Inequity and Risk Aversion in Sequential Public Good Games

Sabrina Teyssier

No 47, TWI Research Paper Series from Thurgauer Wirtschaftsinstitut, Universität Konstanz

Abstract: This paper analyzes which type of intrinsic preferences drive an agent�s behavior in a sequential public good game depending on whether the agent is first or second mover. Theoretical predictions are based on heterogeneity of individuals in terms of social and risk preferences. We modelize preferences according to the inequity aversion model of Fehr and Schmidt (1999) and to the assumption of constant relative risk aversion. Risk aversion is significantly and negatively correlated with the contribution decision of first movers. Second movers with sufficiently high advantageous inequity aversion free-ride less and reciprocate more than others. Both results are predicted by our model. Nevertheless, no effect of disadvantageous inequity aversion of first movers is found in the data while theory predicted it. Our results underline the importance of taking into account the order of agents� play to correctly understand which type of preferences influences cooperation in voluntary contribution mechanisms. They suggest that individuals� behavior can be consistent between different experimental games.

Keywords: inequity aversion; risk aversion; public good game; conditional contribution (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth, nep-pbe, nep-pub and nep-upt
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Inequity and risk aversion in sequential public good games (2012)
Working Paper: Inequity and Risk Aversion in Sequential Public Good Games (2009)
Working Paper: Inequity and Risk Aversion in Sequential Public Good Games (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:twi:respas:0047

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