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Are people willing to pay to reduce others' incomes?

By Andrew J. Oswald and Daniel John Zizzo

Abstract

This paper studies utility interdependence in the laboratory. We design an experiment where subjects can reduce ("burn") other subjects' money. Those who burn the money of others have to give up some of their own cash. Despite this cost, and contrary to the assumptions of economics textbooks, the majority of our subjects choose to destroy at least part of others' money holdings. We vary experimentally the amount that subjects have to pay to reduce other people's cash. The implied price elasticity of burning is calculated; it is mostly less than unity. There is a strong correlation between wealth, or rank, and the amounts by which subjects are burnt. In making their decisions, many burners, especially disadvantaged\ud ones, seem to care about whether another person ‘deserves’ the money he has. Desert is not simply a matter of relative payoff

Topics: HB
Publisher: University of Warwick, Department of Economics
Year: 2000
OAI identifier: oai:wrap.warwick.ac.uk:342

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