Title

Investment Choices with Envy and Altruism

Abstract

Experiment reveals that envy and altruism strongly affect the utility from investment choices: 70% of the subjects reveal envy, 10% reveal altruism and 20% are indifferent.. Envious subjects even prefer an inferior First degree Stochastic Dominance (FSD) investment choice provided that their peer group loses more. We develop bivariate utility-free Stochastic Dominance (SD) rules with envy and altruism. Surprisingly, some non-pathological altruism preferences (let alone envious preferences) induce a reduction in the univariate expected utility of all parties. However, with the additive preferences, we identify important cases where the bivariate and the univariate SD efficient sets coincide.