Bad Luck vs. Self-Inflicted Neediness - An Experimental Investigation of Gift Giving in a Solidarity Game

Abstract

We experimentally examine the impact of self-inflicted neediness on the solidarity behavior of subjects. In one treatment in our solidarity experiment all subjects face the same probability of becoming needy, in the other treatment subjects have the choice between a secure payment and a lottery which includes a certain probability of becoming needy. Then all subjects are asked how much they will give to losers in their group to investigate if people are willing to give the same gifts whether or not subjects are responsible for inequality in payoffs. We found evidence for allocative as well as for procedural utility concerns.

Keywords: Solidarity game, Self-inflicted neediness, Responsibility, Procedural utility

JEL Classification: C91, D63