RIEB Discussion Paper Series No.2020-23

RIEB Discussion Paper Series No.2020-23

Title

Risks on Others

Abstract

We investigate other regarding preferences when others are involved in some risks. We call such risks "risks on others (ROO)". We design a novel experiment to measure ROO, and also define theoretically the risk attitudes toward others under two dimensions: absolute terms, which characterize one's risk attitudes toward others without comparing with other individuals, and relative terms, which compare the risk attitudes between individuals. From our experiment, we find that decision makers exhibit robust risk averse behaviors, which contradicts to the most representative linear inequality aversion models by Fehr and Schmidt (1999). Utilizing our experimental setting which enables us to compare the risk attitudes toward others between subjects, we also investigate the effects of different types of ROO on other regarding behaviors.

Keywords

Other-regarding preferences; Risk preferences; Inequality aversion

JEL Classification

C91, D63, D64, D81, D91

Inquiries

Takaaki HAMADA
Faculty of Economics, Toyo University
Junior Research Fellow, Research Institute for Economics & Business Administration, Kobe University


Tomohiro HARA
Department of Economics, University of Maryland at College Park

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