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Do trade union leaders violate subjective expected utility? Some insight from experimental data

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  • Anna Maffioletti
  • Michele Santoni

Abstract

This paper presents the results of two experiments designed to test violations of Subjective Expected Utility Theory (SEUT) within a sample of Italian trade union delegates and leaders. Subjects priced risky and ambiguous prospects in the domain of gains. Risky prospects were based on games of chance, while ambiguous prospects were built on the standard Ellsberg paradox and on event lotteries whose outcomes were based either on the results of a fictional election or on the future results of the 1999 European Parliamentary election in Italy and the UK. The experiments show that, although risky prospects were priced at their expected values on average, trade union delegates and leaders did violate SEUT when assessing ambiguous prospects. Moreover, their behaviour depended on the source of uncertainty (Ellsberg paradox versus electoral results; fictional versus real election; Italy versus UK election outcomes). We discuss the implications of these results for the economic theory of the trade union as regards technological innovation and the unemployed.

Suggested Citation

  • Anna Maffioletti & Michele Santoni, 2001. "Do trade union leaders violate subjective expected utility? Some insight from experimental data," Departmental Working Papers 2001-015, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    • Handle: RePEc:mil:wpdepa:2001-015
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    More about this item

    Keywords

    Ambiguity; Ellsberg���s paradox; Trade unions.;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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