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The dictator game is an experimental paradigm in psychology and economic theory,[1] similar to the ultimatum game, which was first developed by Daniel Kahneman and colleagues.[2] Experimental results offer evidence against the rationally self-interested individual (sometimes called the homo economicus) concept of economic behavior,[3] though precisely what to conclude from the evidence is controversial.[4]

Since the dictator's outcome depends only on his own actions, the dictator game is not formally a game (as the term is used in game theory), but is rather a problem of decision theory. To be a game, a player's outcome must depend on the actions of at least one other. However, the dictator game is used in game theory literature as a degenerate game.[5][6]

Contents

DescriptionEdit

In the dictator game, the first player, "the dictator", determines how to split an endowment (such as a cash prize) between himself and the second player.[7] The dictator’s action space is complete and therefore is at his own will to determine the endowment, which means that the recipient has no influence over the outcome of the game.[8]

ApplicationEdit

While the initial game as developed by Daniel Kahneman involved third-party punishment, successors later simplified the ultimatum game to remove the punishment portion, resulting in the form now known as the dictator game. Based on homo economicus principle, one would expect players to maximize their own payoff; however, it has been shown that human populations are more “benevolent than homo economicus” and therefore rarely do the majority give nothing to the recipient. [8]

ExperimentsEdit

In 1988 a group of researchers at the University of Iowa conducted a controlled experiment to evaluate the homo economicus model of behavior with groups of voluntarily recruited economics, accounting, and business students. These experimental results contradict the homo economicus model, suggesting that players in the dictator role take fairness and potential adverse consequences into account when making decisions about how much utility to give the recipient.[9] A later study in neuroscience further challenged the homo economicus model, suggesting that various cognitive differences among humans affect decision-making processes, and thus ideas of fairness.[10]

Experimental results have indicated that adults often allocate money to the recipients, reducing the amount of money the dictator himself receives.[11] These results appear robust: for example, Henrich, et al. discovered in a wide cross-cultural study that dictators do allocate a non-zero share of the endowment to the recipient.[12] In modified versions of the dictator game, children also tend to allocate some of a resource to a recipient and most five-year-olds share at least half of their goods.[13]

A further study conducted in 2017 examined differences in decision-making behavior among genders in the “Taking Game” variation of the dictator game in which the dictator decides how much utility to “take” from the recipient’s pre-determined endowment, versus the standard “Giving Game” model in which the dictator decides how much utility to give to the recipient. This study found some differences in behavior among gender groups, attributed to gender-specific cognitive biases affecting feelings of entitlement and toward property rights.[14] In 2016, Bhogal et. al. conducted a study to evaluate the effects of perceived attractiveness on decision-making behavior and altruism in the standard dictator game, testing theories that altruism may serve as a courtship display. This study found no relationship between attractiveness and altruism.[15]

If these experiments appropriately reflect individuals' preferences outside of the laboratory, these results appear to demonstrate that either:

  1. Dictators' utility functions include only money that they receive and dictators fail to maximize it.
  2. Dictators' utility functions may include non-tangible harms they incur (for example self-image or anticipated negative views of others in society), or
  3. Dictators' utility functions may include benefits received by others.

Additional experiments have shown that subjects maintain a high degree of consistency across multiple versions of the dictator game in which the cost of giving varies.[16] This suggests that dictator game behavior is well approximated by a model in which dictators maximize utility functions that include benefits received by others, that is, subjects are increasing their utility when they pass money to the recipients. The latter implies they are maximizing a utility function that incorporates recipient's welfare and not only their own welfare. This is the core of the "other-regarding" preferences. A number of experiments have shown donations are substantially larger when the dictators are aware of the recipient's need of the money.[17][18] Other experiments have shown a relationship between political participation, social integration, and dictator game giving, suggesting that it may be an externally valid indicator of concern for the well-being of others.[19][20][21][22] Recent papers have shown that experimental subjects in the lab do not behave differently than ordinary people outside the lab regarding altruism.[23] A recent pair of studies suggests that behavior in this game is heritable.[24][25]

ChallengesEdit

The idea that the highly mixed results of the dictator game prove or disprove rationality in economics is not widely accepted. Results offer both support of the classical assumptions and notable exception which have led to improved holistic economic models of behavior. Some authors have suggested that giving in the dictator game does not entail that individuals wish to maximize others' benefit (altruism). Instead they suggest that individuals have some negative utility associated with being seen as greedy, and are avoiding this judgment by the experimenter. Some experiments have been performed to test this hypothesis with mixed results.[26][27]

VariantsEdit

The Trust Game is similar to the dictator game, but with an added first step. In the trust game, one participant first decides how much of an endowment to give to the second participant. The first player is also informed that whatever he sends will be tripled by the experimenter. Then the second participant (now acting as a dictator) decides how much of this increased endowment to allocate to the first participant. Thus the dictator's partner must decide how much of the initial endowment to trust with the dictator (in the hopes of receiving the same amount or more in return). The experiments rarely end in the subgame perfect Nash equilibrium of "no trust". A pair of studies published in 2008 of identical and fraternal twins in the USA and Sweden suggests that behavior in this game is heritable.[28]

