This paper utilizes nonparametric tests to investigate the following hypotheses: One, that there is no difference in household wealth distributions derived from the Survey of Consumer Finances for three survey years during the 1990s, namely, 1992, 1995, and 1998. Two, that there is consistency between households attitudes to taking financial risk and their financial risk taking behavior. Three ...

This paper considers a simple stochastic model of international trade with three countries. Two of the tree countries are in an economic union. Comparisons are made between equilibrium welfare for these two countries under fixed and flexible exchange rate regimes. Within the model it is shown that flexible exchange rate regimes generate greater welfare. However, we then consider comparisons of ...

This paper discusses the sensitivity of the value of information to the risk aversion in two-action decision problems when the initial wealth is uncertain. We demonstrate that there is no general monotonicity between information value and the Arrow–Pratt risk aversion in this setting. We then show that monotonicity exists in the sense of Rubinstein’s measure of risk aversion when the lottery is...

We read two papers on Inequity Aversion by E. Fehr & K. Schmidt. We examine the structure and quality of their arguments and the use they make of rhetoric in their papers. I wish to thank 10 friends who read an earlier version of this pamphlet, and who helped me focus my arguments and moderate my excessively outraged tone.

This paper briefly and informally surveys different theoretical models of relative concerns and their relation to inequality. Models of inequity aversion in common use in experimental economics imply a negative relation between inequality and happiness. In contrast, empirical studies on happiness typically employ models of relative concerns that assume that increases in others’ income always ha...

We show how to bound the effect of belief-dependent preferences on choices in sequential two-player games without information about the (higher-order) beliefs of players. The approach can be applied to a class of belief-dependent preferences which includes reciprocity (Dufwenberg and Kirchsteiger, 2004) and guilt aversion (Battigalli and Dufwenberg, 2007) as special cases. We show how the size ...

Where should experimental economics go next? This paper uses the literature on inequity aversion as a case study in suggesting that we could profit from tightening up our act. Experimental Economics: Where Next? by Ken Binmore and Avner Shaked1

Other-Regarding Preferences and Leadership Styles We use a laboratory experiment to examine whether and to what extent other-regarding preferences of team leaders influence their leadership style in choice under risk. We find that leaders who prefer efficiency or report high levels of selfishness are more likely to exercise an autocratic leadership style by ignoring preferences of the other tea...

Different models of capital exchange among economic agents have been proposed recently trying to explain the emergence of Pareto’s wealth power law distribution. One important factor to be considered is the existence of risk aversion. In this paper we study a model where agents posses different levels of risk aversion, going from uniform to a random distribution. In all cases the risk aversion ...

Estimates of willingness to pay in adversely selected markets tend to understate the ex-ante (or utilitarian) willingness to pay for insurance. This paper derives an ’ex-ante’ willingness to pay curve that measures welfare from behind the veil of ignorance. I provide a strategy to estimate this curve using market choices and costs, combined with a measure of risk aversion. In examples motivated...