To be clear: your VNM utility function does not have to correspond directly to utilitarian utility if you are not a strict utilitarian. Even if you are a strict utilitarian, diversifying donations can still, in theory, be VNM rational. E.g.:
A trustworthy Omega appears. He informs you that if you are not personally are responsible for saving 1,000 QALYs, he will destroy the earth. If you succeed, he will leave the earth alone. Under these contrived conditions, the amount of good you are responsible for is important, and you should be very risk-averse with that quantity. If there’s even a 1 in a million risk that the 7 effective charities you donated to were all, by coincidence, frauds, you would be well advised to donate to an eighth (even though the eighth charity will not as effective as the other seven).
Diversifying donations is not rational as long as the marginal utility per dollar generated by a charity is affected negligibly by the the small sum you are donating. This assumption seems correct for a large class of utility functions under realistic conditions.
To be clear: your VNM utility function does not have to correspond directly to utilitarian utility if you are not a strict utilitarian. Even if you are a strict utilitarian, diversifying donations can still, in theory, be VNM rational. E.g.:
A trustworthy Omega appears. He informs you that if you are not personally are responsible for saving 1,000 QALYs, he will destroy the earth. If you succeed, he will leave the earth alone. Under these contrived conditions, the amount of good you are responsible for is important, and you should be very risk-averse with that quantity. If there’s even a 1 in a million risk that the 7 effective charities you donated to were all, by coincidence, frauds, you would be well advised to donate to an eighth (even though the eighth charity will not as effective as the other seven).
Diversifying donations is not rational as long as the marginal utility per dollar generated by a charity is affected negligibly by the the small sum you are donating. This assumption seems correct for a large class of utility functions under realistic conditions.