Social Preference Under Twofold Uncertainty

We investigate the conflict between the ex ante and ex post criteria of social welfare in a new framework of individual and social decisions, which distinguishes between two sources of uncertainty, here interpreted as an objective and a subjective source respectively. This framework makes it possible to endow the individuals and society not only with ex ante and ex post preferences, as is usually done, but also with interim preferences of two kinds, and correspondingly, to introduce interim forms of the Pareto principle. After characterizing the ex ante and ex post criteria, we present a first solution to their conflict that extends the former as much possible in the direction of the latter. Then, we present a second solution, which goes in the opposite direction, and is also maximally assertive. Both solutions translate the assumed Pareto conditions into weighted additive utility representations, and both attribute to the individuals common probability values on the objective source of uncertainty, and different probability values on the subjective source. We discuss these solutions in terms of two conceptual arguments, i.e., the by now classic spurious unanimity argument and a novel informational argument labelled complementary ignorance. The paper complies with the standard economic methodology of basing probability and utility representations on preference axioms, but for the sake of completeness, also considers a construal of objective uncertainty based on the assumption of an exogeneously given probability measure. JEL classification: D70; D81

Discounting and the Social Time Preference Rate

This paper shows that the emphasis on a social time preference rate (defined as the sum of a pure time preference rate and the product of the elasticity of marginal valuation and the growth rate) in social evaluations where money values are discounted using the social time preference rate, is not advisable. It can give an entirely different, and arbitrary, ranking of alternative streams compared with the direct use of the pure time preference rate to discount ‘social welfare’ in each period (where social welfare is a — usually isoelastic — function of money values).

Social Preference, Incomplete Information, and the Evolution of Ultimatum Game in the Small World Networks: An Agent-Based Approach

Certain social preference models have been proposed to explain fairness behavior in experimental games. Existing bodies of research on evolutionary games, however, explain the evolution of fairness merely through the self-interest agents. This paper attempts to analyze the ultimatum game's evolution on complex networks when a number of agents display social preference. Agents' social preference is modeled in three forms: fairness consideration or maintaining a minimum acceptable money level, inequality aversion, and social welfare preference. Different from other spatial ultimatum game models, the model in this study assumes that agents have incomplete information on other agents' strategies, so the agents need to learn and develop their own strategies in this unknown environment. Genetic Algorithm Learning Classifier System algorithm is employed to address the agents' learning issue. Simulation results reveal that raising the minimum acceptable level or including fairness consideration in a game does not always promote fairness level in ultimatum games in a complex network. If the minimum acceptable money level is high and not all agents possess a social preference, the fairness level attained may be considerably lower. However, the inequality aversion social preference has negligible effect on the results of evolutionary ultimatum games in a complex network. Social welfare preference promotes the fairness level in the ultimatum game. This paper demonstrates that agents' social preference is an important factor in the spatial ultimatum game, and different social preferences create different effects on fairness emergence in the spatial ultimatum game.Spatial Ultimatum Game, Complex Network, Social Preference, Agent Based Modeling

Risky social choice with approximate interpersonal comparisons of well-being

We develop a model of social choice over lotteries, where people's psychological characteristics are mutable, their preferences may be incomplete, and approximate interpersonal comparisons of well-being are possible. Formally, we suppose individual preferences are described by a von~Neumann-Morgenstern (vNM) preference order on a space of lotteries over psychophysical states; the social planner must construct a vNM preference order on lotteries over social states. First we consider a model when the individual vNM preference order is incomplete (so not all interpersonal comparisons are possible). Then we consider a model where the individual vNM preference order is complete, but unknown to the planner, and thus modeled by a random variable. In both cases, we obtain characterizations of a utilitarian social welfare function.interpersonal comparisons; social welfare; social choice; utility; utilitarian; von Neumann-Morgenstern; risk

Privatization, Government's Preference and Unionization Structure: A Mixed Oligopoly Approach

