Fairness, Risk Preferences and Independence: Impossibility Theorems
15 Pages Posted: 9 Mar 2011
Date Written: March 9, 2011
Abstract
The most widely used economic models of social preferences are specified only for certain outcomes. There are two obvious methods of extending them to lotteries. If we do so by expected utility theory, so that the independence axiom is satisfied, our results imply that the resulting preferences do not exhibit ex ante fairness. If we do so by replacing certain outcomes with their expected utilities for each individual, so that individual risk preferences are preserved, then ex ante fairness may be preserved, but neither the independence axiom nor ex post fairness is satisfied.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
A Tractable Model of Reciprocity and Fairness
By James C. Cox, Daniel Friedman, ...
-
Incentive Systems in a Real Effort Experiment
By F. A. A. M. Van Winden, Frans Van Dijk, ...
-
Individual Preferences for Giving
By Raymond J. Fisman, Shachar Kariv, ...
-
By James C. Cox, Daniel Friedman, ...
-
By James C. Cox, Daniel Friedman, ...
-
Moral Property Rights in Bargaining
By Simon Gächter and Arno Riedl
-
Direct Tests of Models of Social Preferences and a New Model
By James C. Cox and Vjollca Sadiraj
-
Implications of Trust, Fear, and Reciprocity for Modeling Economic Behavior
By James C. Cox, Klarita Sadiraj, ...
-
What Happens within Firms? A Survey of Empirical Evidence on Compensation Policies