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Inequity and Risk Aversion in Sequential Public Good Games

Listed author(s):
  • Sabrina Teyssier

    ()

    (Thurgau Institute of Economics - University of Konstanz, GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

This paper analyzes which type of intrinsic preferences drive an agent's behavior in a sequential public good game depending on whether the agent is first or second mover. Theoretical predictions are based on heterogeneity of individuals in terms of social and risk preferences. We modelize preferences according to the inequity aversion model of Fehr and Schmidt (1999) and to the assumption of constant relative risk aversion. Risk aversion is significantly and negatively correlated with the contribution decision of first movers. Second movers with sufficiently high advantageous inequity aversion free-ride less and reciprocate more than others. Both results are predicted by our model. Nevertheless, no effect of disadvantageous inequity aversion of first movers is found in the data while theory predicted it. Our results underline the importance of taking into account the order of agents' play to correctly understand which type of preferences influences cooperation in voluntary contribution mechanisms. They suggest that individuals' behavior can be consistent between different experimental games.

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Paper provided by HAL in its series Post-Print with number halshs-00422669.

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Date of creation: 2009
Publication status: Published in Working Paper GATE 2009-19. 2009
Handle: RePEc:hal:journl:halshs-00422669
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00422669
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