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

Abstract: 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)
Date: 2009-11
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Citations: View citations in EconPapers (5)

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http://repec.deps.unisi.it/depfid/text909.pdf (application/pdf)

Related works:
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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