On the intergenerational transmission of preferences

Recent contributions in economics have argued for a re-introduction of preference-based approaches to economic behavior and have called for an empirical investigation of preferences in order to overcome the prevalent skepticism against such explanations within the discipline. The present paper contributes to this discussion by assessing the extent, specificity, and malleability of preference transmission from parents to their children, and thus provides evidence for the clustering of preferences along family lines. Using data on eight activity choices from the British Household Panel Survey, we find strong (and positive) correlations between preferences of parents and their adult children. These correlations are found to be robust to a wide number of robustness checks but to vary considerably across activities, suggesting that parents may have more influence over some preferences than over others. Further investigations also show that this influence is surprisingly robust to a wide number of potentially intervening factors.     

IPO与非法定公司所得税收优惠

公司上市在中国不只是一种商业行为,还与诸多非经济因素有关。拟上市公司通常会受到主管机关(条条)或地方政府(块块)的诸多政策性照顾。所得税优惠就是其中之一。所得税优惠可以分为法定优惠和非法定优惠两类。非法定税收优惠指地方政府或主管机关超越法定权限批准的税收减免或返还。本文以2000年底518家上市公司 A 股 IPO 当年及前1年的所得税优惠为研究主题,揭示上市公司的实际所得税负、非法定税收优惠的方式、持续时间和批准机构,并进一步分析非法定税收优惠泛滥的经济和体制原因以及与区域经济和公司价值的相关性。     

What if women earned more than their spouses? An experimental investigation of work-division in couples

Female specialization on household work and male specialization on labor-market work is a widely observed phenomenon across time and countries. This absence of gender neutrality with respect to work-division is known as the “work-division puzzle”. Gender differences regarding characteristics (preferences, productivity) and context (wage rates, social norms) are generally recognized as competing explanations for this fact. We experimentally control for context and productivity to investigate preferences for work-division by true co-habiting couples, in a newly developed specialization task. Efficiency in this task comes at the cost of inequality, giving higher earnings to the “advantaged” player. We compare behavior when men (or women) are in the advantaged position, which corresponds to the traditional (or power) couple case where he (or she) earns more. Women and men contribute equally to the household public good in all conditions. This result allows us to rule out some of the standard explanations of the work-division puzzle.     

Employee types and endogenous organizational design: An experiment

When managers are sufficiently guided by social preferences, incentive provision through an organizational mode based on informal implicit contracts may provide a cost-effective alternative to a more formal mode based on explicit contracts and active monitoring. This paper reports the results from a stylized laboratory experiment designed to test whether subjects in the role of firm owner rely on the social preferences of other (‘employee’) subjects with whom they are matched when choosing which payoff version of a simple trust game these employee subjects should play (‘the organizational mode’). Our main finding is that they do so, albeit in a different way than theory predicts. The importance of the first mover's social preferences for trusting behavior is recognized by the owner subjects, but the significant (first order) impact second movers’ social preferences have on trusting behavior of first movers seems to be overlooked.     

A Bargaining Experiment to Motivate Discussion on Fairness

The author presents a classroom version of the popular research game called the Ultimatum Game. Researchers are placing growing importance on how fairness affects behavior, and this experiment provides a useful, fun, and engaging way in which a day or two of class time can be spent on the topic. The appendix contains all of the materials necessary to conduct this experiment, and the experiment can highlight several items of interest for the instructor. First, different individuals place different subjective weights on concerns for fairness versus money. Second, theories that incorporate concerns for fairness into agents' preferences can often explain behavior better than those that do not. Finally, when it is relatively cheap to purchase fairness (or equality) individuals purchase more of it. The classroom results can motivate discussion of a downward sloping demand curve for fairness.     

Reciprocity under moral wiggle room: Is it a preference or a constraint?

We analyze reciprocal behavior when moral wiggle room exists. Dana et al. (Econ Theory 33(1):67–80, 2007) show that giving in a dictator game is inconsistent with distributional preferences as the giving rate drops when situational excuses for selfish behavior are provided. Our binary trust game closely follows their design. Only a preceding stage (safe outside option vs. enter the game) is added in order to introduce reciprocity. We find significantly lower rates of selfish choices in the trust baseline in comparison to our treatments that feature moral wiggle room manipulations and a dictator baseline. It seems that reciprocal behavior is not only due to people liking to reciprocate but also because they feel obliged to do so.     

Do risk and competition trigger conditional cooperation? Evidence from public good experiments

We investigate the effect of intra-group competition and risk marginal per capita returns on subjects' cooperative behavior in a one-shot public good game—following the well-known approach proposed by Fischbacher, Gächter, and Fehr (2001) and extending the Colasante et al. (2018, 2019) parametrization. We study the interaction between environment and social preferences and test the existence of a causal relationship of risk and competition over cooperative behavior when an individual's benefit of the public good is heterogeneous and uncertain. Our results report experimental evidence about competition fostering cooperative behavior leading to a rise in contribution for all the subjects regardless of their social preferences. However, risk has a detrimental effect on cooperative behavior due to encouraging free riding.     

