Linking Social and Personal Preferences: Theory and Experiment
A new article in the Journal of Political Economy examines how individuals’ personal preferences are connected to the way they make decisions affecting others.
In “Linking Social and Personal Preferences: Theory and Experiment” William R. Zame, Bertil Tungodden, Erik Ø. Sørensen, Shachar Kariv, and Alexander W. Cappelen develop a theoretical framework that identifies when preferences in personal and social decision-making can be meaningfully linked. The paper establishes clear conditions under which an individual’s attitudes toward risk and trade-offs in personal choices can be used to infer how they make decisions that also affect others.
The authors then test these predictions in a controlled experiment where participants make choices in three domains: personal risk, social allocation, and risky social decisions. The findings show that, for a large majority of individuals, behavior across these domains is systematically connected and broadly consistent with the theory, despite substantial heterogeneity in preferences and decision-making patterns.
Taken together, the study provides new insight into how personal and social preferences are related, offering a unified perspective on decision-making under risk and in social contexts.