Conveniently Pessimistic : Manipulating Beliefs to Excuse Selfishness in Charitable Giving

Abstract This paper demonstrates that people manipulate their ambiguity aversion when it is self-serving. In an online experiment, subjects are asked to choose between a selfish option and an altruistic option. Under the altruistic option, the charity’s payoff depends on an ambiguous lottery, i.e., a lottery in which the probability of winning is unknown. After subjects make this choice, they are asked how optimistic they feel about the lottery. In a subsequent task, the same subjects indirectly reveal how optimistic they truly feel about lottery, through an incentive compatible belief elicitation task. The results show that all subjects, regardless of whether they chose the selfish or altruistic option, are about as optimistic as an ambiguity neutral person should be. However, subjects who chose the selfish option claim to be significantly more pessimistic than they truly are. Given the experiment design, the only plausible explanation for such a discrepancy is that overstating their pessimism gives subjects an excuse to behave selfishly without damaging their self-image of being an altruistic person