Nothing to Lose: Charitable Donations as Incentives in Risk Preference Measurement

Jonathan Rogers

Journal of Experimental Political Science, 2017, vol. 4, issue 1, 34-56

Abstract: Researchers are interested in running experiments in the Middle East and North Africa (MENA), which often include financially incentivized measures of risk preferences. However, it can be that gambling is forbidden and these measures may either be illegal or result in non-random refusal of subjects to participate. If individuals derive utility from warm glow or otherwise enjoy giving, then risk preferences apply to that utility too. Even in the absence of personal stakes, if risk will be borne by others, warm glow will lead subjects to behave in a manner consistent with their preferences over risk for private consumption. I examine how paid risk elicitation mechanisms correlate with measures incentivized by charitable contributions. Results suggest that subjects behave almost identically under paid and charitable stakes. Charitable measures may provide behavioral means by which to measure risk preferences, in populations where gambling is forbidden.

Date: 2017
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