INFORMATION ACQUISITION UNDER RISKY CONDITIONS ACROSS REAL AND HYPOTHETICAL SETTINGS

I collect data on how subjects acquire information about risky choices in both real and hypothetical settings using process‐tracing software called Mouselab. On average, there are no significant differences across settings in the amount of time subjects take to make a choice or the completeness of the information they acquire. Subjects also acquire information in sequences consistent with an integration model of decision‐making, such as expected utility theory or prospect theory. I do not find significant differences in risk preferences across settings, on average, but I do find that subjects' risk preferences are related to the completeness of the information that they acquire and where they start their information acquisition. (JEL C91, D80, D83)     

VOTING EXPRESSIVELY

We address a common criticism directed toward models of expressive voting that they are ad hoc in nature. To that end, we propose a foundation for expressive behavior that is based on a novel theory of social preferences under risk. Under our proposal, expressive considerations in behavior arise from the particular way in which risky social prospects are assessed by decision‐makers who want to interpret their choices as moral. To illustrate the scope of our framework, we use it to address some key questions in the literature on expressive voting: why, for expressive considerations, might voters vote against their self‐interest in large elections and why might such elections exhibit a moral bias. Specifically, we consider an electoral set‐up with two alternatives and explain why, when the size of the electorate is large, voters may want to vote for the alternative they deem morally superior even if this alternative happens to be strictly less preferred, in an all‐inclusive sense, than the other. (JEL D01, D03, D81, D72, A13)     

Entrepreneurial Motivations and Capabilities of Migrant Entrepreneurs in Australia

This article presents findings on immigrant entrepreneurship in Australia. The relationship between the entrepreneurial start‐up motivation, co‐ethnic preferences and entrepreneurial capabilities of established immigrant businesses are explored. We analyse data collected with a self‐administered survey questionnaire from 157 immigrant entrepreneurs in Melbourne's suburbs. Our findings show that immigrant entrepreneurs who report a high level of individual achievement as their start‐up motivation also report high levels of entrepreneurial capabilities in terms of opportunity recognition, managerial innovativeness and proactiveness. Immigrant entrepreneurs who are highly influenced by co‐ethnic preferences on staff employment and customer targeting report higher opportunity recognition than those who have a co‐ethnic preference on suppliers. We provide important insights and explanations for these findings and their implications for Australian immigrant entrepreneurs and policymakers.     

What Is Different about the Profile of the Social Entrepreneur?

In recent years, the term social entrepreneur has become increasingly common in academic and business circles. Social entrepreneurs engage in a variety of activities, but always with the intention of solving social problems. Social entrepreneurs are not merely people who perform acts of charity; they have an evident desire to improve social well‐being and develop projects with long‐term vision. The creation of sustainable social value is a key characteristic that differentiates them from well‐meaning individuals who simply engage in charitable works. There are, however, significant gaps in our understanding of social entrepreneurs and few empirical studies on the subject. This present study attempts to identify the characteristics of more socially oriented entrepreneurs, using sociodemographic variables and the theory of universal values toward work. Analysis of a sample of approximately 400 people shows that more than half of entrepreneurial orientation can be explained through the possession of the values of self‐enhancement (with an inverse relationship in this case), self‐transcendence, and conservation. The theory of universal values has proved extraordinarily useful for studying the characteristics of social entrepreneurs.     

INDIVIDUAL BEHAVIOR AND BIDDING HETEROGENEITY IN SEALED BID AUCTIONS WHERE THE NUMBER OF BIDDERS IS UNKNOWN

This article uses laboratory data from a series of first‐price (FP) and second‐price (SP) sealed bid auctions in which the number of bidders is unknown to test for possible deviations of individual behavior from theory and study the source of heterogeneity in bidding. In SP auctions we find a substantial amount of coincidence with theory. We observe systematic deviations from risk neutral bidding in FP auctions and show theoretically that these deviations are consistent with risk averse preferences. We find essentially no heterogeneity in bidding in SP auctions where risk preferences and the number of bidders do not affect the optimal bid, while in the FP auctions heterogeneity in bidding persists with experience. We find that heterogeneity in bidding in FP auctions is consistent with heterogeneity in risk preferences, the attempt to count the number of bidders in the auction, and bidder specific noise. (JEL D44, C91)     

CENTRALIZED OR DECENTRALIZED INFORMATION: WHICH IS BETTER FOR PROVIDING INCENTIVES?