The role of role uncertainty in modified dictator games

We compare behavior in modified dictator games with and without role uncertainty. Subjects choose between a selfish action, a costly surplus creating action (altruistic behavior) and a costly surplus destroying action (spiteful behavior). While costly surplus creating actions are the most frequent under role uncertainty (64%), selfish actions become the most frequent without role uncertainty (69%). Also, the frequency of surplus destroying choices is negligible with role uncertainty (1%) but not so without it (11%). A classification of subjects into four different types of interdependent preferences (Selfish, Social Welfare maximizing, Inequity Averse and Competitive) shows that the use of role uncertainty overestimates the prevalence of Social Welfare maximizing preferences in the subject population (from 74% with role uncertainty to 21% without it) and underestimates Selfish and Inequity Averse preferences. An additional treatment, in which subjects undertake an understanding test before participating in the experiment with role uncertainty, shows that the vast majority of subjects (93%) correctly understand the payoff mechanism with role uncertainty, but yet surplus creating actions were most frequent. Our results warn against the use of role uncertainty in experiments that aim to measure the prevalence of interdependent preferences.     

Patronage and ideology in electoral behavior: Evidence from Egypt's first presidential elections

This paper investigates the impact of patronage and ideology on voter behavior and election outcomes. Egypt's first free presidential elections represent a good case study to answer the question whether private gain outweighs ideology in voter behavior on a broader level. First, we combine election results with household surveys and national statistics to estimate the impact of patronage (measured by public employment) on voting for the pre-revolution regime candidate. Second, using results of the first round of elections as a proxy for ideology, we test for the effect of ideological preferences on voting behavior. Additionally, we test for candidates' ability to mobilize supporters. Our results suggest that patronage has a stronger effect than secularist ideology but a weaker effect than pro-change ideology. Results show that the number of public sector and government employees in each electoral district has a positive impact on participation rates.     

Optimal versus realized policy rules in a regime-switching framework

In this paper we compare a deterministic model and a Markov switching model to analyze the behavior of the US economy and the Federal Reserve. We examine both optimal and empirical monetary policies for the US Federal Reserve between 1960 and 2008. We compare the optimal monetary policy to the actual interest rates and to the empirical reaction function. We also evaluate the sensitivity of the results to the preferences assigned to each objective. We find that there is no unique optimal solution that fits the Federal Reserve behavior over the entire period. The best fit to the actual interest rates is obtained by an optimal policy with preference switches following the rule: a high-volatility regime coincides with a priority on inflation alone while in a low-volatility regime there is equal policy priority on output stabilization and inflation.     

Poverty alleviation and tax policy

This paper examines public good provision and tax policy—optimal non-linear income taxation and linear commodity taxation—when the government departs from purely welfarist objective function and seeks to minimise poverty. This assumption reflects much policy discussion and may help understand some divergences of practical tax policy from lessons in optimal tax analysis. In contrast to Atkinson and Stiglitz (J. Public Econom. 6 (1976) 55), it may be optimal to use differentiated commodity tax rates, including the taxation of savings, even if preferences are separable in goods and leisure. The optimal effective marginal tax rate at the bottom of the distribution may be negative, suggesting that wage subsidy schemes can be optimal. Finally, optimal provision of a public good is analysed under poverty minimisation.     

How to identify trust and reciprocity

This paper uses a three-games (or triadic) design to identify trusting and reciprocating behavior. A large literature on single-game trust and reciprocity experiments is based on the implicit assumption that subjects do not have altruistic or inequality-averse other-regarding preferences. Such experimental designs test compound hypotheses that include the hypothesis that other-regarding preferences do not affect behavior. In contrast, experiments with the triadic design do discriminate between transfers resulting from trust or reciprocity and transfers resulting from other-regarding preferences that are not conditional on the behavior of others. Decomposing trust from altruism and reciprocity from altruism or inequality aversion is critical to obtaining empirical information that can guide the process of constructing models that can increase the empirical validity of game theory.     

Two-moment decision models and rank-dependent utility

This paper extends results on the consistency of two-moment decision models with expected utility to rank-dependent utility preferences. The representations of expected utility and rank-dependent utility by --preferences have very similar comparative statics properties for linear distribution classes, except for the behavior with respect to small independent risks.I thank Soo Hong Chew for helpful discussion and three anonymous referees for valuable comments.     

Utility from anticipation and personal equilibrium

I develop a dynamic model of individual decisionmaking in which the agent derives utility from physical outcomes as well as from rational beliefs about physical outcomes (“anticipation”), and these two payoff components can interact. Beliefs and behavior are jointly determined in a personal equilibrium by the requirement that behavior given past beliefs must be consistent with those beliefs. I explore three phenomena made possible by utility from anticipation, and prove that if the decisionmaker’s behavior is distinguishable from a person’s who cares only about physical outcomes, she must exhibit at least one of these phenomena. First, the decisionmaker can be prone to self-fulfilling expectations. Second, she might be time-inconsistent even if her preferences in all periods are identical. Third, she might exhibit informational preferences, where these preferences are intimately connected to her attitudes toward disappointments. Applications of the framework to reference-dependent preferences, impulsive behaviors, and emotionally difficult choices are discussed.     

