Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD) LSE RSS Contact Us YouTube Twitter

Abstract:

DARP Paper
Preference Reversals and the Analysis of Income Distributions
Yoram Amiel, Frank A Cowell, Leima Davidovitz and Avraham Polovin March 2003
Paper No' DARP 066:
Full Paper (pdf)

Tags: preference reversals; social welfare; inequality; risk and experiments.

It is known from the literature on uncertainty that in cases where individuals express a preference for a high win-probability bet over a bet with high winnings they nevertheless will bid more to obtain the bet with high winnings. We investigate whether a similar phenomenon applies in the parallel social-choice situation. Here decisions are to be made between a distribution with a small group of very high-income people. Results from a number of experimental designs are analysed.