By introducing the government's preference for tax revenues into the theoretical framework of unionized mixed oligopolies, this study investigates the efficiency of privatization. The results show that (i) regardless of the government's preference for tax revenues, its incentive to privatize a public firm depends on the number of the private firms and (ii) social welfare can decrease with an increase in the number of firms depending on the level of government's preference for tax revenue. Moreover, if the number of private firms and the government's preference for tax revenue are sufficiently small, then social welfare under a unionized privatized oligopoly is greater than under a unionized mixed oligopoly while the government has an incentive not to privatize the public firm, and vice versa if only the number of firms is sufficiently large.Government's Preference, Social Welfare, Tax, Privatization, Union

Why and How Identity Should Influence Utility

This paper provides an argument for the advantage of a preference for identity-consistent behaviour from an evolutionary point of view. Within a stylised model of social interaction, we show that the development of cooperative social norms is greatly facilitated if the agents of the society possess a preference for identity consistent behaviour. As cooperative norms have a positive impact on aggregate outcomes, we conclude that such preferences are evolutionarily advantageous. Furthermore, we discuss how such a preference can be integrated in the modelling of utility in order to account for the distinctive cooperative trait in human behaviour and show how this squares with the evidence

Thinking in Chinese vs. Thinking in English: Social Preference and Risk Attitudes of Multicultural Minds

This paper investigates whether language priming activates different cultural identities and norms associated with the language communicated with respect to social preference and risk attitudes. Our contribution is on identifying the conditions where there will be language priming effects. We conduct economic games with bilingual subjects using Chinese and English as instructions. It is found that language priming affects social preference, but only in context involving strategic interactions. In social preference games involving strategic interactions, e.g., the trust game, subjects in the Chinese treatment are more trusting and trustworthy. In individual choice games, such as the dictator game, there is no treatment difference. Further, we also find that language priming affects risk attitudes. Subjects in the Chinese treatment prefer to pick Chinese lucky numbers in Mark Six lottery. These findings suggest that the effect of language priming is context dependent.language, bilingual, biculture, social preference, risk attitudes

Preference-for-Solitude and Adjustment Difficulties in Early and Late Adolescence

Social withdrawal has been associated with adjustment difficulties across development. Although much is known about shyness, little is known about preference-for-solitude; even less is known about its relations with adjustment across different periods of adolescence. We examined whether preference-for-solitude might be differentially associated with adjustment difficulties in early and late adolescence. Self- and parent-reports of withdrawal motivations and adjustment were collected from 234 eighth graders (113 boys; M age = 13.43) and 204 twelfth graders (91 boys; M age = 17.25). Results from structural equation modeling demonstrated that above and beyond the effects of shyness, preference-for-solitude was more strongly associated with adjustment difficulties in 8th grade than in 12th grade. Preference-for-solitude was associated with greater anxiety/depression, emotion dysregulation, and lower self-esteem in 8th grade; these relations were not found in 12th grade. Although preference-for-solitude was associated with lower social competence in both 8th and 12th grades, this relation was significantly stronger in 8th grade than in 12th grade. Findings suggest preference-for-solitude has closer ties to maladjustment in early adolescence than in late adolescence. Interventions targeting preferred-solitary youth in early adolescence may be particularly fruitfu

Effects of sex preference and social pressure on fertility in changing Japanese families

This study explored how social pressure related to parental preference for the sex of their children affects fertility. Pre-war and post-war generations were compared using individual level data previously collected in Japan in 2002. In the pre-war generation, if the first child was a daughter, the total number of children tended to increase not only when the mother preferred a son, but also when the mother did not have a preference for either gender. This tendency was not observed for the post-war generation. Results suggest that social pressure related to giving birth to a son led to high fertility in the pre-war generation; however, fertility was not influenced by social pressure in the post-war generation. This was because of a change in the influence of the traditional marriage system.Fertility, son preference, social pressure, family structure