Does risk aversion give an agent with purely altruistic preferences a good reason to donate to multiple charities?

Abstract

This paper applies the tools of normative decision theory to the practical ethical question of whether risk aversion gives us a good reason to donate to multiple charities. Recent work by Buchak (Risk and Rationality, 2013) has cast renewed doubts over the rational requirement of the sure-thing principle, which underpins expected utility theory, suggesting that risk aversion over utilities may be rationally permissible. This paper argues that when preferences are altruistic, risk aversion is unjustified and so in the one-shot case it is morally optimal to donate to only one charity. It also develops a simple diachronic model of giving, concluding that risk aversion in the short term may be part of a reasonable strategy of self-determination to prevent a loss of motivation to give in the future.