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Just luck: an experimental study of risk taking and fairness

  • Cappelen, Alexander W
  • Konow, James
  • Sorensen, Erik O
  • Tungodden, Bertil

Choices involving risk significantly affect the distribution of income and wealth in society. This paper reports the results of the first experiment, to our knowledge, to study fairness views about risk-taking, specifically whether such views are based chiefly on ex ante opportunities or on ex post outcomes. We find that, even though many participants focus exclusively on ex ante opportunities, most favor some redistribution ex post. Many participants also make a distinction between ex post inequalities that reflect differences in luck and ex post inequalities that reflect differences in choices. These findings apply to both stakeholders and impartial spectators.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 24475.

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Date of creation: 10 Mar 2010
Date of revision:
Handle: RePEc:pra:mprapa:24475
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  1. Fehr, Ernst & Schmidt, Klaus M., 1999. "A theory of fairness, competition, and cooperation," Munich Reprints in Economics 20650, University of Munich, Department of Economics.
  2. Andrews, Donald W K, 2001. "Testing When a Parameter Is on the Boundary of the Maintained Hypothesis," Econometrica, Econometric Society, vol. 69(3), pages 683-734, May.
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  8. John C. Harsanyi, 1955. "Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility," Journal of Political Economy, University of Chicago Press, vol. 63, pages 309.
  9. Alexander Cappelen & Astri Hole & Erik Sørensen & Bertil Tungodden, 2011. "The importance of moral reflection and self-reported data in a dictator game with production," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 36(1), pages 105-120, January.
  10. Konow, James, 2006. "Is Fairness in the Eye of the Beholder? An Impartial Spectator Analysis of Justice," MPRA Paper 2730, University Library of Munich, Germany.
  11. Daniel J. Zizzo & Andrew J. Oswald, 2001. "Are People Willing to Pay to Reduce Others'Incomes?," Annals of Economics and Statistics, GENES, issue 63-64, pages 39-65.
  12. Norman Frohlich & Joe Oppenheimer & Anja Kurki, 2004. "Modeling Other-Regarding Preferences and an Experimental Test," Public Choice, Springer, vol. 119(1_2), pages 91-117, 04.
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  15. James Konow, 2000. "Fair Shares: Accountability and Cognitive Dissonance in Allocation Decisions," American Economic Review, American Economic Association, vol. 90(4), pages 1072-1091, September.
  16. Cappelen, Alexander W. & Tungodden, Bertil, 2006. "A Liberal Egalitarian Paradox," Economics and Philosophy, Cambridge University Press, vol. 22(03), pages 393-408, November.
  17. Alexander W. Cappelen & Astri D. Hole & Erik Ø. Sørensen & Bertil Tungodden, 2005. "The Pluralism of Fairness Ideals: An Experimental Approach," CESifo Working Paper Series 1611, CESifo Group Munich.
  18. Hammond, Peter J, 1981. "Ex-ante and Ex-post Welfare Optimality under Uncertainty," Economica, London School of Economics and Political Science, vol. 48(191), pages 235-50, August.
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  23. Alon Harel & Zvi Safra & Uzi Segal, 2003. "Ex-Post Egalitarianism," Boston College Working Papers in Economics 563, Boston College Department of Economics.
  24. Krawczyk, Michal, 2010. "A glimpse through the veil of ignorance: Equality of opportunity and support for redistribution," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 131-141, February.
  25. Vitezslav Babicky, 2003. "Fairness Under Risk: Insights from Dictator Games," CERGE-EI Working Papers wp217, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
  26. Jason F. Shogren, 1990. "Experiment on Coasian Bargaining over Ex Ante Lotteries and Ex Post Rewards, An," Center for Agricultural and Rural Development (CARD) Publications 90-wp63, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  27. Ernst R. Berndt & Bronwyn H. Hall & Robert E. Hall & Jerry A. Hausman, 1974. "Estimation and Inference in Nonlinear Structural Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 3, number 4, pages 653-665 National Bureau of Economic Research, Inc.
  28. Daniel John Zizzo, 2003. "Inequality and Procedural Fairness in a Money Burning and Stealing Experiment," Economics Series Working Papers 155, University of Oxford, Department of Economics.
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