Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/93447 
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper No. 4657
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We analyze distributional preferences in games in which a decider chooses the provision of a good that benefits a receiver and creates costs for a group of payers. The average decider takes into account the welfare of all parties and has concerns for efficiency. However, she attaches similar weights to small and large groups so that she neglects large provision costs that are dispersed among many payers. This holds regardless of whether the decider benefits from the provision or not. A CES utility function which rationalizes average behavior implies altruism in bilateral situations and welfare-damaging actions when costs are dispersed.
Subjects: 
social preferences
distribution games
concentrated benefits and dispersed costs
JEL: 
C91
D63
H00
Document Type: 
Working Paper
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