On the Difference between Social and Private Goods

Sandroni Alvaro (), Sandra Ludwig and Kircher Philipp ()
Additional contact information
Sandroni Alvaro: Kellogg School of Management, Northwestern University, Evanston, IL, USA
Kircher Philipp: University of Edinburgh and the London School of Economics

The B.E. Journal of Theoretical Economics, 2013, vol. 13, issue 1, 151-177

Abstract: Standard economic models have long been applied to choices over private consumption goods, but have recently been extended to incorporate social situations as well. We challenge the applicability of standard decision-theoretic models to social settings. In an experiment where choices affect the payoffs of someone else, we find that a large fraction of subjects prefer randomization over any of the deterministic outcomes. This tendency prevails whether the other party knows about the choice situation or not. Such randomization violates standard decision theory axioms that require that lotteries are never better than their best deterministic component. For conceptually similar choices in classical non-social situations, we do not find much evidence for such violations, suggesting the need for theories of uncertainty that are targeted to social settings.

Keywords: risky choice; betweenness axiom; social preferences; preference for randomness (search for similar items in EconPapers)
JEL-codes: C91 D63 D81 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
https://doi.org/10.1515/bejte-2012-0008 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:bejtec:v:13:y:2013:i:1:p:27:n:1

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/bejte/html

DOI: 10.1515/bejte-2012-0008

Access Statistics for this article

The B.E. Journal of Theoretical Economics is currently edited by Burkhard C. Schipper

More articles in The B.E. Journal of Theoretical Economics from De Gruyter
Bibliographic data for series maintained by Peter Golla ().