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Risk versus social preferences under the veil of ignorance

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  • Frignani, Nicola
  • Ponti, Giovanni

Abstract

This paper reports experimental evidence from Dictator Game experiments in which subjects choose repeatedly one out of four options involving a pair of monetary prizes, one for them, one for another anonymously matched participant. In some sessions, there is no uncertainty about the player position (i.e., the identity of the best paid agent, constant across all options); in other sessions subjects choose “under the veil of ignorance”, not knowing in advance to which player position they will be eventually assigned, but only that either possibility is equally likely. Finally, we also collect evidence from additional sessions in which the same options correspond to binary lotteries, in which subjects may win the high or the low prize with equal probability, but their decisions do not affect other participants. We frame subjects’ decisions within the realm of a simple mean-variance utility maximization problem, in which the parameter associated to the variance is interpreted, depending on the treatment, as a measure of pure risk aversion, pure inequality aversion, or some combination of the two. Our estimates suggest that we can simply rely on risk aversion to explain subjects’ behavior under the veil of ignorance.

Suggested Citation

  • Frignani, Nicola & Ponti, Giovanni, 2012. "Risk versus social preferences under the veil of ignorance," Economics Letters, Elsevier, vol. 116(2), pages 143-146.
  • Handle: RePEc:eee:ecolet:v:116:y:2012:i:2:p:143-146
    DOI: 10.1016/j.econlet.2012.02.002
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    References listed on IDEAS

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    1. Kariv, Shachar & Zame, William R., 2008. "Piercing the Veil of Ignorance," Department of Economics, Working Paper Series qt994512r7, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    2. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
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    4. Antonio Cabrales & Raffaele Miniaci & Marco Piovesan & Giovanni Ponti, 2010. "Social Preferences and Strategic Uncertainty: An Experiment on Markets and Contracts," American Economic Review, American Economic Association, vol. 100(5), pages 2261-2278, December.
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    6. Yoram Amiel & John Creedy & Stan Hurn, 1999. "Measuring Attitudes Towards Inequality," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(1), pages 83-96, March.
    7. repec:bla:econom:v:72:y:2005:i:3:p:375-396 is not listed on IDEAS
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    Cited by:

    1. John Bone & Paolo Crosetto & John Hey & Carmen Pasca, 2021. "The Acceptability of Accountability," Constitutional Political Economy, Springer, vol. 32(4), pages 476-501, December.
    2. Giovanni Ponti & Claudio Rossetti, 2018. "Unobserved Heterogeneity in Structural Behavioral Models Using Experimental Data," CSEF Working Papers 512, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    3. Yan Chen & Iman YeckehZaare & Ark Fangzhou Zhang, 2018. "Real or bogus: Predicting susceptibility to phishing with economic experiments," PLOS ONE, Public Library of Science, vol. 13(6), pages 1-18, June.
    4. Michele Ferrara & Anna Bottasso & Daniela Tempesta & Marika Carrieri & Luigi De Gennaro & Giovanni Ponti, 2015. "Gender Differences in Sleep Deprivation Effects on Risk and Inequality Aversion: Evidence from an Economic Experiment," PLOS ONE, Public Library of Science, vol. 10(3), pages 1-15, March.
    5. Karen Evelyn Hauge & Snorre Kverndokk & Andreas Lange, 2021. "Why People Oppose Trade Institutions - On Morality, Fairness and Risky Actions," CESifo Working Paper Series 9456, CESifo.
    6. Matilde Giaccherini & Giovanni Ponti, 2018. "Preference Based Subjective Beliefs," Games, MDPI, vol. 9(3), pages 1-12, July.
    7. Engel, Christoph & Goerg, Sebastian J., 2018. "If the worst comes to the worst: Dictator giving when recipient’s endowments are risky," European Economic Review, Elsevier, vol. 105(C), pages 51-70.
    8. Rodriguez-Lara, Ismael & Ponti, Giovanni, 2017. "Social motives vs social influence: An experiment on interdependent time preferences," Games and Economic Behavior, Elsevier, vol. 105(C), pages 177-194.
    9. Ernesto Mesa-Vázquez & Ismael Rodriguez-Lara & Amparo Urbano, 2019. "Standard vs random dictator games. The effect of role uncertainty on generosity," ThE Papers 20/05, Department of Economic Theory and Economic History of the University of Granada..
    10. John Bone & Paolo Crosetto & John D Hey & Carmen Pasca, 2013. "Chance versus choice: eliciting attitudes to fair compensations," Discussion Papers 13/15, Department of Economics, University of York.
    11. Wolf, Stephan & Dron, Cameron, 2020. "The effect of an experimental veil of ignorance on intergenerational resource sharing: empirical evidence from a sequential multi-person dictator game," Ecological Economics, Elsevier, vol. 175(C).
    12. Hauge, Karen E. & Kverndokk, Snorre & Lange, Andreas, 2024. "Opposition to markets: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 227(C).
    13. Kaisa Herne & Jari K Hietanen & Olli Lappalainen & Esa Palosaari, 2022. "The influence of role awareness, empathy induction and trait empathy on dictator game giving," PLOS ONE, Public Library of Science, vol. 17(3), pages 1-19, March.
    14. Freundt, Jana & Lange, Andreas, 2017. "On the determinants of giving under risk," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 24-31.
    15. Jan (J.P.M.) Heufer & Jason Shachat & Yan Xu, 2018. "Measuring tastes for equity and aggregate wealth behind the veil of ignorance," Tinbergen Institute Discussion Papers 18-087/I, Tinbergen Institute.
    16. Mesa-Vázquez, Ernesto & Rodriguez-Lara, Ismael & Urbano, Amparo, 2021. "Standard vs random dictator games: On the effects of role uncertainty and framing on generosity," Economics Letters, Elsevier, vol. 206(C).

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    More about this item

    Keywords

    Dictator games; Social preferences; Risk preferences; Functional identification;
    All these keywords.

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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