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Do Trade Union Leaders Violate Subjective Expected Utility? Some Insights From Experimental Data

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Abstract

This paper presents the results of two experiments designed to test violations of Subjective Expected Utility Theory (SEUT) within a sample of Italian trade union delegates and leaders. Subjects priced risky and ambiguous prospects in the domain of gains. Risky prospects were based on games of chance, while ambiguous prospects were built on the standard Ellsberg paradox and on event lotteries whose outcomes were based either on the results of a fictional election or on the future results of the 1999 European Parliamentary election in Italy and the U.K. The experiments show that, although risky prospects were priced at their expected values on average, trade union delegates and leaders did violate SEUT when assessing ambiguous prospects. Moreover, their behaviour depended on the source of uncertainty (Ellsberg paradox vs. electoral results; fictional vs. real election; Italy vs. U.K. election outcomes). We discuss the implications of these results for the economic theory of the trade union.

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Authors and Affiliations

  1. Dipartimento di Economia, Università degli Studi di Torino (IT), via Po 53, 10124, Torino (TO), Italy

    Anna Maffioletti

  2. Dipartimento di Economia Politica e Aziendale, Università degli Studi di Milano (IT), via Conservatorio 7, 20122, Milano (MI)

    Michele Santoni

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  1. Anna Maffioletti
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  2. Michele Santoni
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Correspondence to Anna Maffioletti.

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Maffioletti, A., Santoni, M. Do Trade Union Leaders Violate Subjective Expected Utility? Some Insights From Experimental Data. Theor Decis 59, 207–253 (2005). https://doi.org/10.1007/s11238-005-8633-3

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