Social, Behavioral & Experimental Economics (SBEE): Deterministic vs. Stochastic Altruism

Abstract

We report experimental evidence from a 3-person Dictator Game in which Dictators decide over the distribution of probabilities of winning a fixed, indivisible, monetary prize. This evidence is compared with (i) a standard (control) treatment in which money is perfectly divisible and Dictators allocate shares of the prize across the group members and also with (ii) a “hybrid” protocol by which a fraction of the prize is allocated deterministically, and the remainder by way of a lottery. Dictators’ decisions are framed within a (suitably modified version of) Karni and Safra (2002a)’s model of distributional justice. This allows us to identify consequentialist vs. procedural fairness, also controlling for (own-payoff) risk aversion. Our evidence suggests that, among those not exhibiting a completely selfish behavior, both views of fairness are complementary in explaining subjects’ distributional decisions.