Preferences Over Allocations of Public Risk - An Impartial Spectator’s Perspective

As societies are increasingly concerned with risks, it is important to evaluate risks not only from an individual, but also from a societal perspective. This paper analyzes preferences of impartial spectators over different types of risk allocations across a group of individuals. We consider public risks which all yield the same expected outcomes and differ only in terms of risk and inequality. On average our subjects exhibit clear preferences over different types of allocations consistent with ex ante inequality and individual risk aversion, and ex post inequality and collective risk seeking behavior. Though surprising at first sight, these results are consistent with the literature on public risk