If the worst comes to the worst: Dictator giving when recipient’s endowments are risky

Abstract

Donors may often not be sure whether a recipient really needs their help. Does this uncertainty deter generosity? We experimentally investigate a situation in which donors do not know the financial endowment of the recipient for certain, but still have some information on the distribution the endowments are drawn from. In the experiment, we find that uncertainty does not deter generosity. In fact, if we filter out selfish dictators, under most specifications of uncertainty dictators give more, compared with the donation dictators make to a recipient they know to have the expected value of the endowment with certainty. They are particularly concerned about the possibility of a recipient leaving the lab with no payoff from the game.