A risk‐neutral ruler must invest in improving the quality of his country's infrastructures. Higher quality infrastructures increase the profitability of capital investment by foreign entrepreneurs. The ruler wishes to maximize the amount of capital investment that flows into the country. Before selecting their investment, entrepreneurs receive a signal on the quality of infrastructures. We consider two cases. First, all entrepreneurs observe the same signal (centralized information). Second, each entrepreneur receives an independently drawn signal (decentralized information). We compare the effectiveness of these two scenarios for incentivizing the ruler. We find remarkably clear‐cut results. When the entrepreneurs’ investments are strategic complements, centralized information does a better job in incentivizing the ruler. The opposite holds when investments are strategic substitutes. This may help understand the role of media, rating agencies, public announcements, and ambiguity. (JEL D82, D62)     

PERCEIVED GAME UNCERTAINTY,SUSPENSE AND THE DEMAND FOR SPORT

This study tries bridging between different behavioral economic explanations for the lack of support of the uncertainty of outcome hypothesis in spectator sports. We test a measure of perceived game uncertainty that is comparable to objective measures frequently tested in the literature. Econometric results suggest that fans do not perceive closeness of a game differently than how economists have tended to measure it. However, fans' perceptions of suspensefulness are distinct from their perceptions of game uncertainty. Moreover, the finding that fans' preferences for game uncertainty are dominated by loss aversion also emerges—independently of fanship status—in our stated‐preference setting. (JEL L83, D12, Z2)     

Could “Acculturation” Effects Be Explained by Latent Health Disadvantages Among Mexican Immigrants?

This paper tests portions of a new theory of immigrant health by focusing exclusively on latent biomarkers of future health risks. Using data from the National Health and Nutrition Examination Survey III, 1988–1994 – we uncover the typically observed immigrant health advantage among recent immigrants that diminishes among long‐term immigrants. In addition, we observe worse health among U.S.‐born Mexican Americans relative to non‐Hispanic Whites. Finally, although our theory suggests that recent immigrants may have latent health risks due to disadvantaged childhood experiences, we do not find evidence in support of this theory.     

DO SOCIAL PREFERENCES INCREASE PRODUCTIVITY? FIELD EXPERIMENTAL EVIDENCE FROM FISHERMEN IN TOYAMA BAY

In addition to showing that student measures of social preference, a concern for outcomes achieved by other reference agents, are quite different from those obtained in the field with participants who face social dilemmas in their daily lives, we find links between the social preferences of our field participants and their productivity at work. We also find that the field stock of social preferences evolves endogenously with respect to how widely team production is utilized. Because the link between productivity and social preference is strong, we provide a reason for the wider economics profession to take notice of social preferences. (JEL C93, D21, D24, H41, J24, M52, Z13)     

CONTEST DESIGN: AN EXPERIMENTAL INVESTIGATION

This paper experimentally compares the performance of four simultaneous lottery contests: a grand contest, two multiple prize settings (equal and unequal prizes), and a contest which consists of two subcontests. Consistent with the theory, the grand contest generates the highest effort levels among all simultaneous contests. In multi‐prize settings, equal prizes produce lower efforts than unequal prizes. The results also support the argument that joint contests generate higher efforts than an equivalent number of subcontests. Contrary to the theory, there is significant over‐dissipation. This over‐dissipation can be partially explained by strong endowment size effects. Subjects who receive higher endowments tend to over‐dissipate, whereas such over‐dissipation disappears when the endowments are lower. This behavior is consistent with the predictions of a quantal response equilibrium. We also find that less risk‐averse subjects over‐dissipate more. (JEL C72, C91, D72)     