A variation of the dictator game called “Taking Game” (see “Experiments" section above for further detail), emerged from sociological experiments conducted in 2003, in which the dictator decides how much utility to “take” from the recipient’s pre-determined endowment. This dictator game variation was designed to evaluate the idea of greed, rather than the idea of fairness or altruism generally evaluated with the standard dictator game model, also referred to as the “Giving Game”.[29]

See alsoEdit

ReferencesEdit

  1. ^ Guala,, Francesco et. al. (2010). ""Paradigmatic experiments: The Dictator Game"". The Journal of Socio-Economics. 39: 578. 
  2. ^ Kahneman, Daniel; Knetsch, Jack L.; Thaler, Richard H. (1986-01-01). "Fairness and the Assumptions of Economics". The Journal of Business. 59 (4): S285–S300. JSTOR 2352761. 
  3. ^ Levitt, Steven and Stephen Dubner (2009). Superfreakonomics New York: William Morrow.
  4. ^ Bardsley, Nicholas (2005-04-01). "Altruism or Artefact? A Note on Dictator Game Giving". The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. 
  5. ^ Civai C., Hawes D.R. (2016) Game Theory in Neuroeconomics. In: Reuter M., Montag C. (eds) Neuroeconomics. Studies in Neuroscience, Psychology and Behavioral Economics. Springer, Berlin, Heidelberg.
  6. ^ Pereda, M., Brañas-Garza, P., Rodríguez-Lara, I., & Sánchez, A. (2017). The emergence of altruism as a social norm. Scientific Reports, 7(1), 9684. https://doi.org/10.1038/s41598-017-07712-9.
  7. ^ Andreoni, James, William T. Harbaugh and Lise Vesterlund. "altruism in experiments." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 04 December 2017 <http://www.dictionaryofeconomics.com.proxy.lib.umich.edu/article?id=pde2008_A000240>doi:10.1057/9780230226203.0035
  8. ^ a b Engel, C. (2011). "Dictator Games: A Meta Study". Experimental Economics. 14 (4): 583–610. doi:10.1007/s10683-011-9283-7.
  9. ^ Forsythe R, Horowitz JL, Savin NE, Sefton M. "Fairness in simple bargaining experiments." Games and Economic Behavior 6 (1994): 363, 347-369.
  10. ^ Camerer, C., Loewenstein, G., Prelec, D. “Neuroeconomics: how neuroscience can inform economics.” Journal of Economic Literature (2005): 47, 9–64.
  11. ^ For example, Bolton, Katok, Zwick 1998, "Dictator game giving: Rules of fairness versus acts of kindness" International Journal of Game Theory 27:2 (Article Abstract). This paper Archived 2005-10-25 at the Wayback Machine. includes a review of dictator games going back to 1994 (Forsythe R, Horowitz JL, Savin NE, Sefton M, 1994 Fairness in simple bargaining experiments. in Games and Economic Behavior). For an overview see Camerer, Colin (2003) Behavioral Game Theory Princeton University Press, Princeton.
  12. ^ Henrich, Joseph, Robert Boyd, Samuel Bowles, Colin Camerer, Ernst Fehr, and Herbert Gintis (2004) Foundations of Human Sociality: Economic Experiments and Ethnographic Evidence from Fifteen Small-Scale Societies. Oxford University Press.
  13. ^ Gummerum, Michaela; Hanoch, Yaniv; Keller, Monika; Parsons, Katie; Hummel, Alegra (2010-02-01). "Preschoolers' allocations in the dictator game: The role of moral emotions". Journal of Economic Psychology. 31 (1): 25–34. doi:10.1016/j.joep.2009.09.002. 
  14. ^ Chowdhury, S. M., Jeon, J. Y. and Saha, B. (2017), Gender Differences in the Giving and Taking Variants of the Dictator Game. Southern Economic Journal, 84: 474–483. doi:10.1002/soej.12223 http://onlinelibrary.wiley.com.proxy.lib.umich.edu/doi/10.1002/soej.12223/full ; Thaler, R. 1980. Towards a positive theory of consumer choice. Journal of Economic Behavior and Organization 1:39–60 ; Bylsma, W. H., and Major, B. 1992. Two routes to eliminating gender differences in personal entitlement: Social comparisons and performance evaluations. Psychology of Women Quarterly 16:193–200; Dommer, S. L., and Swaminathan, V. 2013. Explaining the endowment effect through ownership: The role of identity, gender, and self-threat. Journal of Consumer Research 39:1034–50.