An essay on the Life Cycle: Characterizing intertemporal behavior with uncertainty,human capital,taxes, durables,imperfect capital markets,and non-separable preferences

This paper formulates a general characterization of a household's portfolio choice and savings behavior in an environment with uncertain future interest rates, prices, wages, and factors influencing tastes. Savings may be invested in three types of assets: financial assets; human capital, which is non-tradable; and consumer durables, in which investment may be partially irreversible. Risk-return relations determine the optimal allocation of resources across assets at a point in time. The optimal intertemporal allocation of resources is determined by a restriction on the planned growth rate for the marginal utility of after-tax wealth, where growth rates depend on rates of time preference and measures of long-term riskless rates of interest. Given special assumptions, this marginal utility follows a martingale process as a consequence of optimizing behavior. Pricing formulae are developed for evaluating shifts in uncertain future income, wage, and price profiles. The relations characterizing portfolio and savings behavior presented here do not rely on particular distributional assumptions; they account for all forms of uncertainty including wage uncertainty induced by human capital investment; they allow for the non-marketability of assets; and the main results apply for very general functional form assumptions for preferences. In later sections, results are extended to incorporate income taxes and to account for a wide variety of imperfections in asset markets.     

Wealth and the capitalist spirit

The wealth distribution in the U.S. is more unequal than either the income or earnings distribution, a fact current models of saving behavior have difficulty explaining. Using Max Weber’s [Weber, M. (1905). The Protestant Ethic and the Spirit of Capitalism. Charles Scribners’ and Sons (1958 translated edition)] idea that individuals may have a ‘capitalist spirit’, I construct and simulate a model where individuals accumulate wealth for its own sake rather than as deferred consumption. Including capitalist spirit preferences in a simple life cycle model, with no other modifications, generates a skewness of wealth consistent with that observed in the U.S. economy. Furthermore, capitalist spirit preferences provide a way to generate decreasing risk aversion with increases in wealth without resorting to idiosyncratic rates of time preference.     

Social influence and consumer preference formation for pro-environmental technology: The case of a U.K. workplace electric-vehicle study

We investigate the roles of social influence in the formation of consumer perceptions and preferences for pro-environmental technologies, using the example of battery electric vehicles (BEVs). The context was a technology-based workplace in the U.K. with around 500 members of staff, 57 of whom took part in a BEV experience project in 2010. Several months later, we recruited a diverse sample of 21 staff to complete semi-structured interviews. Following a multi-method approach, we elicited details about their perceptions and valuation of BEVs, experiences with BEVs, and social interactions relating to BEVs. Participants reported a wide variety of perceptions of BEV attributes, including environmental benefits and functional drawbacks. The majority of participants indicated that their BEV perceptions were “highly influenced” by at least one social interaction. We use the reflexive layers of influence conceptual framework to categorize social influence according to three processes: diffusion, the sharing of BEV-related information; translation, the discussion of uncertain BEV benefits and drawbacks; and reflexivity, the relating of BEV technology to self-concept. Findings suggest that participant perceptions change in part through social negotiation of meaning, lifestyle and identity. Neglect of social influence processes will underestimate the potential for shifts in consumer preferences regarding emerging pro-environmental technologies.     

Decreasing Impatience: A Criterion for Non‐stationary Time Preference and "Hyperbolic" Discounting

Despite recent interest in hyperbolic discounting, there has been little discussion of exactly what property of time preferences is instantiated by hyperbolic or quasi‐hyperbolic functional forms. The paper revives an earlier proposal in Prelec (1989) that the key property is Pratt–Arrow convexity of the log of the discount function, which corresponds to decreasing impatience(DI) at the level of preferences. DI provides a natural criterion for assessing the severity of departure from stationarity in that greater DI is equivalent to more choices of dominated options in two‐stage decision problems, as well as greater convexity of the log of the discount function. Inefficient choices may arise as intentional precommitments, or as unintended reversals of preference by “naïve” agents.     

Public goods and the value of product quality regulations: the case of food safety

The paper examines preferences for product quality regulations. Our premise is that preferences for product quality regulations derive from preferences for both private and public goods. The model is used to explain public attitudes toward a referendum measure to eliminate pesticide residues on food. Results from a survey of consumers are consistent with the conceptual model and show that preferences for public goods influence support for the product quality regulation. The results help explain why consumption behavior is a poor predictor of political behavior, and have implications for methods that use voting and market behavior to value public goods.     

Socioeconomic stratification and stereotyping: lab-in-the-field evidence from Colombia

In this study, we test the hypothesis that the Colombian system of socioeconomic stratification (SES), which ranks dwellings from one to six to calculate utility (public services) rates, may induce discrimination. To this end, a field experiment with around 1000 participants from Bogotá is carried out. The design includes a combination of a trust game and a dictator game and SES-contingent decisions. Results exclude the presence of pure preferences for discrimination, yet they confirm that low strata are associated with stereotypes of low trustworthiness. We also observe significant prosocial behavior in the low-income population, and most strikingly, we do not observe any difference in trustworthiness across different income levels.