Risk Preferences in Choices for Self and Others: Meta Analysis and Research Directions

Abstract

Are we more inclined to take risks for ourselves rather than on someone else’s behalf? The current study reviews and summarizes 28 effects from 18 studies (n=4,784). Across all studies, choices for others were significantly more risk-averse than choices for self (d=0.15, p=0.012). Two objective features of the choices moderated these effects: potential losses and reciprocal relationships. First, self-other differences in risk preferences were significant in the presence of potential losses (k=14, d=0.33, p<.001), and not significant (k=14, d=-0.06, p=0.473) in the gains-only domain (Q=12.56, p=<0.001). Choices for others were significantly more risk-averse when decision makers were reciprocally related to recipients (k=6, d=0.33, p=0.018) but no different in the absence of such a relationship (d=0.11, p=0.115). Reciprocal relationship was a marginally significant predictor (Q=2.02, p=0.155). Results are shown separately by publication status and by context (medical, economic game, hypothetical choice). A relational model of surrogate risk taking is proposed to explain the pattern of results, which emphasizes the importance of chooser-recipient relationships, and the tendency of choosers to minimize anticipated blame from losses, rather than maximizing credit for gains. Implications for benefits design, medical and managerial decision making are discussed.

Keywords: Risk Aversion, Risk Preferences, Uncertainty, Other Regarding Preferences, Blame

JEL Classification: D81, D70