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Department of Economics, WU (Wirtschaftsuniversität Wien) Working papers, Department of Economics, WU (Wirtschaftsuniversität Wien)

No 172:
Social Preferences and Voting on Reform: An Experimental Study

Fabian Paetzel (), Rupert Sausgruber () and Stefan Traub ()

Abstract: Debating over efficiency-enhancing but inequality-increasing reforms accounts for the routine business of democratic institutions. Fernandez and Rodrik (1991) hold that anti-reform bias can be attributed to individual-specific uncertainty regarding the distribution of gains and losses resulting from a reform. In this paper, we experimentally demonstrate that anti-reform bias arising from uncertainty is mitigated by social preferences. We show that, paradoxically, many who stand to lose from reforms vote in favor because they value efficiency, while many who will potentially gain from reforms oppose them due to inequality aversion.

Keywords: Political economy of reform, Status quo bias, Social preferences, Voting, Experiment; (follow links to similar papers)

JEL-Codes: C92,; D72,; D80; (follow links to similar papers)

April 2014

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