How Default Risk Shapes Social Choice

This paper reports the results of an experimental study investigating the role of uncertainty for pro-social behavior. We compare settings in which the decision-maker is solely responsible for the outcome to settings in which his choice is only implemented with some probability while with the complementary probability a “default” is implemented. We find that a sufficiently high probability of the default is necessary to alter decisions. Sufficiently-high-probability defaults lead to less giving by pro-social decision-makers, not only when the default is generous to the receiver but also when it is selfish. This violates monotonicity and is thus not consistent with expected utility theory nor with notions of ex ante fairness.