On the determinants of giving under risk

Abstract

By means of a laboratory experiment we investigate the role of risk preferences for prosocial behavior. Modifying the way the decision-maker or the recipient are exposed to risk, our design allows to identify how risk preferences impact giving-decisions. By measuring the decision-makers’ risk preferences regarding both their own as well as the recipients’ payoff, we generate new insights into how social preference theories may extend to risky situations

How do risk attitudes affect pro-social behavior? Theory and experiment

“…By contrast, the results from two earlier studies (Brennan, González, Güth, and Levati 2008;Güth, Levati, and Ploner 2008) suggest that while players care about their own risks, they do not appear to respond to risks faced by others. Most recently, in a setting similar to our own, Freundt and Lange (2017) found that risk preferences do appear to matter for giving behavior. Independent of our study, they showed that a giver's risk preferences can help explain differences in giving behavior between deterministic and risky versions of the standard dictator game observed by Brock, Lange, and Ozbay (2013).…”

“…While this feature helped to identify the role of the dictator's risk preferences, in many real-world analogs of our setting-for example, a physician performing a risky operation for a patient-the decision-maker may be better informed about the willingness of the recipient to take on risk. Recent research indicates that this kind of information does affect the behavior of the decision-maker (Freundt and Lange 2017). It has also been shown that individuals do use available information about others' risk attitudes when predicting a target's preferences, but their own risk preferences still have a strong influence on their predictions (Roth and Voskort 2014).…”

“…This differentiates our work from the research on ex-post income redistribution-both the work on fairness concerns (e.g., Cappelen et al [2013]) and the extensive literature on risk sharing. 6 To our knowledge, only four papers have studied dictator games which incorporate the type of ex-ante redistribution we analyze: Karni, Salmon, and Sopher (2008); Krawczyk and Le Lec (2010); Brock, Lange, and Ozbay (2013); and Freundt and Lange (2017). Our experimental setup is very similar to the design in the latter three papers, which also study two-person games.…”

How perceptions of autonomy relate to beliefs about inequality and fairness

“…A large literature in economics provides ample evidence that beliefs about fairness of the economic environment and views about meritocracy are related to tolerance for inequality. For instance, experimental studies show that having ex-ante fair chances to win a lottery decreases participants’ willingness to redistribute unequal ex-post outcomes [ 28 – 31 ]. Likewise, several studies have found that people are more accepting of inequality when income differences are due to achievements or choices rather than luck [ 32 – 36 ].…”

Prosociality predicts health behaviors during the COVID-19 pandemic

“… 3 We thereby build on previous work on social preferences in risky environments, see, e.g., Haisley and Weber, 2010 , Krawczyk and Le Lec, 2010 , Brock et al, 2013 , Freundt and Lange, 2017 , Andersson et al, 2020 . …”