Skip to main content
Log in

The econometric modelling of social preferences

  • Published:
Theory and Decision Aims and scope Submit manuscript

Abstract

Experimental data on social preferences present a number of features that need to be incorporated in econometric modelling. We explore a variety of econometric modelling approaches to the analysis of such data. The approaches under consideration are: the Random Utility approach (in which it is assumed that each possible action yields a utility with a deterministic and a stochastic component, and that the individual selects the action yielding the highest utility); the Random Behavioural approach (which assumes that the individual computes the maximum of a deterministic utility function, and that computational error causes their observed behaviour to depart stochastically from this optimum); and the Random Preference approach (in which all variation in behaviour is attributed to stochastic variation in the parameters of the deterministic component of utility). These approaches are applied in various ways to an experiment on fairness conducted by Cappelen et al. (Am Econ Rev 97(3):818–827, 2007). Various models that we estimate succeed in capturing the key features of the dataset. Conclusions concerning fairness-related behaviour depend crucially on the choice of econometric model.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Andersen, S., Harrison, G. W., Hole, A. R., Lau, M., & Rutström, E. E.: Non-linear mixed logit. Theory and Decision, Forthcoming.

  • Anderson S. P., Goeree J. K., Holt C. A. (1998) A theoretical analysis of altruism and decision error in public goods games. Journal of Public Economics 70: 297–323

    Article  Google Scholar 

  • Bardsley N. (2000) Control without deception: Individual behaviour in free-riding experiments revisited. Experimental Economics 3: 215–241

    Google Scholar 

  • Bardsley N., Moffatt P. G. (2007) The experimetrics of public goods: Inferring motivations from contributions. Theory and Decision 62: 161–193

    Article  Google Scholar 

  • Bellemare C., Kröger S., van Soest A. (2008) Measuring inequity aversion in a heterogeneous population using experimental decisions and subjective probabilities. Econometrica 76(4): 815–839

    Article  Google Scholar 

  • Botti, F., Conte, A., Di Cagno, D. T., & D’Ippoliti, C. (2008). Risk attitude in real decision problems. The B.E. Journal of Economic Analysis & Policy—Advances, 8(1), Article 6.

  • Cappelen A. W., Hole A. D., Sørensen E. Ø., Tungodden B. (2007) The pluralism of fairness ideals: An experimental approach. American Economic Review 97(3): 818–827

    Article  Google Scholar 

  • Cherry T. L., Frykblom P., Shogren J. F. (2002) Hardnose the dictator. American Economic Review 92(4): 1218–1221

    Article  Google Scholar 

  • Conte, A., Di Cagno, D., & Sciubba, E. (2009). Strategies in social network formation. Birkbeck Working Papers in Economics and Finance 0905, Birkbeck, Department of Economics, Mathematics & Statistics.

  • Conte A., Hey J. D., Moffatt P. G. (2011) Mixture models of choice under risk. Journal of Econometrics 162: 79–88

    Article  Google Scholar 

  • Conte, A., & Levati, V. (2011). Use of data on planned contributions and stated beliefs in the measurement of social preferences. Jena Economic Research Papers 2011-039.

  • Costa-Gomes M. A., Weizsäcker G. (2008) Stated beliefs and play in normal-form games. The Review of Economic Studies 75: 729–762

    Article  Google Scholar 

  • Fechner, G. (1860/1966). Elements of psychophysics (Vol. 1). New York: Holt, Rinehart and Winston.

  • Harrison G. W., Rutström E. E. (2009) Expected utility and prospect theory: One wedding and decent funeral. Experimental Economics 12(2): 133–158

    Article  Google Scholar 

  • Loomes G., Moffatt P. G., Sugden R. (2002) A microeconometric test of alternative stochastic theories of risky choice. Journal of Risk and Uncertainty 24: 103–130

    Article  Google Scholar 

  • Loomes G., Sugden R. (1995) Incorporating a stochastic element into decision theories. European Economic Review 39: 641–648

    Article  Google Scholar 

  • Moffatt P. G. (1995) Grouped Poisson regression models: Theory and an application to public house visit frequency. Communications in Statistics—Part A: Theory and Methods 24(11): 2779–2796

    Google Scholar 

  • Spanos A. (2010) Akaike-type criteria and the reliability of inference: Model selection versus statistical model specification. Journal of Econometrics 158: 204–220

    Article  Google Scholar 

  • Stahl D. O., Wilson P. W. (1994) Experimental evidence on players’ models of other players. Journal of Economic Behavior & Organisation 25: 309–327

    Article  Google Scholar 

  • Train K. (2003) Discrete choice methods with simulation. Cambridge University Press, Cambridge

    Book  Google Scholar 

  • Van Soest A. (1995) Structural models of family labor supply: A discrete choice approach. Journal of Human Resources 30: 63–88

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Anna Conte.

Additional information

The dataset used in this paper was downloaded from the AER website: http://www.aeaweb.org/articles/issue_detail_datasets.php?journal=AER&volume=97&issue=3&issue_date=June%202007.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Conte, A., Moffatt, P.G. The econometric modelling of social preferences. Theory Decis 76, 119–145 (2014). https://doi.org/10.1007/s11238-012-9309-4

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11238-012-9309-4

Keywords

JEL Classification

Navigation