Salience and Social Choice

Abstract

The axioms of expected utility and discounted utility theory have been tested extensively. In contrast, the axioms of social welfare functions have only been tested in a few questionnaire studies involving choices between hypothetical income distributions. In this note, we conduct a controlled experiment with 100 subjects in the role of social planners that tests five fundamental properties of social welfare functions to provide a basic test of cardinal social choice theory. We find that four properties of the standard social welfare functions tested are systematically violated, producing an Allais paradox, a common ratio effect, a framing effect, and a skewness effect in social choice. We also develop a model of salience based social choice which predicts these systematic deviations and highlights the close relationship between these anomalies and the classical paradoxes for risk and time

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