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Applied Micro Workshop – Erik Ø. Sørensen, “Linking Social and Personal Preferences”

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Alexander W. Cappelen, Shachar Kariv, Erik Ø. Sørensen, Bertil Tungodden, and William H. Zame: “Linking Social and Personal Preferences” We provide a positive account of preferences for both personal and social consumption in rich choice environments. The primary methodological contributions of the work are the establishment of theoretical links between preferences in various environments and an experimental technique that allows for the collection of richer data about preferences than has heretofore been possible. In this paper we ask whether – and in what circumstances – it is possible to deduce an individual decision-maker’s social risk preferences from the decision maker’s personal risk preferences and the decision maker’s primitive (non-risky) social preferences. We show that the analysis depends crucially on whether or not the decision maker is (assumed to be) an Expected Utility maximizer. Whether or not this is the case we provide necessary and sufficient conditions that the decision maker’s risk attitude in the domain of social choices can be deduced from the decision maker’s risk attitude in the domain of personal choices. To test the theory, we designed and executed an experiment in which subjects were confronted in turn with choices in three domains: risky personal choices (lotteries whose consequences are monetary outcomes for themselves alone), riskless social choices (deterministic monetary outcomes for themselves and another) and risky social choices (lotteries whose consequences are monetary outcomes for themselves and another). Theoretical predictions are well (but not perfectly) supported by the experimental data.

Event details
What
  • Presentation
When Nov 27, 2018
from 16:00 to 17:30
Where briq, Seminar Room 9/1.1, Schaumburg-Lippe-Straße 9
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