103(4), pages 1398-1413, June.

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    More about this item

    Keywords

    Risk aversion; Inequality aversion; Social preferences; Social dilemmas; Experimental economics;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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