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Dictating the Risk: Experimental Evidence on Giving in Risky Environments

  • J. Michelle Brock
  • Andreas Lange
  • Erkut Y. Ozbay

We study if and how social preferences extend to risky environments. We provide experimental evidence from different versions of dictator games with risky outcomes and establish that preferences that are exclusively based on ex post or on ex ante comparisons cannot generate the observed behavioral patterns. The more money decision-makers transfer in the standard dictator game, the more likely they are to equalize payoff chances under risk. Risk to the recipient does, however, generally decrease the transferred amount. Ultimately, a utility function with a combination of ex post and ex ante fairness concerns may best describe behavior. (JEL C72, D63, D64, D81)

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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 103 (2013)
Issue (Month): 1 (February)
Pages: 415-37

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Handle: RePEc:aea:aecrev:v:103:y:2013:i:1:p:415-37
Note: DOI: 10.1257/aer.103.1.415
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  1. Grant, Simon, 1995. "Subjective Probability without Monotonicity: Or How Machina's Mom May Also Be Probabilistically Sophisticated," Econometrica, Econometric Society, vol. 63(1), pages 159-89, January.
  2. Charness, Gary & Rabin, Matthew, 2001. "Understanding Social Preferences with Simple Tests," Department of Economics, Working Paper Series qt4qz9k8vg, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  3. Christoph Engel, 2011. "Dictator games: a meta study," Experimental Economics, Springer, vol. 14(4), pages 583-610, November.
  4. Forsythe Robert & Horowitz Joel L. & Savin N. E. & Sefton Martin, 1994. "Fairness in Simple Bargaining Experiments," Games and Economic Behavior, Elsevier, vol. 6(3), pages 347-369, May.
  5. Cappelen, Alexander W & Konow, James & Sorensen, Erik O & Tungodden, Bertil, 2010. "Just luck: an experimental study of risk taking and fairness," MPRA Paper 24475, University Library of Munich, Germany.
  6. Bohnet, Iris & Zeckhauser, Richard, 2004. "Trust, risk and betrayal," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 467-484, December.
  7. Trautmann, Stefan T., 2009. "A tractable model of process fairness under risk," Journal of Economic Psychology, Elsevier, vol. 30(5), pages 803-813, October.
  8. Chambers, Christopher P., 2012. "Inequality aversion and risk aversion," Journal of Economic Theory, Elsevier, vol. 147(4), pages 1642-1651.
  9. Charlotte Klempt & Kerstin Pull, 2010. "Committing to Incentives: Should the Decision to Sanction be Revealed or Hidden?," Jena Economic Research Papers 2010-013, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  10. Sandroni Alvaro & Ludwig Sandra & Kircher Philipp, 2013. "On the Difference between Social and Private Goods," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 13(1), pages 27, June.
  11. John A. List, 2007. "On the Interpretation of Giving in Dictator Games," Journal of Political Economy, University of Chicago Press, vol. 115, pages 482-493.
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