Blameable and imperfect: A study of risk-taking and accountability

In this paper, we examine how stakeholders hold trustees accountable in voluntary relationships. Trustees are economic agents such as physicians, entrepreneurs, or political leaders who are entrusted with making risky decisions that impact stakeholders. These stakeholders often demand measures to hold trustees accountable for their risky decisions. Using a novel laboratory experiment, we explore how different accountability mechanisms influence the decisions of stakeholders and third-party participants in rewarding or punishing trustee risk choices. We find that stakeholders reward trustees based on both the outcomes of trustees’ choices and by the degree to which those choices match what their stakeholder would have chosen for themselves in a similar situation. Our results indicate that stakeholders’ accountability decisions are best explained by a theory that captures responses to both the pure quality of decisions and the perceived luck of the decision maker, or what we characterize as a good decision with moral luck theory. We further observe that these accountability decisions vary substantially between third-party and stakeholder enforcement and depending upon whether the trustee was also exposed to the risk environment they chose.