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Who helps whom? Risk taking and solidarity in a virtual world experiment

Ingmar Lübbe and Friedel Bolle

No 310, Discussion Papers from European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics

Abstract: Most incomes underlie some risk, i.e. ex ante they can be regarded as a lottery ticket. In every society, the lucky winners of this lottery compensate unlucky losers (unemployed workers or bankrupt entrepreneurs) privately and/or by public insurances. Do voluntary solidarity payments depend on the amount and origin of risk of winners and losers? We differentiate between people with riskless incomes (civil servants), with low risk incomes (workers), and with high risk incomes (entrepreneurs). Some of our subjects had no choice of their risk class (civil servants and some workers), some of them had the choice to be a worker or an entrepreneur. The main stylized results are: (i) Civil servants and lucky workers with and without a choice transfer similar shares of their income to unlucky workers, but (ii) discriminate against unlucky entrepreneurs. (iii) Lucky entrepreneurs give about the same share of their income to unlucky workers as lucky workers do and (iv) do not significantly discriminate. (v) The potential solidarity payments are not an incentive for taking higher risks.

Keywords: solidarity; responsibility; risk taking (search for similar items in EconPapers)
JEL-codes: D63 D64 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-cbe, nep-ent, nep-exp and nep-soc
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