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on Utility Models and Prospect Theory |
| By: | Dannenberg, Astrid; Sturm, Bodo; Vogt, Carsten |
| Abstract: | This paper investigates in how far equity preferences may matter for climate negotiations. For this purposes we conducted a simple experiment with people who have been involved in international climate policy. The experiment, which was run via the Internet, consisted of two simple non-strategic games suited to measure the parameters of inequity aversion in a Fehr and Schmidt (1999) utility function. We find that our participants show aversion against advantageous as well as disadvantageous inequity to a considerable amount. Moreover, the degree of inequity aversion is higher compared to that of students in the similar study of Dannenberg et al. (2007). Regarding the geographical variety in our sample, we cannot confirm significant differences in the degree of inequity aversion between different regions in the world, which is in line with previous findings from the experimental literature. This finding lends support to the hypothesis that equity preferences are "hard-wired" and not much influenced by socio-economic or cultural circumstances. |
| Keywords: | individual preferences, inequity aversion, climate policy, experimental economics, public goods |
| JEL: | C91 C92 H41 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:6801&r=upt |
| By: | Alcantud, José C. R.; García-Sanz, María D. |
| Abstract: | This paper contributes to qualifying the Basu-Mitra approach to the problem of intergenerational social choice, by analyzing the impact of the structure of the feasible set of utilities on Banerjee's (2006) impossibility theorem. We prove that if the utilities that each generation can possess lie in $\NN \cup \{0\} $, then an explicit expression for a Paretian social welfare function that accounts for a strengthened form of Hammond Equity for the Future can be given. |
| Keywords: | Social welfare function; Equity; Pareto axiom; Intergenerational utility |
| JEL: | D63 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:6288&r=upt |
| By: | Jonathan Heathcote; Kjetil Storesletten; Giovanni L. Violante |
| Abstract: | Using a model with constant relative risk-aversion preferences, endogenous labor supply and partial insurance against idiosyncratic wage risk, we provide an analytical characterization of three welfare effects: (a) the welfare effect of a rise in wage dispersion, (b) the welfare gain from completing markets, and (c) the welfare effect from eliminating risk. Our analysis reveals an important trade-off for these welfare calculations. On the one hand, higher wage uncertainty increases the cost associated with missing insurance markets. On the other hand, greater wage dispersion presents opportunities to raise aggregate productivity by concentrating market work among more productive workers. Our welfare effects can be expressed in terms of the underlying parameters defining preferences and wage risk, or alternatively in terms of changes in observable second moments of the joint distribution over individual wages, consumption and hours. |
| JEL: | E21 J22 J31 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13673&r=upt |
| By: | Jose Apesteguia (Universitat Pompeu Fabra); Steffen Huck (University College London, Department of Economics); Jörg Oechssler (University of Heidelberg, Department of Economics); Simon Weidenholzer (University of Vienna, Department of Economics) |
| Abstract: | A well-known result by Vega-Redondo implies that in symmetric Cournot oligopoly, imitation leads to the Walrasian outcome where price equals marginal cost. In this paper we show that this result is not robust to the slightest asymmetry in fixed costs. Instead of obtaining the Walrasian outcome as unique prediction, every outcome where agents choose identical actions will be played some fraction of the time in the long run. We then conduct experiments to check this fragility. We obtain that, contrary to the theoretical prediction, the Walrasian outcome is still a good predictor of behavior. |
| Keywords: | Evolutionary game theory; Stochastic stability; Imita- tion; Cournot markets; Information; Experiments; Simulations |
| JEL: | C72 C91 C92 D43 L13 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0461&r=upt |
| By: | Neuman, Einat; Neuman, Shoshana |
| Abstract: | The standard assumption in economic theory is that preferences do not change as a result of experience with the commodity/service/event. Behavioural scientists have challenged this assumption, claiming that preferences constantly do change as experience is accumulated. This paper tests the effect of experience with a health-care service on preferences for maternity-ward attributes. In order to explore the effect of experience on preferences, the research sample was decomposed into three sub-samples: women pregnant with their first child (no experience); women after one delivery (single experience); and women after more than one delivery (multiple experiences). The preference patterns of the three sub-groups were estimated and compared. A Discrete Choice Experiment (DCE) was employed for establishing the relative importance of the following attributes: number of beds in room; attitude of staff; professionalism of staff; information delivered by personnel; and travel time from residence to hospital. Socio-economic background variables (education, age, and income) were also considered. The basic findings are that preferences change significantly as a result of experience with the health event; that the effect of experience is attribute-specific; that the extent of past experience (number of deliveries) is irrelevant; and that the effect of experience differs by socio-economic status. |
| Keywords: | delivery; Discrete Choice Experiment; experience; health-care; preferences |
| JEL: | D01 D12 I19 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6608&r=upt |
| By: | John Beshears; James Choi; David Laibson; Brigitte Madrian |
| Date: | 2007–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levrem:122247000000001760&r=upt |