By Chance or by Choice? Biased Attribution of Others' Outcomes when Social Preferences Matter

Abstract

Decision makers in positions of power often make unobserved choices under risk and uncertainty. In many cases, they face a trade-off between maximizing their own payoff and those of other individuals. What inferences are made in such instances about their choices when only outcomes are observable? We report findings from two experiments that investigate whether outcomes are attributed to luck or choices. We show that attribution biases exist in the evaluation of good outcomes. On average, good outcomes of decision makers are attributed more to luck as compared to bad outcomes. This asymmetry implies that decision makers get too little credit for their successes. Interestingly, the biases are exhibited by those individuals who make or would make the less prosocial choice for the group as decision makers, suggesting that a consensus effect may be shaping both the belief formation and updating processes.

Keywords: Decision-making under risk; Beliefs about others' decisions; Attribution biases; Social preferences; Consensus effect; Experiments

JEL Classification: C92, D91, D81