WHAT MOTIVATES POLITICAL PREFERENCES? SELF‐INTEREST,IDEOLOGY, AND FAIRNESS IN A LABORATORY DEMOCRACY

Substantial prior literature has established that subjects in laboratory experiments are typically willing to sacrifice their own well being to make financial allocations more equal among participants. We test the applicability of this result in an environment that contains some of the key contextual issues that are usually excluded from more abstract games, but which might be important in situations involving income redistribution. Our general finding is that votes for a redistributive tax are almost entirely in accordance with self‐interest: above‐average earners vote for low tax rates and below‐average earners vote for high tax rates. A measure of subjects' preferences for fairness or equality, their self‐reported economic ideology, is not directly related to their voting behavior in this experiment. Because the ideology measure should be correlated with any intrinsic preferences regarding inequality aversion, we conclude that any preferences for fairness or inequality that our subjects possess are not strong enough to overcome self‐interest in this context. We do, however, find evidence for a possible indirect effect of ideology on choice behavior in that more conservative subjects tend to be more responsive to their self‐interest than the more liberal subjects. (JEL C90, D63)     

REFERENCE‐DEPENDENT PREFERENCES,LOSS AVERSION,AND LIVE GAME ATTENDANCE

We develop a consumer choice model of live attendance at a sporting event with reference‐dependent preferences. The predictions of the model motivate the “uncertainty of outcome hypothesis” (UOH) as well as fans' desire to see upsets and to simply see the home team win games, depending on the importance of the reference‐dependent preferences and loss aversion. A critical review of previous empirical tests of the UOH reveals significant support for models with reference‐dependent preferences, but less support for the UOH. New empirical evidence from Major League Baseball supports the loss aversion version of the model. (JEL L83, D12)     

Environmental Risks and Environmental Justice,Or How Titanic Risks Are Not So Titanic After All*

Some of the best‐known social scientific theories of risks are those that have been elaborated by Anthony Giddens and Ulrich Beck. Although their arguments differ greatly, they agree in seeing the technologically induced risks of today’s “Risk Society” as global—so pervasive that they transcend all socioeconomic as well as geopolitical and national boundaries. Most empirical work, however, provides greater support for a theoretical tradition exemplified by Short and Erikson. In this paper, we argue that many of the technological mega‐risks described by Giddens and Beck as “transcending” social boundaries are better described as “Titanic risks,” referring not so much to their colossal impact as to the fact that—as was the case for the majority of the victims on the Titanic—actual risks are related to victims’ socioeconomic as well as sociogeographic locations. Previous research has shown this to be the case with high‐risk technologies, such as nuclear energy and weaponry, and also with localized ones, such as toxic waste disposal. This article illustrates that the same is true even for the most genuinely “global” risks of all, namely those associated with global climate disruption.     

Risk society and the distribution of bads: theorizing class in the risk society

Ulrich Beck states in the Risk Society (1992) that the rise of the social production of risks in the risk society signals that class ceases to be of relevance; instead the hierarchical logic of class will be supplanted by the egalitarian logic of the distribution of risks. Several trenchant critiques of Beck's claim have justified the continued relevance of class to contemporary society. While these accounts have emphasized continuity, they have not attempted to chart, as this paper will, how the growing social production of risk increases the importance of class. This paper argues that it is Beck's undifferentiated, catastrophic account of risk that undergirds his rejection of class, and that by inserting an account of risk involving gradations in both damages and calculability into Beck's framework, his theory of risk society may be used to develop a critical theory of class. Such a theory can be used to reveal how wealth differentials associated with class relations actually increase in importance to individuals’ life‐chances in the risk society. With the growing production and distribution of bads, class inequalities gain added significance, since it will be relative wealth differentials that both enables the advantaged to minimize their risk exposure and imposes on others the necessity of facing the intensified risks of the risk society.     

