Essays on Behavioral Economics: Empirical Studies on Risk, Morality and Framing

This cumulative dissertation comprises three empirical studies on matters of risk taking, morality and framing. The first deals with endowment history and prior outcomes in risky contexts. In a seminal contribution, Thaler and Johnson (1990) detected the existence of a house money effect which is defined as an increase in risk tolerance after previous gains resulting from a risky activity. Subsequent studies used the term house money effect also in case of windfall gains, i.e., easily acquired money like show-up fees or initial endowments in experiments which does not result from a risky investment. The present study is to the best of our knowledge the first that disentangles the house money effect and windfall gains. We find a clear and systematic pattern that windfall gains increase risk tolerance. In contrast, the house money effect is far less ubiquitous and seems to require skewed lotteries and/or a large number of rounds played. We, therefore, conclude that a careful distinction between windfall gains and the house money effect is warranted in future research. The second contribution employs a multitude of probabilistic versions of two iconic variants of the trolley dilemma. In four studies, subjects rated moral permissibility of action in the bystander case – where one can divert a train, letting one person die instead of five – and the footbridge case – where one can sacrifice one person to save the five – with outcome probabilities being changed systematically. Results show that decreasing attractiveness of intervention yields a decreasing perceived moral permissibility of the intervention. Furthermore, a constant ratio of expected outcomes leaves moral permissibility ratings unchanged on aggregate if outcome probabilities are identical, whereas they display the emergence of a common ratio effect in the bystander, but not in the footbridge situation in case of asymmetric probabilities if these are manipulated intrapersonally. Additionally, probability framing does not seem to be of major importance and previous findings that moral permissibility of intervention is denoted higher in the bystander case are confirmed. The third essay employs four variants of the standard sender-receiver game by Gneezy (2005), with outcome valence being varied systematically. Depending on the frame of the game, a deceptive message, if acted upon, resulted in a higher gain for the sender and a lower gain for the receiver, a lower loss for the sender and a lower gain for the receiver, a higher gain for the sender and a higher loss for the receiver or a lower loss for the sender and a higher loss for the receiver. Results show that framing has no effect on senders’ decisions to lie on aggregate. Analyses with respect to gender point towards female and male subjects being influenced differently by the framing manipulation. Women show a higher propensity to lie to avoid a higher loss and behave less deceptively if doing so increases the receiver’s loss, with this pattern being reversed for me