Other-regarding preferences and giving decision in a risky environment: experimental evidence

We investigate whether and how an individual giving decision is affected in risky environments in which the recipient’s wealth is random. We demonstrate that, under risk neutrality, the donation of dictators with a purely ex post view of fairness should, in general, be affected by the riskiness of the recipient’s payoff, while dictators with a purely ex ante view should not be. Furthermore, we observe that some influential inequality aversion preferences functions yield opposite predictions when we consider ex post view of fairness. Hence, we report on dictator games laboratory experiments in which the recipient’s wealth is exposed to an actuarially neutral and additive background risk. Our experimental data show no statistically significant impact of the recipient’s risk exposure on dictators’ giving decisions. This result appears robust to both the experimental design (within subjects or between subjects) and the origin of the recipient’s risk exposure (chosen by the recipient or imposed on the recipient). Although we cannot sharply validate or invalidate alternative fairness theories, the whole pattern of our experimental data can be simply explained by assuming ex ante view of fairness and risk neutrality

On the Importance of the Tax System in Marginal Cost of Funds Calculations

Several papers have attempted to derive computable analytical formulas for the Marginal Cost of Funds (MCF). However, this literature is often cast in the pure labor supply general equilibrium model, which is not completely consistent with real tax systems where Labor Income Taxation (LIT) is not the only instrument used by governments. Hence, we explicitly introduce Value-Added Taxation (VAT) on consumption goods in the conventional model, and we derive an analytical formula for the MCF which does incorporate general equilibrium interactions between the different tax bases. Then, we illustrate how much this matter for empirical estimates of MCF using French data. Our numerical example suggests that, when computing MCF for a LIT reform, taking account of the impact of LIT reform on tax revenue from VAT can make a great deal of difference, typically increasing MCF and accounting for around 0.2 to 0.8 of estimates. In addition, MCF is then really less likely to be less than one than in the conventional framework.

Quels déterminants de la prise de risque? Les réponses de l’économie expérimentale

Nous passons en revue les méthodes d’élicitation des préférences pour le risque avec incitations réelles, afin de mettre en évidence les principaux déterminants de la prise de risque identifiés grâce à ces méthodes. Dans un premier temps nous présentons l’état des connaissances quant à ces déterminants (le genre, l’âge et la richesse), et dans un second temps, nous mettons en avant deux domaines qui affectent la prise de risque et pour lesquels l’état des connaissances reste insuffisant : la présence de risque inassurable et l’interaction entre les préférences temporelles et les préférences pour le risque

Quels déterminants de la prise de risque? Les réponses de l’économie expérimentale

Nous passons en revue les méthodes d’élicitation des préférences pour le risque avec incitations réelles, afin de mettre en évidence les principaux déterminants de la prise de risque identifiés grâce à ces méthodes. Dans un premier temps nous présentons l’état des connaissances quant à ces déterminants (le genre, l’âge et la richesse), et dans un second temps, nous mettons en avant deux domaines qui affectent la prise de risque et pour lesquels l’état des connaissances reste insuffisant : la présence de risque inassurable et l’interaction entre les préférences temporelles et les préférences pour le risque

A Note on Generalized Transfers Principle with Reduced-Form Social Welfare Functions

In most welfare analyses, especially in the literature on normative inequality measurement, it is a commonplace to assume a direct relationship between the distribution of income and social welfare. As a result, this relationship is formally summarized by a single function, called a reduced-form social welfare function. Hence, with reference to some transfer principles, normative considerations are introduced and the shape of the reduced-form is accordingly restricted. In this note, we investigate and question the relevance of this approach. After recognizing that any reduced-form social welfare function merges two elements of very different nature – individuals’ self-interested preferences over income (an empirical element) and those of the society over utilities (a normative element) – it is clear that it is problematic or at least misleading to make assumptions about the shape of the reduced-form social welfare function according to normative considerations only. However, we show that consistency can be restored whenever individuals’ preferences can be represented by completely monotone utility functions.Social Welfare; Inequality; Transfer Principles; Completely Monotone Utility Functions

Other-Regarding Preferences and Giving Decision in a Risky Environment: Experimental Evidence

International audienceWe investigate whether and how an individual giving decision is affected in risky environments in which the recipient's wealth is random. We demonstrate that, under risk neutrality, the donation of dictators with a purely ex post view of fairness should, in general, be affected by the riskiness of the recipient's payoff, while dictators with a purely ex ante view should not be. Furthermore, we observe that some influential inequality aversion preferences functions yield opposite predictions when we consider ex post view of fairness. Hence, we report on dictator games laboratory experiments in which the recipient's wealth is exposed to an actuarially neutral and additive background risk. Our experimental data show no statistically significant impact of the recipient's risk exposure on dictators' giving decisions. This result appears robust to both the experimental design (within subjects or between subjects) and the origin of the recipient's risk exposure (chosen by the recipient or imposed on the recipient). Although we cannot sharply validate or invalidate alternative fairness theories, the whole pattern of our experimental data can be simply explained by assuming ex ante view of fairness and risk neutrality

Other-Regarding Preferences and Giving Decision in a Risky Environment: Experimental Evidence

International audienceWe investigate whether and how an individual giving decision is affected in risky environments in which the recipient's wealth is random. We demonstrate that, under risk neutrality, the donation of dictators with a purely ex post view of fairness should, in general, be affected by the riskiness of the recipient's payoff, while dictators with a purely ex ante view should not be. Furthermore, we observe that some influential inequality aversion preferences functions yield opposite predictions when we consider ex post view of fairness. Hence, we report on dictator games laboratory experiments in which the recipient's wealth is exposed to an actuarially neutral and additive background risk. Our experimental data show no statistically significant impact of the recipient's risk exposure on dictators' giving decisions. This result appears robust to both the experimental design (within subjects or between subjects) and the origin of the recipient's risk exposure (chosen by the recipient or imposed on the recipient). Although we cannot sharply validate or invalidate alternative fairness theories, the whole pattern of our experimental data can be simply explained by assuming ex ante view of fairness and risk neutrality