  15. ^ Bhogal, M. S., Galbraith, N., & Manktelow, K. (2016). Physical Attractiveness and Altruism in Two Modified Dictator Games. Basic and Applied Social Psychology, 38(4), 212-222. doi:10.1080/01973533.2016.1199382
  16. ^ Andreoni, James; Miller, John (2002-03-01). "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism". Econometrica. 70 (2): 737–753. doi:10.1111/1468-0262.00302. ISSN 1468-0262. 
  17. ^ Eckel, Catherine C.; Grossman, Philip J. (1996-01-01). "Altruism in Anonymous Dictator Games". Rochester, NY: Social Science Research Network. SSRN 1883604 . 
  18. ^ Brañas-Garza, Pablo (2006-07-01). "Poverty in dictator games: Awakening solidarity". Journal of Economic Behavior & Organization. 60 (3): 306–320. doi:10.1016/j.jebo.2004.10.005. 
  19. ^ Fowler, James H.; Kam, Cindy D. (2007-08-01). "Beyond the Self: Social Identity, Altruism, and Political Participation". The Journal of Politics. 69 (3): 813–827. doi:10.1111/j.1468-2508.2007.00577.x. ISSN 0022-3816. 
  20. ^ Fowler, James H. (2006-08-01). "Altruism and Turnout". The Journal of Politics. 68 (3): 674–683. doi:10.1111/j.1468-2508.2006.00453.x. ISSN 0022-3816. 
  21. ^ Leider, Stephen; Möbius, Markus M.; Rosenblat, Tanya; Do, Quoc-Anh (2009-11-01). "Directed Altruism and Enforced Reciprocity in Social Networks". The Quarterly Journal of Economics. 124 (4): 1815–1851. doi:10.1162/qjec.2009.124.4.1815. ISSN 0033-5533. 
  22. ^ Brañas-Garza, Pablo; Cobo-Reyes, Ramón; Espinosa, María Paz; Jiménez, Natalia; Kovářík, Jaromír; Ponti, Giovanni (2010-07-01). "Altruism and social integration". Games and Economic Behavior. 69 (2): 249–257. doi:10.1016/j.geb.2009.10.014. 
  23. ^ Exadaktylos, Filippos; Espín, Antonio M.; Brañas-Garza, Pablo (2013-02-14). "Experimental subjects are not different". Scientific Reports. 3. doi:10.1038/srep01213. ISSN 2045-2322. PMC 3572448 . PMID 23429162. 
  24. ^ Cesarini, David; Dawes, Christopher T.; Johannesson, Magnus; Lichtenstein, Paul; Wallace, Björn (2009-01-01). "Genetic Variation in Preferences for Giving and Risk Taking". The Quarterly Journal of Economics. 124 (2): 809–842. JSTOR 40506244. 
  25. ^ Brañas-Garza, Pablo; Kovářík, Jaromír; Neyse, Levent (2013-04-10). "Second-to-Fourth Digit Ratio Has a Non-Monotonic Impact on Altruism". PLOS ONE. 8 (4): e60419. doi:10.1371/journal.pone.0060419. ISSN 1932-6203. PMC 3622687 . PMID 23593214. 
  26. ^ Hoffman, Elizabeth; McCabe, Kevin; Shachat, Keith; Smith, Vernon (1994-11-01). "Preferences, Property Rights, and Anonymity in Bargaining Games". Games and Economic Behavior. 7 (3): 346–380. doi:10.1006/game.1994.1056. 
  27. ^ Bolton, Gary E.; Katok, Elena; Zwick, Rami. "Dictator game giving: Rules of fairness versus acts of kindness". International Journal of Game Theory. 27 (2): 269–299. doi:10.1007/s001820050072. ISSN 0020-7276. 
  28. ^ Cesarini, David; Christopher T. Dawes; James H. Fowler; Magnus Johannesson; Paul Lichtenstein; Björn Wallace (11 March 2008). "Heritability of cooperative behavior in the trust game" (PDF). Proceedings of the National Academy of Sciences. 105 (10): 3721–3726. doi:10.1073/pnas.0710069105. PMC 2268795 . PMID 18316737. 
  29. ^ Chowdhury, S. M., Jeon, J. Y. and Saha, B. (2017), Gender Differences in the Giving and Taking Variants of the Dictator Game. Southern Economic Journal, 84: 474–483. doi:10.1002/soej.12223 http://onlinelibrary.wiley.com.proxy.lib.umich.edu/doi/10.1002/soej.12223/full

Further readingEdit

  • Haley, K.; D. Fessler (2005). "Nobody's watching? Subtle cues affect generosity in an anonymous economic game". Evolution and Human Behaviour. 26 (3): 245–256. doi:10.1016/j.evolhumbehav.2005.01.002.  Concludes that people tend to be more generous if there is a picture of a pair of eyes watching them.
  • Engel, C. (2011). "Dictator Games: A Meta Study". Experimental Economics. 14 (4): 583–610. doi:10.1007/s10683-011-9283-7. 
  • For a recent review of the dictator game in experiments see Angela A. Stanton: Evolving Economics: Synthesis