Earning responsibility increases risk taking among representative decision makers

Abstract

Abstract Previous experiments on representative decision making find that social responsibility alters risk-taking behavior relative to individuals making decisions for only themselves. However, these experiments confer the position of social responsibility through random assignment. In the field, people who are responsible for making decisions on behalf of others typically do not assume the position by pure chance, but instead ‘earn’ social responsibility on a basis of merit. Experiments on earned roles in other areas of economics suggest this may induce more self-regarding behavior. We conduct laboratory experiments to investigate how self-determining one's role as a representative decision maker influences subsequent risk-taking behavior. Using a one-shot binary lottery choice and a between-subjects design, we compare the risk-taking behavior of representatives under randomly assigned social responsibility with that of representatives under earned responsibility and with that of participants making decisions only for themselves. We find that when participants earn social responsibility through performance in a pre-game task, they report considering their dependents less and exhibit significantly more risk taking than those who receive responsibility through random assignment. Those who earn social responsibility behave like individuals without dependents, while those who receive social responsibility through random assignment—consistent with previous studies—display less risk taking (over moderate probability gains prospects) than individuals operating by themselves.