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Risk Tolerance, Self-Interest, and Social Preferences

  • Lucy F. Ackert
  • Ann B. Gillette
  • Jorge Martinez-Vazquez
  • Mark Rider

We use an experimental method to investigate whether systematic relationships exist across distinct aspects of individual preferences: risk aversion in monetary outcomes, altruism in a twoperson context, and social preferences in a larger group context. Individual preferences across these three contexts are measured, and there is no possibility for risk sharing, wealth effects, or updating expectations of the population choices. We find that social preferences are related to demographic variables, including years of education, gender, and age. Perhaps most importantly, self allocation in a two-person dictator game is related to social preferences in a group context. Participants who are more generous in a dictator game are more likely to vote against their selfinterest in a group decision-making task which we interpret to be expressions of social preferences.

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Paper provided by Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University in its series Experimental Economics Center Working Paper Series with number 2009-04.

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Length: 46
Date of creation: Jan 2009
Date of revision: Feb 2011
Handle: RePEc:exc:wpaper:2009-04
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  14. Lucy F. Ackert & Jorge Martinez-Vazquez & Mark Rider, 2007. "Social Preferences And Tax Policy Design: Some Experimental Evidence," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 487-501, 07.
  15. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
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  26. Lucy F. Ackert & Ann B. Gillette & Jorge Martinez-Vazquez & Mark Rider, 2007. "Voting on Tax Policy Design," Public Finance Review, , vol. 35(2), pages 263-284, March.
  27. Ackert, Lucy F. & Church, Bryan K. & Englis, Basil, 2002. "The asset allocation decision and investor heterogeneity: a puzzle?," Journal of Economic Behavior & Organization, Elsevier, vol. 47(4), pages 423-433, April.
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