|
on Utility Models and Prospect Theory |
| By: | Tol, Richard S. J. (Economic and Social Research Institute (ESRI)) |
| Abstract: | I measure the rate of aversion to inequality in consumption as expressed in the development aid given by rich countries to poor ones between 1965 and 2005. Over time, OECD countries have become less concerned about international inequity. Even for a fairly leaky bucket, the consumption rate of inequity aversion is less than the rate of risk aversion, which implies that the pure rate of inequity aversion is negative. That is, rich countries would prefer to see greater inequality between rich and poor countries. |
| Keywords: | Inequity aversion, risk aversion, income distribution, development aid |
| JEL: | D31 D63 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp254&r=upt |
| By: | Reuben, Ernesto; Sapienza, Paola; Zingales, Luigi |
| Abstract: | We study experimentally the effect of expectations on trustworthiness. Most subjects respond with untrustworthy behavior if they find out that little is expected from them. This suggests that guilt aversion plays an important role in inducing trustworthiness. |
| Keywords: | trust; trustworthiness; reciprocity; guilt aversion |
| JEL: | C92 Z13 C72 |
| Date: | 2008–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:10653&r=upt |
| By: | Grodner, Andrew (East Carolina University); Kniesner, Thomas J. (Syracuse University) |
| Abstract: | We examine the socially optimal wealth distribution in a two-person two-good model with heterogeneous workers and asymmetric social interactions where only one (social) individual derives positive or negative utility from the leisure of the other (non-social) individual. We show that the interdependence can effectively counter-act the need to transfer wealth to low-wage individuals and may require them to be poorer by all objective measures. We demonstrate that in the presence of social interactions it can be socially desirable to keep substantial wealth inequality. |
| Keywords: | wealth inequality, earnings inequality, social welfare, social interactions |
| JEL: | D31 D63 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3684&r=upt |