Time preferences and risk aversion: tests on domain differences

The design and evaluation of environmental policy requires the incorporation of time and risk elements as many environmental outcomes extend over long time periods and involve a large degree of uncertainty. Understanding how individuals discount and evaluate risks with respect to environmental outcomes is a prime component in designing effective environmental policy to address issues of environmental sustainability, such as climate change. Our objective in this study is to investigate whether subjects' time preferences and risk aversion across the monetary domain and the environmental domain differ. Crucially, our experimental design is incentivized: in the monetary domain, time preferences and risk aversion are elicited with real monetary payoffs, whereas in the environmental domain, we elicit time preferences and risk aversion using real (bee-friendly) plants. We find that subjects' time preferences are not significantly different across the monetary and environmental domains. In contrast, subjects' risk aversion is significantly different across the two domains. More specifically, subjects (men and women) exhibit a higher degree of risk aversion in the environmental domain relative to the monetary domain. Finally, we corroborate earlier results, which document that women are more risk averse than men in the monetary domain. We show this finding to, also, hold in the environmental domain

The Effects of Social Ties on Coordination: Conceptual Foundations for an Empirical Analysis

International audienceThis paper investigates the influence that social ties can have on behavior. After defining the concept of social ties that we consider, we introduce an original model of social ties. The impact of such ties on social preferences is studied in a coordination game with outside option. We provide a detailed game theoretical analysis of this game while considering various types of players, i.e., self-interest maximizing, inequity averse, and fair agents. In addition to these approaches that require strategic reasoning in order to reach some equilibrium, we also present an alternative hypothesis that relies on the concept of team reasoning. After having discussed the differences between the latter and our model of social ties, we show how an experiment can be designed so as to discriminate among the models presented in the paper

Children Base Their Investment on Calculated Pay-Off

To investigate the rise of economic abilities during development we studied children aged between 3 and 10 in an exchange situation requiring them to calculate their investment based on different offers. One experimenter gave back a reward twice the amount given by the children, and a second always gave back the same quantity regardless of the amount received. To maximize pay-offs children had to invest a maximal amount with the first, and a minimal amount with the second. About one third of the 5-year-olds and most 7- and 10-year-olds were able to adjust their investment according to the partner, while all 3-year-olds failed. Such performances should be related to the rise of cognitive and social skills after 4 years

Fair Air: Distributive Justice and Environmental Economics

Fairness, Justice, Equity, Environmental policy, Behavioral economics, Experimental economics,