Risk and Inequality in a Social Decision Making Experiment

Ingrid Rohde and Kirsten I.M. Rohde
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Kirsten I.M. Rohde: Erasmus School of Economics, Erasmus University Rotterdam

No 12-045/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: As societies are increasingly concerned with social risks, it is important to evaluate risks not only from an individual perspective, but also from a societal one. Many increases in social risk involve a simultaneous increase in risk and inequality. This paper presents an experiment which disentangles concerns for risk and inequality in a social risk context. Subjects choose between different types of allocations of risks over 10 other participants. The allocations differ only in terms of dispersion. We disentangle four types of dispersion: ex ante inequality, ex post inequality, individual risk, and collective risk. The results show that people are averse towards ex ante inequality and individual risk, whereas they are ex post inequality and collective risk seeking.

Keywords: inequality; risk; experiment (search for similar items in EconPapers)
JEL-codes: D03 D63 (search for similar items in EconPapers)
Date: 2012-04-26
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20120045

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