Investigating Risky Choices Over Losses Using Experimental Data

We conduct a battery of experiments in which agents make choices from several pairs of all-loss-lotteries. Using these choices, we estimate a representation of individual preferences over lotteries. We find statistically and economically significant departures from expected utility maximization for many subjects. We also estimate a preference representation based on summary statistics for behavior in the population of subjects, and again find departures from expected utility maximization. Our results suggest that public policies based on an expected utility approach could significantly underestimate preferences and willingness to pay for risk reduction.JEL Classification: C91, D81     

Is more health always better for society? Exploring public preferences that violate monotonicity

There has recently been some literature on the properties of a Health-Related Social Welfare Function (HRSWF). The aim of this article is to contribute to the analysis of the different properties of a HRSWF, paying particular attention to the monotonicity principle. For monotonicity to be fulfilled, any increase in individual health—other things equal—should result in an increase in social welfare. We elicit public preferences concerning trade-offs between the total level of health (concern for efficiency) and its distribution (concern for equality), under different hypothetical scenarios through face-to-face interviews. Of key interests are: the distinction between non-monotonic preferences and Rawlsian preferences; symmetry of HRSWF; and the extent of inequality neutral preferences. The results indicate strong support for non-monotonic preferences, over Rawlsian preferences. Furthermore, the majority of those surveyed had preferences that were consistent with a symmetric and inequality averse HRSWF.     

Guilt and shame: an axiomatic analysis

Using the machinery of Game Theory, this article analyzes how shame and guilt affect preferences. Based on abundant psychological literature, we posit that the preference ordering of someone who can feel shame (or guilt) must satisfy a number of axioms and prove that it can be represented by a particular utility function. Understanding how shame and guilt work is important to explain why people respect social norms and exhibit prosocial behavior, many times contrary to their material interest.     

Stability of risk preferences and the reflection effect of prospect theory

Are risk preferences stable over time? To address this question we elicit risk preferences from the same pool of subjects at two different moments in time. To interpret the results, we use a Fechner stochastic choice model in which the revealed preference of individuals is governed by some underlying preference, together with a random error. We take cumulative prospect theory as the underlying preference model (Kahneman and Tversky, Econometrica 47:263–292, 1979; Tversky and Kahneman, Journal of Risk and Uncertainty 5:297–323, 1992). We observe that the aggregate pattern of preferences is very similar in both sessions, and it matches the results reported in the literature. Most subjects are risk averse for gains, and risk seeking for losses. However, the subjects that jointly agree with the reflection effect of prospect theory are around 50%. The percentage of individuals that change their responses across sessions is quite high, 63%. Estimating the stochastic choice model we find that 72% of the subjects have an underlying preference which agrees with the reflection effect of prospect theory. The remaining 28% are mainly classified as risk averse for both gains and losses. The results reinforce the empirical validity of the reflection effect. Deviations from the reflection effect can be attributed to noise, as well as to the existence of a fraction of risk averse subjects.     

Choosers as extension axioms

We consider the extension of a (strict) preference over a set to its power set. Elements of the power set are non-resolute outcomes. The final outcome is determined by an “(external) chooser” which is a resolute choice function. The individual whose preference is under consideration confronts a set of resolute choice functions which reflects the possible behaviors of the chooser. Every such set naturally induces an extension axiom (i.e., a rule that determines how an individual with a given preference over alternatives is required to rank certain sets). Our model allows to revisit various extension axioms of the literature. Interestingly, the Gärdenfors (1976) and Kelly (1977) principles are singled-out as the only two extension axioms compatible with the non-resolute outcome interpretation.     

Are risk preferences stable? Comparing an experimental measure with a validated survey-based measure

We examine the stability of risk preference within subjects by comparing measures obtained from two elicitation methods, an economics experiment with real monetary rewards and a survey with questions on hypothetical gambles. The survey questions have been validated by numerous empirical studies of investment, insurance demand, smoking and alcohol use, and recent studies have shown the experimental measure is associated with several real-world risky behaviors. For the majority of subjects, we find that risk preferences are not stable across elicitation methods. In interval regression models subjects’ risk preference classifications from survey questions on job-based gambles are not associated with risk preference estimates from the experiment. However, we find that risk classifications from inheritance-based gambles are significantly associated with the experimental measure. We identify some subjects for whom risk preference estimates are more strongly correlated across elicitation methods, suggesting that unobserved subject traits like comprehension or effort influence risk preference stability.     

