Suchergebnisse

Abstract
Arrow (1950) famously showed the impossibility of aggregating individual preference orders into a social preference order (together with basic desiderata). This paper shows that it is possible to aggregate individual choice functions, that satisfy almost any condition weaker than WARP, into a social choice function that satisfy the same condition (and also Arrow's desiderata).

We examine Popper's falsifiability within an economic model in which a tester hires a potential expert to produce a theory. Payments are contingent on the performance of the theory vis-à-vis data. We show that if experts are strategic, falsifiability has no power to distinguish scientific theories from worthless theories. The failure of falsification in screening informed and uninformed experts motivates questions on the broader concepts of refutation and verification. We demonstrate an asymmetry between the two concepts. Like falsification, verification contracts have no power to distinguish between informed and uninformed experts, but some refutation contracts are capable of screening experts. (JEL B41)

It is well known that when agents are fully rational, compulsory public insurance may make all agents better off in the Rothschild and Stiglitz (1976) model of insurance markets. We find that when sufficiently many agents underestimate their personal risks, compulsory insurance makes low-risk agents worse off. Hence, behavioral biases may weaken some of the well-established rationales for government intervention based on asymmetric information. (JEL D82, G22)

We analyze a model of participation in elections in which voting is costly and no vote is pivotal. Ethical agents are motivated to participate when they determine that agents of their type are obligated to do so. Unlike previous duty-based models of participation, in our model an ethical agent's obligation to vote is determined endogenously as a function of the behavior of other agents. Our model predicts high turnout and comparative statics that are consistent with strategic behavior.

AbstractStandard economic models have long been applied to choices over private consumption goods, but have recently been extended to incorporate social situations as well. We challenge the applicability of standard decision-theoretic models to social settings. In an experiment where choices affect the payoffs of someone else, we find that a large fraction of subjects prefer randomization over any of the deterministic outcomes. This tendency prevails whether the other party knows about the choice situation or not. Such randomization violates standard decision theory axioms that require that lotteries are never better than their best deterministic component. For conceptually similar choices in classical non-social situations, we do not find much evidence for such violations, suggesting the need for theories of uncertainty that are targeted to social settings.

We argue that large elections may exhibit amoral bias(i.e., conditional on the distribution of preferences within the electorate, alternatives understood by voters to be morally superior are more likely to win in large elections than in small ones). This bias can result fromethical expressivepreferences, which include a payoff voters obtain from taking an action they believe to be ethical. In large elections, pivot probability is small, so expressive preferences become more important relative to material self-interest. Ethical expressive preferences can have a disproportionate impact on results in large elections for two reasons. As pivot probability declines, ethical expressive motivations make agents more likely to vote on the basis of ethical considerations than on the basis of narrow self-interest, and the set of agents who choose to vote increasingly consist of agents with large ethical expressive payoffs. We provide experimental evidence that is consistent with the hypothesis of moral bias.

Hume (1748) challenged the idea that a general claim (e.g., "all swans are white") can be validated by empirical evidence, no matter how compelling. We examine this issue from the perspective of a tester who must accept or reject the forecasts of a potential expert. If experts can be skeptical about the validity of claims then they can evade rejection strategically. In contrast, if experts are required to conclude that claims backed by sufficient evidence are likely to be true, then they can be tested and rejected. These results provide an economic rationale for claim validation based on incentive problems. (JEL D82)