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Preference reversals and the analysis of income distributions

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  • Amiel, Yoram
  • Cowell, Frank
  • Davidovitz, Leima
  • Polovin, Avraham

Abstract

It is known from the literature on uncertainty that in cases where individuals express a preference for a high win-probability bet over a bet with high winnings they nevertheless will bid more to obtain the bet with high winnings. We investigate whether a similar phenomenon applies in the parallel social-choice situation. Here decisions are to be made between a distribution with a small group of very highincome people. Results from a number of experimental designs are analysed.

Suggested Citation

  • Amiel, Yoram & Cowell, Frank & Davidovitz, Leima & Polovin, Avraham, 2003. "Preference reversals and the analysis of income distributions," LSE Research Online Documents on Economics 2144, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:2144
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    Cited by:

    1. Camacho-Cuena, Eva & Seidl, Christian & Morone, Andrea, 2005. "Comparing preference reversal for general lotteries and income distributions," Journal of Economic Psychology, Elsevier, vol. 26(5), pages 682-710, October.
    2. Oliver, Adam, 2006. "Further evidence of preference reversals: Choice, valuation and ranking over distributions of life expectancy," Journal of Health Economics, Elsevier, vol. 25(5), pages 803-820, September.
    3. Uri Gneezy & John A. List & George Wu, 2006. "The Uncertainty Effect: When a Risky Prospect is Valued Less than its Worst Possible Outcome," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(4), pages 1283-1309.

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    More about this item

    Keywords

    Preference reversals; Social welfare; Inequality; Risk and Experiments;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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