Separating curvature and elevation: A parametric probability weighting function

This paper presents a preference foundation for a two-parameter family of probability weighting functions. We provide a theoretical link between the well-established notions of probabilistic risk attitudes (i.e., optimism and pessimism) used in economics and the important independent measures for individual behavior used in the psychology literature (i.e., curvature and elevation). One of the parameters in our model measures curvature and represents the diminishing effect of optimism and pessimism when moving away from extreme probabilities 0 and 1. The other parameter measures elevation and represents the relative strength of optimism vs. pessimism. Our empirical analysis indicates that the new weighting function fits elicited probability weights well, and that it can explain differences in the treatment of probabilities for gains compared to that for probabilities of losses.     

Social organizations and matching theory

We generalize the Gale-Shapley matching theory to the formation of social units consisting of more than two individuals and each individual having more than one role.We show how social preferences and social structure could conflict with freedom. In the absence of such a conflict, we define stability and show that this could conflict with social preferences and social structure. Next, we define Rawlsian justice in case of stability and show how social preferences and social structure can conflict with justice. Thus, it is the social preferences and social-structure which decide whether our concepts of freedom, stability, and justice are achievable or not.     

In Search of a Professional Supervisory Practice: External Social Work Supervision in China

This article examines the importance of supportive and educative functions in the practice of social work supervision and identifies the common features of external social work supervision. Using a qualitative study design, the author explores social workers’ need for professional supervision and support, and the functions and roles commonly played by external supervisors. A mixed model of internal and external supervision is used in some countries; however, such a method is not commonly used or discussed in the literature in Asian regions. The findings of this study suggest that the practice of external supervision should be considered by social work agencies in China. Arranging appropriate external supervisors and establishing a supportive supervisory environment at an agency level are recommended to facilitate the professional growth of social work practitioners.     

Eliciting risk preferences: When is simple better?

We study the estimation of risk preferences with experimental data and focus on the trade-offs when choosing between two different elicitation methods that have different degrees of difficulty for subjects. We analyze how and when a simpler, but coarser, elicitation method may be preferred to the more complex, but finer, one. Results indicate that the more complex measure has overall superior predictive accuracy, but its downside is that subjects exhibit noisier behavior. Our main result is that subjects’ numerical skills can help better assess this tradeoff: the simpler task may be preferred for subjects who exhibit low numeracy, as it generates less noisy behavior but similar predictive accuracy. For subjects with higher numerical skills, the greater predictive accuracy of the more complex task more than outweighs the larger noise. We also explore preference heterogeneity and provide methodological suggestions for future work.     

Social-emotional Classroom Climate in Child Care, Child-Teacher Relationships and Children's Second Grade Peer Relations

We used a five-year longitudinal study of children's teacher-child relationships and social-emotional competence to examine the relative contributions of preschool social-emotional climate and early individual child-teacher relationships and behavior problems in predicting second grade social competence with peers. Three hundred and seven children (152 girls) had complete second grade data on peer social competence. We used the Peer Play Scale to measure the climate of peer social competence in preschool classrooms. We used the Classroom Behavior Inventory to measure behavior problems and the Student-Teacher Relationship Scale to measure child-teacher relationship quality at both the classroom and individual level. Children's second grade social competence with peers could be predicted by preschool classroom social-emotional climate, four-year-old behavior problems and child-teacher relationship quality, and contemporary child-teacher relationship quality. The particular pattern of these predictors differed by aspect of social competence with peers.     

Ageism,Death Anxiety and the Caseworker

ABSTRACT

This paper presents the results of an exploratory research study designed to identify some of the attitudes and socio-cultural characteristics of social workers practicing in the field of aging. Data were collected from two groups of caseworkers-one group with a geriatric caseload, the other with a non-geriatric caseload. There were striking and significant differences between the two groups in their preferences for working with particular client populations. The geriatric caseworkers indicated a preference for working with the frail elderly and cancer patients and negative preference for working with younger clients (either disturbed children or adolescent offenders). The non-geriatric caseworkers generally expressed a negative preference for the frail elderly or cancer patients and a preference for young married couples. No single factor seemed to differentiate the two groups as clearly as their levels of death anxiety. Those practicing in the field of aging revealed a significantly greater level of death anxiety as indicated by their higher levels of fear of the dying of others. Results also pointed to a relationship between death anxiety and the number of years of social work practice with the aging. In general, the greater number of years in the field of aging, the greater the level of anxiety tended to be, leveling off at about six or seven years. When the age of the social worker was held constant longevity in the field of aging affected levels of anxiety about the death of others, the dying of self, as well as the dying of others.     

Identity development across the lifespan: a biracial model

Traditional concepts of identity emphasize race to the exclusion of life span criteria. Race based models ignore the human behavior of biracial Americans in their social environment. Conversely, a substantial portion of the scholarly literature advocates social experience rather than physiological attributes as keystone to individual identity development. In the aftermath biracial Americans are conflicted. In an effort to insure their psychic health, scholars and practitioners must inculcate an identity development across the life span model to accommodate the nation’s increasing level of ethnic and racial miscegenation.     

