Stochastic Expected Inequity-Averse Choice

14 Pages Posted: 26 Feb 2021 Last revised: 22 Jun 2021

See all articles by Yosuke Hashidate

Yosuke Hashidate

Waseda University; Japan Society for the Promotion of Science

Keisuke Yoshihara

Gunma University - Center for Mathematics and Data Science

Date Written: June 20, 2021

Abstract

This note studies stochastic inequity-averse choice behavior, capturing ex-post fairness and ex-ante fairness. By studying deliberate randomization, we characterize the stochastic choice behavior stemming from Saito [Social Preferences under Risk: Equality of Opportunity versus Equality of Outcome, American Economic Review, 103 (7): 3084-3101]. We find that the violations of first order stochastic dominance (FOSD) and Regularity occur, and that ex-ante fairness can lead to preference reversal phenomena.

Keywords: Inequity Aversion; Ex-Ante Fairness; Ex-Post Fairness; Deliberate Randomization.

JEL Classification: D63; D64; D81; D91

Suggested Citation

Hashidate, Yosuke and Yoshihara, Keisuke, Stochastic Expected Inequity-Averse Choice (June 20, 2021). Available at SSRN: https://ssrn.com/abstract=3793637 or http://dx.doi.org/10.2139/ssrn.3793637

Yosuke Hashidate (Contact Author)

Waseda University ( email )

1-6-1 Nishi-Waseda, Shinjuku-ku, Tokyo
Sinjuku, 169-8050
Japan
169-8050 (Fax)

Japan Society for the Promotion of Science ( email )

Keisuke Yoshihara

Gunma University - Center for Mathematics and Data Science

4-2 Aramakimachi
Maebashi, Gunma 371-8510
Japan

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