RISK PREFERENCES AND EXPECTED UTILITY: EVIDENCE FROM LABOR SUPPLY DATA

This paper adds to the growing body of evidence that observed risk preferences are not consistent with expected‐utility theory. Using the link between labor supply decisions and utility as outlined by Chetty (“A Bound on Risk Aversion Using Labor Supply Elasticities.” The American Economic Review, 96(5), 2006, 1821–34), I compute the curvature of utility over wealth for 3,900 individuals in the 1996 Panel Study of Income Dynamics. I then compare this estimate to a measure of relative risk aversion based on the respondents' answers to hypothetical gambling questions and find virtually zero correlation. Finally, I investigate how the two measures and their correlations change by demographic groups and risky behavior. (JEL C81, D80, J22)     

EDUCATION'S GAMBLING PROBLEM: EARMARKED LOTTERY REVENUES AND CHARITABLE DONATIONS TO EDUCATION

I examine the impact that lotteries introduced to support education have on voluntary contributions to education. State lotteries, and the causes they are introduced to support, are highly publicized. This provides the opportunity to assess whether donors are crowded‐out by government spending of which they are almost certainly aware. Using donor‐level survey data and nonprofits' tax returns, I find that donations to education‐related organizations fall with the introduction of a lottery. This result is driven by donors' response to the new (highly publicized) government revenue source (rather than a decrease in nonprofit fundraising efforts). (JEL D64, H3, H75)     

Interpersonal risk assessment and social preferences: An experimental study

We investigate interpersonal risk assessment, that is how individuals use either their own or their partner’s monetary resources to offset the risk that affects them or their partner. The observed behavior is in line with the predictions of a simple piecewise linear model of social preferences. Overall, individuals opportunistically draw from others’ resources to offset risk; furthermore, they display higher levels of risk aversion when delegated to choose for others rather than when choosing for themselves. However, different social types differ in the assessment of interpersonal risk. Considering our results, we suggest that studies dealing with interpersonal risk assessment should not only focus on risk preferences, but also take into account social preferences.     

Utilities,preferences, and substantive goods

 People’s utility levels are meant to be measures of their well-being. Early utilitarians defined them in terms of people’s happiness. Modern economics defines them in terms of people’s actual preferences. But in ethics they have to be defined in terms of people’s informed preferences. I shall discuss the relationship between people’s desires and preferences, and that between their reasoned and unreasoned preferences. I shall argue that people’s basic desires are much the same, whereas their preferences are often very different. Finally, I shall argue, contrary to Scanlon’s theory, that the things that are good for us are beneficial to us ultimately because they satisfy our biological and psychological needs and our personal interests. Received: 8 July 1996     

Migration Decisions Within Dual‐Earner Partnerships: A Test of Bargaining Theory

This article focuses on the problems faced by dual‐earner partnerships arising from the regional coordination of the partners' careers. It is still unknown whether the fact that couples are less mobile than singles is caused by homogeneous preferences within couples or by a process of balancing conflicting interests. Consequently, we analyze the potential conflicts provoked by work‐related migration incentives. We test hypotheses derived from bargaining theory using quasi‐experimental data from a factorial survey of nearly 280 European couples. Our results support the bargaining approach and confirm that asymmetrical shifts in bargaining power drive the potential for conflict. Women's willingness to move is generally less than men's, but the impact of employment prospects differs only slightly by gender.     

Face Preferences for Infant‐ and Adult‐Directed Speakers in Infants of Depressed and Nondepressed Mothers: Association with Infant Cognitive Development

Face preferences for speakers of infant‐directed and adult‐directed speech (IDS and ADS) were investigated in 4‐ to 13.5‐month‐old infants of depressed and nondepressed mothers. Following 1 min of exposure to an ID or AD speaker (order counterbalanced), infants had an immediate paired‐comparison test with a still, silent image of the familiarized versus a novel face. In the test phase, ID face preference ratios were significantly lower in infants of depressed than nondepressed mothers. Infants' ID face preference ratios, but not AD face preference ratios, correlated with their percentile scores on the cognitive (Cog) scale of the Bayley Scales of Infant & Toddler Development (3rd Edition; BSID‐III), assessed concurrently. Regression analyses revealed that infant ID face preferences significantly predicted infant Cog percentiles even after demographic risk factors and maternal depression had been controlled. Infants may use IDS to select social partners who are likely to support and facilitate cognitive development.