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Inequality aversion and risk‐aversion are widely assumed in economic models; however existing economic literature fails to distinguish between the two. This paper presents methodology and a laboratory experiment, which separates inequality aversion from risk aversion. In a set of laboratory experiments, subjects had to choose between two risky alternatives which pay meaningful prizes with the same individual risk but different levels of egalitarianism. Thus, the choice of the more egalitarian alternative implies a higher level of inequality aversion. The experiment was conducted among children, some of whom live on a communal system (kibbutz) and some in the city.

This paper studies the effect of individual uncertainty on collective decision-making to implement innovation. We show how individual uncertainty creates a bias for the status quo even under irreversible voting decisions, in contrast with Fernandez and Rodrik (1991). Blocking innovation is rooted in the aversion to the potential loss of political clout in future voting decisions. Thus, risk neutral individuals exhibit what we call political risk aversion. Yet individual uncertainty is not all bad news as it may open the door to institutional reform. We endogenize institutional reform and show

The cross derivatives of a multiattribute utility function play an important role in the choice between multivariate lotteries and in multiattribute Taylor expansions of the utility function. This paper decomposes the cross derivatives into two components: the derivatives of a single-attribute utility function over value and the cross derivatives of the value function. This approach provides a simple method for reasoning about the signs of the cross derivatives of a multiattribute utility function using derivatives of a univariate utility function and the properties of the value function. To illustrate the approach, we relate the multivariate risk aversion concept, which involves the mixed partial derivative of the utility function, to the Arrow–Pratt risk aversion function. We show that for additive value functions, a decision maker is multivariate risk averse if and only if he is risk averse over value in the Arrow–Pratt sense. For other value functions, however, a decision maker can be risk averse or risk seeking over value and still exhibit multivariate risk aversion. The approach also derives the conditions on the value function that relate two important classes of utility functions: single attribute utility functions whose derivatives alternate in sign and multiattribute utility functions whose cross derivatives alternate in sign. These two classes are widely used in practice and form the basis of univariate and multivariate stochastic dominance. Several examples illustrate the approach.

This series presents research utilizing laboratory experimental methods in economics. A distinction between this book series and traditional journals is that the book series format allows for papers and features that might not be appropriate for journals. Some examples which have been included in this series are: papers with complete presentation of experimental instructions and data, papers which report replication and robustness results, methodological papers, and theoretical papers motivated specifically by experimentation. The series currently consists of two different types of volumes. Some volumes are open-submission covering all topics. The papers in these volumes are reviewed externally. The other volumes, recently undertaken and with Prof. Charles Holt as a co-editor, are focused on a single, broad research topic with papers solicited and reviewed by the co-editors