Hyper-altruistic behavior vanishes with high stakes

Abstract

Using an incentivized experiment with statistical power, 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). Although the donations increase in absolute terms as the stakes increase, subjects decrease the donated fraction of the pie. 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. 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. Policies promoted via prosocial frames (e.g., stressing the effects of mask-wearing or social distancing on others during the Covid-19 pandemic or environmentally-friendly behaviors on future generations) may thus be miscalibrated if they disregard the stakes at play.