Social Preferences under Risk - An ExperimentalAnalysis

The literature on social preferences provides overwhelming evidence of departuresfrom pure self-interest of individuals. Experiments show that people care about others’well-being and their relative standing. This paper investigates whether this type ofbehavior persists when risk comes into play. I devise an experiment which sheds light onthe interrelation of risk and social preferences by measuring (1) individual risk preferences,(2) interpersonal risk preferences, and (3) social preferences under certainty. The resultsreveal that a large share of subjects choose to accept more risk or less potential gain thanindividually preferred in order to increase another subject’s payoff. Further, the willingnessto do so appears to be influenced by the "need" of the other person and her potentialrelative standing. Surprisingly, the results do not suggest that a subject’s social behaviorunder risk is related to his exhibited social concerns exhibited under certainty.