The geometry of distributional preferences and a non-parametric identification approach: The Equality Equivalence Test

Eur Econ Rev. 2015 May:76:85-103. doi: 10.1016/j.euroecorev.2015.01.008.

Abstract

This paper proposes a geometric delineation of distributional preference types and a non-parametric approach for their identification in a two-person context. It starts with a small set of assumptions on preferences and shows that this set (i) naturally results in a taxonomy of distributional archetypes that nests all empirically relevant types considered in previous work; and (ii) gives rise to a clean experimental identification procedure - the Equality Equivalence Test - that discriminates between archetypes according to core features of preferences rather than properties of specific modeling variants. As a by-product the test yields a two-dimensional index of preference intensity.

Keywords: Distributional preferences; Equality equivalence test; Other-regarding preferences; Social preferences; Social value orientations.