The impact of background risk on altruistic giving

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This paper investigates the effect of an additive unfair background risk on the optimal donation behavior of a purely altruistic decision-maker in the dictator game. Assuming both the dictator and the recipient face this background risk, and that the dictator is risk-vulnerable, we find that the presence of background risk reduces the deviation of the optimal donation from an equal split. This outcome holds whether the dictator's fairness is evaluated ex-ante or ex-post, offering new insights into the implications of risk vulnerability.

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