An experimental study on individual choice, social welfare, and social preferences

We experimentally study subjects' compliance with dominance relationships of income distributions in a ranking task. The experiment consisted of four different treatments: Lottery, individual choice, social preferences, and social planner. Our results suggest that people's risk attitudes do not adequately reflect their inequality attitudes. Uninvolved social planners exhibit randomization preferences, while self-interested social planners are generally more inequality averse and try to avoid extreme outcomes.

[1]  W. Güth,et al.  An experimental analysis of ultimatum bargaining , 1982 .

[2]  J. Rawls.  Justice as Fairness , 2001 .

[3]  Tibor Neugebauer,et al.  Leaky Buckets Versus Compensating Justice: An Experimental Investigation , 2007 .

[4]  Colin Camerer,et al.  The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework , 1999 .

[5]  A. M. Carr-Saunders,et al.  Wealth and Welfare , 1913 .

[6]  C. Seidl,et al.  Perceptional inequality and preferential judgements: An empirical examination of distributional axioms , 1994 .

[7]  M. O. Lorenz,et al.  Methods of Measuring the Concentration of Wealth , 1905, Publications of the American Statistical Association.

[8]  W. Vickrey.  Measuring Marginal Utility by Reactions to Risk , 1945 .

[9]  Alain Trannoy,et al.  Freedom in Economics : New Perspectives in Normative Analysis , 1997 .

[10]  Bernard Cullen.  Le contrat social libéral: Philosophie et pratique du libéralisme , 1990 .

[11]  Marc Fleurbaey,et al.  EQUALITY AMONG RESPONSIBLE INDIVIDUALS , 2002 .

[12]  Serge-Christophe Kolm,et al.  Chance and justice: Social policies and the Harsanyi–Vickrey–Rawls problem , 1998 .

[13]  J. Harsanyi.  Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility , 1955 .

[14]  William Vickrey,et al.  Utility, Strategy, and Social Decision Rules , 1960 .

[15]  M. Fleming,et al.  A Cardinal Concept of Welfare , 1952 .

[16]  L. A. Goodman,et al.  Social Welfare Functions Based on Individual Rankings , 1952, American Journal of Sociology.

[17]  Frank A. Cowell,et al.  Income inequality and social welfare , 1994 .

[18]  E. Fehr.  A Theory of Fairness, Competition and Cooperation , 1998 .

[19]  R. Saposnik,et al.  On evaluating income distributions: Rank dominance, the Suppes-Sen grading principle of justice, and Pareto optimality , 1983 .

[20]  Robert H. Strotz.  How Income Ought To Be Distributed: Paradox Regained , 1961, Journal of Political Economy.

[21]  A. Shorrocks,et al.  The Class of Additively Decomposable Inequality Measures , 1980 .

[22]  R. Saposnik,et al.  Rank-dominance in income distributions , 1981 .

[23]  Larry G. Epstein,et al.  Quadratic Social Welfare Functions , 1992, Journal of Political Economy.

[24]  Peter A. Diamond,et al.  Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparison of Utility: Comment , 1967, Journal of Political Economy.

[25]  Erik Schokkaert,et al.  Risk perceptions and distributional judgments , 2001 .

[26]  Gary E. Bolton,et al.  ERC: A Theory of Equity, Reciprocity, and Competition , 2000 .

[27]  Javier Ruiz-Castillo Ucelay,et al.  Searching by questionnaire for the meaning of income inequality , 1993 .

[28]  Russell Keat,et al.  Equality and Efficiency: The Big Tradeoff , 1980 .

[29]  J. Silber.  Inequalities: theory, experiments and applications , 2004 .

[30]  Yoram Kroll,et al.  Inequality Aversion Versus Risk Aversion , 2003 .

[31]  Friedman, Harsanyi, Rawls, Boulding - or Somebody Else? , 2003 .

[32]  F. Cowell,et al.  Inequality Changes and Income Growth , 1994 .

[33]  A. Shorrocks.  Ranking Income Distributions , 1983 .

[34]  C. Seidl,et al.  Comparing preference reversal for general lotteries and income distributions , 2005 .

[35]  Satya R. Chakravarty,et al.  Ethical Social Index Numbers , 1990 .

[36]  Ernst Fehr,et al.  Theories of Fairness and Reciprocity , 2001 .

[37]  P. Hammond.  Consequentialist foundations for expected utility , 1988 .

[38]  Robert H. Strotz.  How Income Ought to be Distributed: A Paradox in Distributive Ethics , 1958, Journal of Political Economy.

[39]  Ulrich Schmidt,et al.  Friedman, Harsanyi, Rawls, Boulding – or somebody else? An experimental investigation of distributive justice , 2005, Soc. Choice Welf..

