Browsing by Subject "Risk attitudes"

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Fairness, efficiency, risk, and time
(2007) Seidel, Gerald
We present a model of a 2-person-2-period-economy with specific (human) capital. Although the individuals are purely selfish, the outcome is seemingly guided by pro-social behavior. We find in our model economy that fairness and efficiency are positively related whereas risk aversion seems to have no major impact on the seemingly fair behavior. A rise in the time preference increases the disadvantaged subject?s aspiration for equal outcomes but reduces the advantaged subject?s willingness to accept them.