Australasian Mathematical Psychology Conference 2019

Differentiating social preference in hypothetical distributive decisions

Blake Cavve
School of Psychology, University of Western Australia
Mark Hurlstone
School of Psychological Science, University of Western Australia
Simon Farrell
School of Psychological Science, University of Western Australia

Neoclassical economic theory assumes that decision making is primarily driven by rational material self-interest. A number of more recent psychological and economic models challenge this assumption, highlighting instead the role of social context in judgement and decision making. Potential manifestations of social preference span several forms of equality or fairness, to various forms of competitive status-based concerns (the most prominent being Brown et al., 2008). Such motivations are assumed to underlie financial choices including support for taxation regimes. Even seemingly similar social preferences generate different implications regarding distributive and re-distributive decisions of individuals.

In order to differentiate preferences reflecting concern for material self-interest, equality and competitive status in re-distributive decisions, Social Utility functions (Loewenstein et al., 1989) were elicited in several (hypothetical) decision making domains (e.g., income, vacation time, attractiveness). Preferences regarding hypothetical allocations varied by domain, and substantial discrete individual differences were observed. Overall, Bayesian model selection indicates prominent fairness-based preferences for resource distribution, consistent with Inequality Aversion (Fehr & Schmidt, 1999).

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