[40]  R. Sugden,et al.  Does the Random-Lottery Incentive System Elicit True Preferences? An Experimental Investigation , 2016 .

[41]  J. Huyck,et al.  Tacit Coordination Games, Strategic Uncertainty, and Coordination Failure , 1990 .

[42]  F. Bourguignon.  On the Measurement of Inequality , 2003 .

[43]  C. Seidl,et al.  Acceptance of Distributional Axioms: Experimental Findings , 1994 .

[44]  Buhong Zheng,et al.  Envy, malice and Pareto efficiency: An experimental examination , 2002, Soc. Choice Welf..

[45]  G. Loomes,et al.  The Impact of Incentives Upon Risky Choice Experiments , 1997 .

[46]  Frank A. Cowell,et al.  'A Fair Suck of the Sauce Bottle' or What Do You Mean by Inequality? , 1985 .

[47]  John C. Harsanyi,et al.  Cardinal Utility in Welfare Economics and in the Theory of Risk-taking , 1953, Journal of Political Economy.

[48]  D. Levine.  Modeling Altruism and Spitefulness in Experiments , 1998 .

[49]  Olivier Armantier.  Do Wealth Differences Affect Fairness Considerations? , 2006 .

[50]  Frank A. Cowell,et al.  Thinking about Inequality: Personal Judgment and Income Distributions , 1999 .

[51]  J. Huyck,et al.  Strategic Uncertainty, Equilibrium Selection, and Coordination Failure in Average Opinion Games , 1991 .

[52]  H. Dalton.  The Measurement of the Inequality of Incomes , 1920 .

[53]  John H. Miller,et al.  NOTES AND COMMENTS GIVING ACCORDING TO GARP: AN EXPERIMENTAL TEST OF THE CONSISTENCY OF PREFERENCES FOR ALTRUISM , 2002 .

[54]  S. Chew.  Axiomatic utility theories with the betweenness property , 1989 .

[55]  The Impossibility of a Just Pigouvian , 2007 .

[56]  Erik Schokkaert,et al.  Social welfare, the veil of ignorance and purely individual risk: An empirical examination , 2004 .

[57]  H. Alker,et al.  On measuring inequality. , 1964, Behavioral science.

[58]  Wulf Gaertner,et al.  Income inequality, risk, and the transfer principle: A questionnaire-experimental investigation , 2003, Math. Soc. Sci..

[59]  Bev Dahlby,et al.  Interpreting inequality measures in a Harsanyi framework , 1987 .

[60]  Arthur Cecil Pigou,et al.  Wealth and Welfare. , 1913 .

[61]  Michele Bernasconi,et al.  How should income be divided? questionnaire evidence from the theory of “Impartial preferences” , 2002 .

[62]  H. Fawcett.  Manual of Political Economy , 1995 .

[63]  V. Smith.  Microeconomic Systems as an Experimental Science , 1982 .

[64]  F. Cowell,et al.  Income Transformation and Income Inequality , 1999 .

[65]  M. Machina.  "Expected Utility" Analysis without the Independence Axiom , 1982 .

[66]  M. Powell,et al.  How to predict gender-differences in choice under risk a case for the use of formalized models , 2001 .

[67]  K. Kuga,et al.  Inequality measurement : an axiomatic approach , 1981 .

[68]  P. Lambert.  The Distribution and Redistribution of Income , 1989 .

[69]  W. Eichhorn,et al.  Models and Measurement of Welfare and Inequality , 1994 .

[70]  Ronald Dworkin,et al.  What is Equality? Part 1: Equality of Welfare , 1981 .

[71]  Gary H. McClelland,et al.  Who accepts the pareto axiom? the role of utility and equity in arbitration decisions , 1978 .

[72]  Milton Friedman,et al.  Choice, Chance, and the Personal Distribution of Income , 1953, Journal of Political Economy.

[73]  Fredrik Carlsson,et al.  Are People Inequality-Averse, or Just Risk-Averse? , 2001 .

[74]  Charles Blackorby,et al.  Measures of relative equality and their meaning in terms of social welfare , 1978 .

[75]  M. Rabin,et al.  Understanding Social Preference with Simple Tests , 2001 .

[76]  Frank A. Cowell,et al.  Measurement of income inequality: Experimental test by questionnaire , 1992 .

[77]  Steven M. Shugan.  The Cost Of Thinking , 1980 .

[78]  Alois Stutzer,et al.  Introducing Procedural Utility: Not Only What, But Also How Matters , 2002 .

[79]  Robin P. Cubitt,et al.  On the Validity of the Random Lottery Incentive System , 1998 .