Greg DeAngelo, Assistant Professor, Economics, RPI

 

Greg DeAngelo, Assistant Professor, Economics, RPI

Sage 4101

February 22, 2012 12:00 PM - 1:30 PM

Abstract:

Subjects are placed in social and individual decision situations with an obvious unchanging reference point.  We observe whether subjects risk behavior changes on either side of the reference point as prospect theory suggests. We also observe if social and private decisions are similar allowing us to evaluate if there is inequality aversion. Finally we observe redistribution behavior when positions are known and fixed allowing an assessment if the observed redistribution reflects risk preferences, inequality preferences or simple self-interest.  Our primary result is that subjects are heterogeneous in their response to risk with a majority exhibiting risk preference either above or below the reference point. Men are more prone to take risks at the low end of the distribution but are unwilling to force this preference on others in social situations.  We do not observe a separate preference for equality.  With positions known, self-interest predicts well at the low end of the distribution but not at the high end.

Social Behavior Toward Risk and Inequality

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