My Mug Is Valuable, But My Partner's Is Even More So: Economic Decisions for Close Others

Harm to others reduces the sunk-cost effect

The sunk-cost effect (SCE) is the tendency to continue investing in something that is not working out because of previous investments that cannot be recovered. In three experiments, we examine the SCE when continued investment violates the ethic of care by harming others. In Experiment 1, the SCE was smaller if the sunk-cost decision resulted in harmful consequences towards others (an interaction between sunk cost and the ethic of care). In Experiment 2, participants considered vignettes from their own or another person's perspective. We observed an interpersonal SCE - people showed the SCE when taking the perspective of others. We did not replicate the interaction found in Experiment 1. In Experiment 3, we used statistically more powerful analyses - Bayesian sequential hypothesis testing - to examine the interaction between sunk cost and the ethic of care. We found evidence in favor of the interaction; the SCE was smaller if the sunk-cost decision harmed others. We suggest that violating one's ethic of care de-biases decision-making by overshadowing sunk costs. These findings may help explain decision-making in real-world situations involving large investments.

Economic Decisions for Others Are More Favorable for Close Than Distant Clients

This research investigates the role of social distance between decision makers and their clients. In 11 experiments (total N = 1,653), participants decided about unfair and hyper-fair offers in an advisor game for themselves or for a client who varied in social distance (e.g., for a close friend vs. a stranger). Participants were strongly influenced by client identity. They systematically accepted more hyper-fair offers for themselves and close clients than for distant clients, while client identity played no role in unfair offers. We show that the driving mechanism of this client privileging effect is joy (happy-for-ness) participants experience particularly for close clients, while envy did not explain this effect. Across all types of clients and experiments, hyper-fair offers were accepted at only 86% which can only be explained by participants being not exclusively motivated by absolute monetary payoffs but also, to some extent, factoring in nonmonetary concerns.

Uncertainty about the impact of social decisions increases prosocial behaviour

Uncertainty about how our choices will affect others infuses social life. Past research suggests uncertainty has a negative effect on prosocial behaviour^1-12 by enabling people to adopt self-serving narratives about their actions^1,13. We show that uncertainty does not always promote selfishness. We introduce a distinction between two types of uncertainty that have opposite effects on prosocial behaviour. Previous work focused on outcome uncertainty (uncertainty about whether or not a decision will lead to a particular outcome). However, as soon as people's decisions might have negative consequences for others, there is also impact uncertainty (uncertainty about how others' well-being will be impacted by the negative outcome). Consistent with past research^1-12, we found decreased prosocial behaviour under outcome uncertainty. In contrast, prosocial behaviour was increased under impact uncertainty in incentivized economic decisions and hypothetical decisions about infectious disease threats. Perceptions of social norms paralleled the behavioural effects. The effect of impact uncertainty on prosocial behaviour did not depend on the individuation of others or the mere mention of harm, and was stronger when impact uncertainty was made more salient. Our findings offer insights into communicating uncertainty, especially in contexts where prosocial behaviour is paramount, such as responding to infectious disease threats.