Dictating the Risk: Experimental Evidence on Giving in Risky Environments: Reply

In Brock, Lange, and Ozbay (2013), we experimentally investigate social preferences under risk. One of our conclusions is that a social preference model incorporating both ex ante and ex post fairness concerns may best describe behavior. Krawczyk and Le Lec (2016 ) argue that ex ante comparisons alone may account for our data. We address their points in this reply. (JEL C72, D63, D64, D81)

Download Full-text

Dictating the Risk: Experimental Evidence on Giving in Risky Environments

The American Economic Review ◽

10.1257/aer.103.1.415 ◽

2013 ◽

Vol 103 (1) ◽

pp. 415-437 ◽

Cited By ~ 98

Author(s):

J. Michelle Brock ◽

Andreas Lange ◽

Erkut Y Ozbay

Keyword(s):

Utility Function ◽

Experimental Evidence ◽

Social Preferences ◽

Dictator Game ◽

Decision Makers ◽

Behavioral Patterns ◽

Dictator Games ◽

Ex Post ◽

Ex Ante ◽

Fairness Concerns

We study if and how social preferences extend to risky environments. We provide experimental evidence from different versions of dictator games with risky outcomes and establish that preferences that are exclusively based on ex post or on ex ante comparisons cannot generate the observed behavioral patterns. The more money decision-makers transfer in the standard dictator game, the more likely they are to equalize payoff chances under risk. Risk to the recipient does, however, generally decrease the transferred amount. Ultimately, a utility function with a combination of ex post and ex ante fairness concerns may best describe behavior. (JEL C72, D63, D64, D81)

Download Full-text

Ex-post implementation with social preferences

Social Choice and Welfare ◽

10.1007/s00355-020-01291-x ◽

2020 ◽

Author(s):

Boaz Zik

Keyword(s):

Mechanism Design ◽

Current Literature ◽

Private Information ◽

Social Preference ◽

Social Preferences ◽

Incentive Compatibility ◽

Higher Order ◽

The Other ◽

Ex Post ◽

Ex Post Implementation

Abstract The current literature on mechanism design in models with social preferences discusses social-preference-robust mechanisms, i.e., mechanisms that are implementable in any environment with social preferences. The literature also discusses payoff-information-robust mechanisms, i.e., mechanisms that are implementable for any belief and higher-order beliefs of the agents about the payoff types of the other agents. In the present paper, I address the question of whether deterministic mechanisms that are robust in both of these dimensions exist. I consider environments where each agent holds private information about his personal payoff and about the existence and extent of his social preferences. In such environments, a mechanism is robust in both dimensions only if it is ex-post implementable, i.e., only if incentive compatibility holds for every realization of payoff signals and for every realization of social preferences. I show that ex-post implementation of deterministic mechanisms is impossible in such environments; i.e., deterministic mechanisms that are both social-preference-robust and payoff-information-robust do not exist.

Download Full-text

Dictating the Risk: Experimental Evidence on Giving in Risky Environments: Comment

The American Economic Review ◽

10.1257/aer.20130779 ◽

2016 ◽

Vol 106 (3) ◽

pp. 836-839 ◽

Cited By ~ 7

Author(s):

Michal Krawczyk ◽

Fabrice Le Lec

Keyword(s):

Experimental Evidence ◽

Implicit Assumption ◽

Dictator Games ◽

Ex Post ◽

Ex Ante ◽

The Asymmetry ◽

Do So ◽

Observed Behavior

Based on experimental dictator games with probabilistic prospects, Brock, Lange, and Ozbay (2013) conclude that neither ex post nor ex ante comparisons can fully account for observed behavior. We argue that their conclusion that ex ante comparisons cannot explain the data is at best weakly supported by their results, and do so on three grounds: (i) the absence of significant differences between the most relevant treatments, (ii) the implicit assumption of subjects' risk neu trality, and (iii) the asymmetry of treatments regarding the disclosure of dictators' choice. (JEL C72, D63, D64, D81)

Download Full-text

Contracts as Reference Points—Experimental Evidence

The American Economic Review ◽

10.1257/aer.101.2.493 ◽

2011 ◽

Vol 101 (2) ◽

pp. 493-525 ◽

Cited By ~ 90

Author(s):

Ernst Fehr ◽

Oliver Hart ◽

Christian Zehnder

Keyword(s):

Experimental Evidence ◽

Reference Points ◽

Employment Relation ◽

Trade Off ◽

Ex Post ◽

Ex Ante ◽

John Moore

Hart and John Moore (2008) introduce new behavioral assumptions that can explain long-term contracts and the employment relation. We examine experimentally their idea that contracts serve as reference points. The evidence confirms the prediction that there is a trade-off between rigidity and flexibility. Flexible contracts—which would dominate rigid contracts under standard assumptions—cause significant shading in ex post performance, while under rigid contracts much less shading occurs. The experiment appears to reveal a new behavioral force: ex ante competition legitimizes the terms of a contract, and aggrievement and shading occur mainly about outcomes within the contract. (JEL D44, D86, J41)

Download Full-text