Date of Original Version

7-26-2005

Type

Article

Abstract or Table of Contents

We show that people manipulate their valuations of ambiguous risks when doing so allows them to justify unfair behavior. In a binary dictator decision, dictators chose between a “fair” and an “unfair” choice. By choosing the unfair choice, dictators increase their own allocation, decrease the allocation to the recipient, and make the recipient’s allocation dependent on a p=0.5 lottery. More unfair allocations were made when the lottery was ambiguous than when it involved simple risk. We posit a mechanism through which dictators reconcile self-interest with a desire to act fairly in the presence of ambiguity. We predict and find that dictators adopt a favorably-biased view of ambiguity, as evidenced by higher estimates of the expected value of ambiguous lotteries relative to comparable lotteries involving simple risk. Dictators adopt this biased perception of ambiguity despite monetary incentives for accuracy. However, this motivated favorable view of ambiguity and increased unfair behavior is extinguished when dictators are constrained by their own initial unmotivated (negative) attitudes towards ambiguity. These findings suggest that perceptions of ambiguity can be manipulated by an underlying desire to behave self-interestedly at the expense of another, and run counter to the usual finding that ambiguity is perceived as unfavorable (ambiguity aversion).

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