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Are People Willing to Pay to Reduce Others' Incomes?

This paper studies utility interdependence in the laboratory. We design an experiment where subjects can reduce ("burn") other subjects' money. Those who burn the money of others have to give up some of their own cash. Despite this cost, and contrary to the assumptions of economics textbooks, the majority of our subjects choose to destroy at least part of others' money holdings. We vary experimentally the amount that subjects have to pay to reduce other people's cash. The implied price elasticity of burning is calculated; it is mostly less than unity. There is a strong correlation between wealth, or rank, and the amounts by which subjects are burnt.

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File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/twerp568.pdf
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Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 568.

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Length: 38 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:wrk:warwec:568
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Web page: http://www2.warwick.ac.uk/fac/soc/economics/

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  18. Hoffman, Elizabeth & McCabe, Kevin A & Smith, Vernon L, 1996. "On Expectations and the Monetary Stakes in Ultimatum Games," International Journal of Game Theory, Springer, vol. 25(3), pages 289-301.
  19. Schotter, A. & Weiss, A. & Zapater, I., 1993. "Fairness and Survival in Ultimatum and Dictatorship Games," Working Papers 93-01, C.V. Starr Center for Applied Economics, New York University.
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