Research

Working Paper

Hyper-altruistic behavior vanishes with high stakes

Abstract

Using a powered and incentivized experiment, this paper explores the role of stakes in charitable giving of lottery prizes, where subjects commit to donate a fraction of the prize before they learn the outcome of the lottery. We study three stake levels: 5€ (n= 177), 100€ (n= 168), and 1,000€ (n= 171). We find that individuals decrease the donated fraction of the pie as the stakes increase. However, people still share roughly 20% of 1,000€, an amount as high as the average monthly salary of people at the age of our subjects. We further report that the number of people sharing 50% of the pie is remarkably stable across stakes, but donating the the whole pie the modal behavior in charity-donation experiments disappears with stakes. Such hyper-altruistic behavior thus seems to be an artifact of the stakes typically employed in economic and psychological experiments. Our findings point out that sharing with others is a prevalent human feature, but stakes are an important determinant of sharing and policies frequently promoted via prosocial frames (such as stressing the effects of mask-wearing or social distancing on others during the ongoing Covid-19 pandemic or environmentally-friendly behaviors on future generations) may thus be miscalibrated if they disregard the stakes at play.

Keywords: ambiguity, charity, giving, stakes, uncertainty,