Self-serving biased reference points
Andrea Gallice ()
Department of Economic Policy, Finance and Development (DEPFID) University of Siena from Department of Economic Policy, Finance and Development (DEPFID), University of Siena
The paper formalizes the pervasive phenomenon of the self-serving bias within the framework of reference dependent preferences. This formulation allows to state a simple rule to assess the existence of the bias at the aggregate level as well as a procedure that identifies the minimum number of biased agents. As an application, we study the problem of the optimal allocation of a scarce resource among a finite number of claimants. We analyze the performance of different welfare criteria and show how the existence of self-serving biased individuals exacerbates the conflict between equity and efficiency of the final allocation.
Keywords: Self-Serving Bias; Reference Dependent Preferences; Optimal Allocation. (search for similar items in EconPapers)
JEL-codes: D00 D60 (search for similar items in EconPapers)
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Working Paper: Self-serving biased reference points (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:usi:depfid:0909
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