Public Goods and Social Cooperation: Experiments
Paper Session
Saturday, Jan. 6, 2024 8:00 AM - 10:00 AM (CST)
- Chair: Paul J. Feldman, Texas A&M University
Disentangling Risk and Other-Regarding Preferences
Abstract
This paper investigates risk and other-regarding preferences within a framework that parallels Epstein-Zin’s. Our model can explain key behavioral patterns in the combined domain and is the first to disentangle elementary attitudes towards risk, altruism, social substitution, ex-ante inequality, and ex-post inequality. We parameterize the model and test its predictions using a laboratory experiment with four decision environments based on convex choice sets. Our findings are consistent with the model, showing that most subjects adjust their risk attitudes due to ex-post inequality concerns and exhibit ex-ante fairness-seeking behavior. Our structural analysis at the individual level allows us to characterize people’s heterogeneity of preferences over five fundamental dimensions.JEL Classifications
- C9 - Design of Experiments
- H4 - Publicly Provided Goods