Dictator game
Encyclopedia
The dictator game is a game in experimental economics
Experimental economics
Experimental economics is the application of experimental methods to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. Economic experiments usually use cash to motivate subjects, in...

, similar to the ultimatum game
Ultimatum game
The ultimatum game is a game often played in economic experiments in which two players interact to decide how to divide a sum of money that is given to them. The first player proposes how to divide the sum between the two players, and the second player can either accept or reject this proposal. ...

. Experimental results offer evidence against the rationally self-interested individual (sometimes called the homo economicus
Homo economicus
Homo economicus, or Economic human, is the concept in some economic theories of humans as rational and narrowly self-interested actors who have the ability to make judgments toward their subjectively defined ends...

) concept of economic behavior, though precisely what to conclude from the evidence is controversial.

Description

In the dictator game, the first player, "the proposer", determines an allocation (split) of some endowment (such as a cash prize). The second player, "the responder", simply receives the remainder of the endowment
Financial endowment
A financial endowment is a transfer of money or property donated to an institution. The total value of an institution's investments is often referred to as the institution's endowment and is typically organized as a public charity, private foundation, or trust....

 left by the proposer. The responder's role is entirely passive (the responder has no strategic input into the outcome of the game). As a result, the dictator game is not formally a game at all (as the term is used in game theory
Game theory
Game theory is a mathematical method for analyzing calculated circumstances, such as in games, where a person’s success is based upon the choices of others...

). To be a game, every player's outcome must depend on the actions of at least some others. Since the proposer's outcome depends only on his own actions, this situation is one of decision theory
Decision theory
Decision theory in economics, psychology, philosophy, mathematics, and statistics is concerned with identifying the values, uncertainties and other issues relevant in a given decision, its rationality, and the resulting optimal decision...

 and not game theory. Despite this formal point, the dictator game is used in the game theory literature as a degenerate
Degeneracy (mathematics)
In mathematics, a degenerate case is a limiting case in which a class of object changes its nature so as to belong to another, usually simpler, class....

 game.

This game has been used to test the homo economicus model of individual behavior: if individuals were only concerned with their own economic well being, proposers (acting as dictator
Dictator
A dictator is a ruler who assumes sole and absolute power but without hereditary ascension such as an absolute monarch. When other states call the head of state of a particular state a dictator, that state is called a dictatorship...

s) would allocate the entire good to themselves and give nothing to the responder. Experimental results have indicated that individuals often allocate money to the responders, reducing the amount of money they receive. These results appear robust: for example, Henrich, et al. discovered in a wide cross cultural study that proposers do allocate a non-zero share of the endowment to the responder.

If these experiments appropriately reflect individuals' preferences outside of the laboratory, these results appear to demonstrate that either:
  1. Proposers fail to maximize their own expected utility,
  2. Proposers' utility functions may include non-tangible harms they incur (for example self-image or anticipated negative views of others in society), or
  3. Proposers' 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. This suggests that dictator game behavior is, in fact, altruism
Altruism
Altruism is a concern for the welfare of others. It is a traditional virtue in many cultures, and a core aspect of various religious traditions, though the concept of 'others' toward whom concern should be directed can vary among cultures and religions. Altruism is the opposite of...

 instead of the failure of optimizing behavior. Other experiments have shown a relationship between political participation
Participation (decision making)
Participation in social science refers to different mechanisms for the public to express opinions - and ideally exert influence - regarding political, economic, management or other social decisions. Participatory decision making can take place along any realm of human social activity, including...

 and dictator game giving, suggesting that it may be an externally valid indicator of concern for the well-being of others.

Challenges

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
Altruism
Altruism is a concern for the welfare of others. It is a traditional virtue in many cultures, and a core aspect of various religious traditions, though the concept of 'others' toward whom concern should be directed can vary among cultures and religions. Altruism is the opposite of...

). 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.

Further experiments testing experimental effects have been performed. Bardsley has performed experiments where individuals are given the opportunity to give money, give nothing, or take money from the respondent. In these cases most individuals far from showing altruism actually take money. And comparing the taking games with dictator games which start from the same endowments, most people who give in the dictator game would take in a taking game. Bardsley suggests two interpretations for these results. First, it may be that the range of options provides different cues to experimental subjects about what is expected of them. "Subjects might perceive dictator games as being about giving, since they can either do nothing or give, and so ask themselves how much to give. Whilst the taking game... might appear to be about taking for analogous reasons, so subjects ask themselves how much to take." On this interpretation dictator game giving is a response to demand characteristics
Demand characteristics
In research, and particularly psychology, demand characteristics refers to an experimental artifact where participants form an interpretation of the experiment's purpose and unconsciously change their behavior accordingly. Pioneering research was conducted on demand characteristics by Martin Orne...

 of the experiment. Second, subjects' behavior may be affected by a kind of framing effect. What a subject considers to be an appropriately kind behavior depends on the range of behaviors available. In the taking game, the range includes worse alternatives than the dictator game. As a result giving less, or even taking, may appear equally kind.

Trust game

The trust game extends the dictator game one step by having the reward that the dictator can (unilaterally) split between himself and a partner partially decided by an initial gift from that partner. The initial move is from the dictator's partner, who must decide how much of his or her initial endowment to trust with him (in the hopes of receiving some of it back). Normally, he is encouraged to give something to the dictator through a specification in the game's rules that her endowment will be increased by a factor from the researchers. The experiments rarely end in the subgame perfect Nash equilibrium of "no trust". In fact, a recent pair of studies of identical and fraternal twins in the USA and Sweden suggests that behavior in this game is heritable
Heritability
The Heritability of a population is the proportion of observable differences between individuals that is due to genetic differences. Factors including genetics, environment and random chance can all contribute to the variation between individuals in their observable characteristics...

.

Further reading

Concludes that people tend to be more generous if there is a picture of a pair of eyes watching them.
The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
x
OK