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Stochastic Choice and Social Preferences: Inequity Aversion versus Shame Aversion

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  • Yosuke Hashidate
  • Keisuke Yoshihara

Abstract

In this paper, we propose a theory to identify the motivations behind altruistic or prosocial behavior. We focus on inequity aversion and shame aversion as social image concerns. To study these, we characterize two additively perturbed utility models, that is, the sum of expected utility and a non-linear cost function. First, we examine how to distinguish between stochastic inequity-averse behavior and stochastic shame-averse behavior. Next, we show that additively perturbed inequity-averse utility captures the general class of inequity-averse preferences, including ex-ante and ex-post fairness. Finally, we consider the relationship between our models and random utility, one of the most common stochastic choice models.

Suggested Citation

  • Yosuke Hashidate & Keisuke Yoshihara, 2021. "Stochastic Choice and Social Preferences: Inequity Aversion versus Shame Aversion," Working Papers e155, Tokyo Center for Economic Research.
    • Handle: RePEc:tcr:wpaper:e155
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    References listed on IDEAS

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    1. Stefano DellaVigna & John A. List & Ulrike Malmendier, 2012. "Testing for Altruism and Social Pressure in Charitable Giving," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(1), pages 1-56.
    2. Yosuke Hashidate, 2018. "Social Image Concern and Reference Point Formation," CIRJE F-Series CIRJE-F-1085, CIRJE, Faculty of Economics, University of Tokyo.
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    13. , & ,, 2012. "Ashamed to be selfish," Theoretical Economics, Econometric Society, vol. 7(1), January.
    14. Kirsten Rohde, 2010. "A preference foundation for Fehr and Schmidt’s model of inequity aversion," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 34(4), pages 537-547, April.
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    16. Yosuke Hashidate & Keisuke Yoshihara, 2021. "Stochastic Expected Inequity-Averse Choice," Economics Bulletin, AccessEcon, vol. 41(3), pages 1843-1848.
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    1. Yosuke Hashidate & Keisuke Yoshihara, 2021. "Stochastic Expected Inequity-Averse Choice," Economics Bulletin, AccessEcon, vol. 41(3), pages 1843-1848.

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