Does time inconsistency differ between gain and loss? An intra-personal comparison using a non-parametric elicitation method

Several studies on time preference have found time inconsistency in both gain and loss preferences. However, the relationship between the two within the same person remains unclear; that is, does an individual who demonstrates time inconsistency for gain outcomes do so for losses as well? This paper reports on individuals’ time inconsistency for gains and losses in a laboratory setting. To obtain a precise comparison of individuals’ time inconsistency for gains and losses, we used Rohde’s “DI (decreasing impatience)-index” (Manag Sci 65(4):1700–1716, 2018) and measured the level of time inconsistency, rather than merely identifying whether TI was present. This index represents how strongly a person exhibits present bias, and easily extends to the comparison between gain and loss preferences within the same person. Further, it allows the experiment to test for so-called future bias, which has been a focus area in recent time inconsistency literature. It is elicited through a non-parametric method, which avoids any specification errors in the analysis. Our findings are as follows: first, we found future bias in preferences for not only gains but also losses, and we confirmed that this tendency is consistent with previous findings on preferences for gains. Second, a positive correlation between time inconsistency for gains and losses was found at the individual level. Indeed, we could not find a significant difference between the two in most cases.

     

Experts in experiments

An ever increasing number of experiments attempts to elicit risk preferences of a population of interest with the aim of calibrating parameters used in economic models. We are concerned with two types of selection effects, which may affect the external validity of standard experiments: Sampling from a narrowly defined population of students (??experimenter-induced selection??) and self-selection due to non-response or incomplete response of participants in a random sample from a broad population. We find that both types of selection lead to a sample of experts: Participants perform significantly better than the general population, in the sense of fewer violations of revealed preference conditions. Self-selection within a broad population does not seem to matter for average preferences. In contrast, sampling from a student population leads to lower estimates of average risk aversion and loss aversion parameters. Furthermore, it dramatically reduces the amount of heterogeneity in all parameters.     

Preference Reversals and Induced Risk Preferences: Evidence for Noisy Maximization

We combine two research lines: preference reversal research (Lichtenstein and Slovic, 1971) and research on lottery-based risk preference induction (Roth and Malouf, 1979). Our results are informative for both research lines. We show that inducing risk preferences in preference reversal experiments has dramatic effects. First, while our subjects still display reversals, they do not display the usual pattern of predicted reversals suggested by the compatibility hypothesis. By inducing risk averse and risk loving preferences, we can dramatically reduce reversal rates and even produce the opposite pattern of reversals. Our results are consistent with the assumption that subjects maximize expected utility with error. This provides evidence that Camerer and Hogarth's (1999) framework for incentive effects can be extended to include the risk preference induction reward scheme.     

Multiple motives of pro-social behavior: evidence from the solidarity game

The article analyses experimental “solidarity games” with two benefactors and one beneficiary. Depending on their motive for giving—e.g., warm glow, altruism, or guilt—the benefactors’ response functions are either constant, decreasing, or increasing. If motives interact, or if envy is a concern, then more complex (unimodal) shapes may emerge. Controlling for random utility perturbations, we determine which and how many motives affect individual decision making. The main findings are that the motives of about 75% of the subjects can be identified fairly sharply, that all of the motives discussed in the literature co-exist in the population, and that for any given individual no more than two motives (out of six motives considered overall) are identified. We conclude that a unifying motive for solidarity cannot be derived even when we allow for individually heterogeneous parameterization: different subjects give for different reasons and all existing social preference theories are partially correct.     

Alienation as Atrophied Moral Cognition and Its Implications for Political Behavior

I present a theory of alienation that accounts for the cognitive processes involved with moral thinking and political behavior in modern societies. On my account, alienation can be understood as a particular kind of atrophy of moral concepts and moral thinking that affect the ways individuals cognize and legitimate the social world and their place within it. Central to my argument is the thesis that modern forms of social integration—shaped by highly institutionalized, rationalized and hierarchical forms of social life—serve to constrain the moral‐ cognitive powers of subjects leading to a condition of alienation as moral atrophy. This state results from the withering of the subject's internal powers of moral reflection and an overriding predisposition to rely on external value schemas to make sense of moral and political problems. I then present an analysis of alienated moral consciousness and its implications for modern social theory.     

Sleepiness,choice consistency,and risk preferences

We investigate the consistency and stability of individual risk preferences by manipulating cognitive resources. Participants are randomly assigned to an experiment session at a preferred time of day relative to their diurnal preference (circadian matched) or at a non-preferred time (circadian mismatched) and choose allocations between two risky assets [using the Choi et al. (Am Econ Rev 27(5):1921–1938, 2007), design]. We find that choices of circadian matched and mismatched subject are statistically similar in terms of satisfying basic requirements for preference consistency. However, mismatched subjects tend to choose riskier asset bundles.