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

Author

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  • Sean Fahle

    (State University of New York at Buffalo)

  • Santiago I. Sautua

    (Universidad del Rosario)

Abstract

We explore how risk preferences affect pro-social behavior under uncertainty. We analyze a modified dictator game in which the dictator can, by reducing her own sure payoff, increase the odds that an unknown recipient wins a lottery. We first augment a standard social preferences model with reference-dependent risk attitudes and then test the model’s predictions for the dictator’s giving behavior using a laboratory experiment. Consistent with the predictions of the model, we find that the relationship between giving behavior and a giver’s loss aversion is mediated by the strength of the giver’s pro-social preferences. Among more (less) pro-social dictators, an increase in loss aversion increases (decreases) the likelihood that a dictator contributes to a recipient.

Suggested Citation

  • Sean Fahle & Santiago I. Sautua, 2021. "How do risk attitudes affect pro-social behavior? Theory and experiment," Theory and Decision, Springer, vol. 91(1), pages 101-122, July.
    • Handle: RePEc:kap:theord:v:91:y:2021:i:1:d:10.1007_s11238-020-09788-8
    DOI: 10.1007/s11238-020-09788-8
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    2. Sautua, Santiago I., 2022. "Donation requests following a pay rise," Journal of Economic Psychology, Elsevier, vol. 90(C).

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