Loss Sharing and Social Distance: An Experimental Study

Abstract

We investigate the prosocial behaviour of decision-makers in the context of financial losses. We find that in the dictator game, the loss transferred to other people occupying subsequent positions on the social distance scale behaves non-monotonically (it initially drops and then rises). Further, those effects tend to be smaller when the dictator game is replaced by the ultimatum game. Finally, we find that for the 20th ranked person and higher, decision-makers are prone to transfer a higher amount of loss to that person than willing to receive it from her. It means that egoistic motive dominates the altruistic one starting from a place no. 20 on a social distance scale.

Appendix. Experimental Procedure (Translated)

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Please read out the following instructions carefully.

The study is on the evaluation of the value of monetary losses. You will be asked to make a series of choices about different amounts of losses. The choices are hypothetical—you will not lose those amounts, but we ask you to indicate your preferences as if you were to really lose those amounts. We are interested in your preferences. There are no right or wrong answers. We have no expectations of you, except that you choose according to your preferences.

Imagine that you made a list of 100 people you know, sorted by social proximity. The first position on the list is the person you consider socially closest to you. In the last position is a person you know only by sight. You do not have to create this list physically; just imagine it.

Imagine you have a financial loss of PLN 5000. You can cover this loss entirely by yourself, or you can transfer the part of the loss to another person occupying a specific position on your list. In the following, we will ask you to make a series of choices considering different people on the list and different delays. Remember that the decision is entirely yours.

Monetary losses in 5 years [immediately, in a month, in 6 months, in a year].

Choose how much of a monetary loss you will shift to person number 1 [5, 20, 50, 100].

Imagine you have a loss of PLN 5000. You can cover this loss entirely by yourself, or you can transfer a part of the loss to another person occupying a specific position on your list. However, if that person does not accept your decision, you will have to cover the entire loss by yourself. In the following, we will ask you to make a series of choices considering different people on the list and different delays.

Monetary losses in 5 years [immediately, in a month, in 6 months, in a year].

Choose how much of a monetary loss you will shift to person number 1 [5, 20, 50, 100].

This time the roles were reversed. Another person on your list suffered a loss of PLN 5000. She can either cover that loss entirely by herself or pass on to your part of the loss. However, if you do not accept her decision, the loss will be covered in full by another person on your list. In the following, we will ask you for the minimum acceptable (for you) loss shifted by another person, considering different people on the list and different delays.

Monetary losses in 5 years [immediately, in a month, in 6 months, in a year].

Choose how much of a monetary loss you will shift to person number 1 [5, 20, 50, 100].

In the following, we will ask you to make hypothetical choices between monetary losses just for you. Option A will be equal to the lower loss immediately incurred and Option B to the greater and delayed loss.

[here standard delay discounting task with titration algorithm, option B is 2900 PLN].

Thank you very much for your participation!