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Risk and Inequality in a Social Decision Making Experiment

Author

Listed:
  • Ingrid M.T. Rohde

    (Maastricht University, Bilgi Economics Lab of Istanbul)

  • Kirsten I.M. Rohde

    (Erasmus School of Economics, Erasmus University Rotterdam)

Abstract

As societies are increasingly concerned with social risks, it is important to evaluate risks not only from an individual perspective, but also from a societal one. Many increases in social risk involve a simultaneous increase in risk and inequality. This paper presents an experiment which disentangles concerns for risk and inequality in a social risk context. Subjects choose between different types of allocations of risks over 10 other participants. The allocations differ only in terms of dispersion. We disentangle four types of dispersion: ex ante inequality, ex post inequality, individual risk, and collective risk. The results show that people are averse towards ex ante inequality and individual risk, whereas they are ex post inequality and collective risk seeking.

Suggested Citation

  • Ingrid M.T. Rohde & Kirsten I.M. Rohde, 2012. "Risk and Inequality in a Social Decision Making Experiment," Tinbergen Institute Discussion Papers 12-045/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20120045
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    inequality; risk; experiment;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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