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Yosuke Hashidate and Keisuke Yoshihara
''Stochastic Expected Inequity-Averse Choice''
( 2021, Vol. 41 No.3 )
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: D8 - Information, Knowledge, and Uncertainty: General
C7 - Game Theory and Bargaining Theory
Manuscript Received : Mar 22 2021 Manuscript Accepted : Sep 17 2021

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