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Social Preferences and Voting on Reform: An Experimental Study

  • Fabian Paetzel

    ()

    (Centre for Social Policy Research, University of Bremen)

  • Rupert Sausgruber

    ()

    (Department of Economics, Vienna University of Economics and Business)

  • Stefan Traub

    ()

    (Centre for Social Policy Research, University of Bremen)

Debating over efficiency-enhancing but inequality-increasing reforms accounts for the routine business of democratic institutions. Fernandez and Rodrik (1991) hold that anti-reform bias can be attributed to individual-specific uncertainty regarding the distribution of gains and losses resulting from a reform. In this paper, we experimentally demonstrate that anti-reform bias arising from uncertainty is mitigated by social preferences. We show that, paradoxically, many who stand to lose from reforms vote in favor because they value efficiency, while many who will potentially gain from reforms oppose them due to inequality aversion.

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Paper provided by Vienna University of Economics and Business, Department of Economics in its series Department of Economics Working Papers with number wuwp172.

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Date of creation: Apr 2014
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Handle: RePEc:wiw:wiwwuw:wuwp172
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