Arno Riedl

We are living in times of increasing background uncertainty, that is, uncertainty beyond individual control. The Covid-19 pandemic and climate change, but also more flexible labor markets are examples at hand that induce background uncertainty. Published research investigating background uncertainty is confined to risk preferences and little is known on how it affects other decision domains. This project investigates the impact of background uncertainty on a core element of social human behavior: social preferences. Social preferences are pivotal for the maintenance of societal order through voluntary contributions to public goods, maintaining cooperation, sanctioning free-riders and more. An erosion of them due to increased background uncertainty can have significant adverse effects because changes on the individual level can aggravate in the aggregate through, e.g., voting and coordinated actions.

For a thorough understanding, the project investigates the effect of background uncertainty on social preferences at the behavioral and the neural level, thereby integrating knowledge from economics, psychology and neuroscience. First, in online surveys and experiments with a large heterogeneous participant pool it will provide correlational and causal evidence on the behavioral level. Second, using laboratory experiments with students it will investigate the effect of background uncertainty beyond the financial domain and scrutinize affect as a potential channel. Third, it will employ neuroeconomics experiments to uncover the cognitive and neural processes underlying observed behavioral changes. Together, the studies will paint a first comprehensive picture on how background uncertainty impacts social preferences. The proposed project brings together research in economics, psychology and neuroscience.