Stochastic Choice and Social Preference

Abstract

This paper studies stochastic choice in social contexts, and explores the difference between inequity-averse and image-conscious preferences, in particular, shame aversion. This paper studies a class of additive perturbed utility (APU) introduced in Fudenberg et al. (2015). We find that the general class of inequity-averse preferences correspond to the case of item-invariant APU, and that image-conscious preferences correspond to the case of menu-invariant APU. Under some conditions, the difference between inequity aversion and shame aversion is discussed through the violation of Regularity, one of the most well-known properties of stochastic choice.