Seminars

Abstract: We present a theoretical framework to study risk and other-regarding preferences jointly. The model can explain the main behavioral patterns in the risk and social domain and is the first to disentangle elementary attitudes towards risk, altruism, social substitution, and ex-ante or ex-post inequality. We devise an experiment with four decision environments based on convex choice sets. Our findings are consistent with the model, showing that most subjects adjust their risk attitudes due to ex-post inequality concerns and exhibit ex-ante fairness-seeking behavior. We estimate the model at the individual level and characterize subjects' heterogeneity of preferences over five fundamental dimensions.