Behind The Veil Of Ignorance

This paper reveals risk preference and social preference behind the veil of igno-rance and successfully decomposes the various underlying motivations. Using a novel experiment wherein subjects move graphically along a slider to divide a pie of money between high and low reward in both lottery and Vol treatments, we are able to collect rich data sets at individual level. We check individual preference characteristics includ-ing consistency and homotheticity in pure risk and in distributive scenarios and employ two structure models to estimate underlying motivations including risk aversion, in-equality aversion,loss aversion and jealousy. We found almost all decision choices made by individuals in two treatments can be rationalized by a well-behaved utility function and the utility function is weak homothetic. The results show individual social preference behind Vol are not the same as risk preference and these two preferences are highly heterogeneous among subjects. More specifically, the correlation between risk aversion and inequality aversion is very low and exhibits weak substitute, weak com-pliment and weak independence. A significant amount of subjects demonstrate social preference behind the Vol in the sense of aversion for unequal distribution and of not being jealous when receiving low rewards.