Linking Social and Personal Preferences: Theory and Experiment
The paper titled "Linking Social and Personal Preferences: Theory and Experiment" by William Zame, Bertil Tungodden, Erik Ø. Sørensen, Shachar Kariv and Alexander W. Cappelen has been published in Journal of Political Economy
Abstract
We provide necessary and sufficient conditions for linking preferences for personaland social consumption and attitudes toward risk. We also offer an experimental test ofthe theory in which subjects were confronted with risky personal choices, riskless socialchoices and risky social choices. Revealed preference tests show that subject choicesare generally consistent within each choice domain but frequently involve at least someerrors. We test for consistency across choice domains using a revealed preference testthat accounts for these errors. The choices of a large majority of subjects are consistentwith the predictions of our theory.