Inequality Aversion and Self-Interest: An Experimental Approach

Thursday 28 April 2016, 1.00PM to 2.00pm

Speaker(s): Matthew Robson

References to inequality aversion and other-regarding preferences are becoming ever more present in the field of economics. Stemming from experimental, behavioural and welfare economics, these notions question the integrity of purely individualistic utility functions. In this study, an incentivised laboratory experiment was run (n=30), using multiple experimental designs and alternative perspectives, to establish parameter values for a utility function which incorporates these preferences. The function used assumes that individual utility is not solely based upon the welfare of the individual, but also of the distribution of welfare amongst others; proposing that individual behaviour is influenced by moral value judgements. Analysis will be conducted on an individual and sample level; utilising both elicitation and estimation techniques to explain behaviour and establish parameter values for inequality aversion and self-interest. Treatment effects between experimental designs and alternative perspectives will be analysed, goodness-of-fit measures established and cluster analysis conducted. The results reveal that a large majority of the population exhibit behaviour inconsistent with a purely individualistic model. 

Location: Economics Staff Room - A/EC202

Admission: Staff and PhD Students